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Harley I. Lewin McCarter & English, LLP 245 Park Avenue, 27th Floor New York, NY 10167 Tel: (212) 609-6800 Fax: (212) 609-6921 hlewin@mccarter.com Lee Carl Bromberg McCarter & English, LLP 265 Franklin Street Boston, MA 02110 Tel: 617-449-6500 Fax: 617-443-6161 lbromberg@mccarter.com Attorneys for Plaintiffs

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK CHRISTIAN LOUBOUTIN S.A.; CHRISTIAN LOUBOUTIN, L.L.C.; and CHRISTIAN LOUBOUTIN, Plaintiffs/Counterclaim-Defendants, v. YVES SAINT LAURENT AMERICA, INC.; YVES SAINT LAURENT AMERICA HOLDING, INC.; YVES SAINT LAURENT S.A.S.; YVES SAINT LAURENT (an unincorporated association); JOHN AND JANE DOES A-Z (UNIDENTIFIED); and XYZ COMPANIES 1-10 (UNIDENTIFIED), Defendants/Counterclaim-Plaintiffs. X Civil Action No.: 11 Civ. 2381 (VM) : : ECF Case : : : : : : : : : : : : : X

REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF PLAINTIFFS/COUNTERCLAIM-DEFENDANTS’ MOTION TO DISMISS YSL effectively admits that its initial counterclaim for fraud was deficient by amending it (the “Amended Counterclaim”). However, the Amended Counterclaim is equally deficient. The

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essence of YSL’s Amended Counterclaim remains the same, that Mr. Louboutin, in stating that he had substantially exclusive use of his Red Sole mark on the outsole of women’s luxury footwear, in the United States, for the five years preceding his application, was stating an outright lie, intending to obtain his trademark registration as a result thereof. YSL has dropped the “should have known” allegation, but fails to plead specific particular facts to support its remaining conclusory allegations. Even if accepted as true for the purposes of this motion, YSL’s allegations do not support a showing that at the time Mr. Louboutin submitted his declaration dated March 14, 20071 to the United States Patent and Trademark Office (“USPTO”) in support of U.S. Application Serial No. 77/141,7892 (the “March 14 Declaration”), his representation to the USPTO that he was the substantially exclusive user of red outsoles on women’s footwear was false or that Mr. Louboutin made the representation with the intent to deceive the USPTO. Louboutin requests the Court to treat its initial motion as a motion to dismiss the now Amended Counterclaim. YSL’s Response has relied on the Amended Counterclaim. Louboutin’s Reply herein addresses the Amended Counterclaim and YSL’s position with respect thereto. ARGUMENT THE AMENDED COUNTERCLAIM, STILL DOES NOT STATE A CLAIM FOR FRAUD ON THE USPTO; DISMISSAL OF THE AMENDED COUNTERCLAIM IS WARRANTED. Fed. R. Civ. P. 9(b) requires that a claim for fraud be pleaded with particularity. In re Bose Corp., 580 F.3d 1240, 1243 (Fed. Cir. 2009), requires a showing of a subjective intent to

Mr. Louboutin’s declaration was submitted pursuant to section 2(f) of the Lanham Act, 15 U.S.C. § 1052(f). 2 U.S. Application Serial No. 77/141,789 issued to registration on January 1, 2008 and has been assigned Registration No. 3,361,597. 2

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deceive. A showing of mistake, negligence, which is demonstrated by allegations that a party “knew or should have known” that a statement was false or misleading, or even gross negligence will not suffice.3 Id. (“Deception must be willful to constitute fraud.”). The party alleging fraud bears a heavy burden to meet these strict standards. YSL has failed to meet its burden; the Amended Counterclaim does not plead the alleged fraud with sufficient particularity to survive Louboutin’s motion to dismiss, even when read in a light most favorable to YSL. By failing to state particular facts showing that the registrant had an intent to deceive the USPTO, the Amended Counterclaim lacks the requisite mens rea required by Bose and its progeny. Id. Even if Mr. Louboutin had made a false statement in the March 14 Declaration, a false statement by itself will not require the cancellation of his registrations. See L.D. Kichler Co. v. Davoil, Inc., 192 F.3d 1349, 1351 (Fed. Cir. 1999) (“Merely making a false statement is not sufficient to cancel a mark.”); In re Bose, 580 F.3d at 1243 (stating there is a “material legal distinction between a ‘false’ representation and a ‘fraudulent one, the latter involving an intent to deceive, whereas the former may be occasioned by a misunderstanding, an inadvertence, a mere negligent omission, or the like) (quoting Kemin Indus., Inc. v. Watkins Prods., Inc., 192 U.S.P.Q. 327, 329 (T.T.A.B. 1976)). Because the Amended Counterclaim for fraud is devoid of any facts showing that Mr. Louboutin willfully intended to deceive the USPTO when he submitted the March 14 Declaration, it must be dismissed. The Amended Counterclaim alleges that: [A]s an industry leader who has devoted his entire professional life to women’s footwear, Mr. Louboutin no doubt was exposed to some or all YSL also incorrectly contends at page 3 of its Response that the Bose standard is inappropriate in the context of a motion to dismiss. But see, e.g., Scooter Store, Inc. v. SpinLife.com, LLC, No. 2:10-CV-18, 2011 U.S. Dist. LEXIS 32654, at *11 (S.D. Ohio Mar. 28, 2011) (applying In re Bose Corp.); Bauer Bros. LLC, v. Nike, Inc., 98 U.S.P.Q.2d 1160, 1164 (S.D. Cal. Mar. 8, 2011) (same). 3
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of the dozens of other footwear models with red outsoles that rendered his sworn statement false (including through other issues of fashion magazines that featured both his shoes and shoes with red outsoles by other designers). See Exhibit A at ¶ 32 (emphasis added). The allegation that Mr. Louboutin “no doubt was exposed” to red-soled shoes as an industry leader is merely a reformation of the “should have known” standard that was deficient in the initial counterclaim and summarily rejected by the Federal Circuit in Bose. In addition, mere exposure to such product does not constitute a showing of the requisite intent required under Bose, nor would it render Mr. Louboutin’s representation to the USPTO in the March 14 Declaration false. YSL asserts that Mr. Louboutin attended a YSL runway show at which red-soled shoes were on display; Mr. Louboutin and other designers contributed red-soled shoes to a feature that ran in the December 2005 issue Vogue magazine that was inspired by The Wizard of Oz; and “red-soled shoes made by other fashion designers have been featured in the very same issues of fashion publications with Louboutin shoes with red outsoles.” See id. A “look behind the curtain” reveals that even if these statements were true, they are irrelevant to a claim for fraud because they say nothing about Mr. Louboutin’s state of mind when Mr. Louboutin submitted the March 14 Declaration. Moreover, YSL has failed to allege in the detail required by Bose that at the time Mr. Louboutin signed the March 14 Declaration, back in 2007, he had actual knowledge (a) a third party was using a mark that was confusingly similar to his red sole mark in the United States, (b) the third party had rights in a bright red lacquer outsole that were superior to Mr. Louboutin’s rights in the United States, (c) Mr. Louboutin believed that a likelihood of confusion would result from his use of the Red Sole Mark or had no reasonable basis for believing otherwise; and (d) in failing to disclose these facts to the USPTO, Mr. Louboutin intended to procure a 4

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registration to which he was not entitled. See Maids to Order Inc. of Ohio Inc. v. Maid-to-Order Inc., 78 U.S.P.Q.2d 1899, 1908 (T.T.A.B. 2006) (citing Intellimedia Sports Inc., 43 U.S.P.Q.2d at 1207). For example, YSL simply asserts that red-soled shoes made by other fashion designers have been featured in the same issues of fashion publications with Louboutin shoes with red outsoles. Exhibit A at ¶ 32. Even if taken as true for the purpose of this motion, it does not support any finding of a lack of substantial exclusivity on the part of Mr. Louboutin, in the United States, using his Red Sole mark on the outsole of women’s luxury footwear. YSL would also have the Court misconstrue the presence of third party product with quantity. Allegations of the presence of a product, even if true, do not support the proposition that Mr. Louboutin’s statement of substantially exclusive use, when made, was false. L.D. Kichler Co. v. Davoil, Inc., 192 F.2d 1349, 1352 (Fed. Cir. 1999) (inconsequential or infringing use does not invalidate a claim of substantially exclusive use). The mere fact that third parties may have created footwear with red outsoles before Mr. Louboutin submitted the March 14 Declaration does not nullify Mr. Louboutin’s claim that since 1992, he has been the substantially exclusive user of bright lacquered red outsoles on luxury women’s footwear.4 Id. (standard is substantially exclusive use, and not exclusive use). Whether or not third party incidental use existed, for example, if Mr. Louboutin participated in the two events identified by YSL in the Amended Counterclaim, namely, a 2004 YSL fashion show and a feature inspired by The Wizard of Oz that ran in the December 2005 issue of Vogue magazine that allegedly involved red-soled

YSL alleges in paragraph 33 of the Amended Counterclaims that Mr. Louboutin also falsely asserted in the March 14, 2007 Declaration that “all” shoes he has designed since 1992 have used a red outsole. See Exhibit A at ¶ 33. Whether or not other of Mr. Louboutin’s shoe designs contained red outsoles is immaterial to Mr. Louboutin’s representation to the USPTO that he was the “substantially exclusive user” of red outsoles on women’s footwear since 1992. 5

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shoes created by third parties, such use was insignificant and is “insufficient to preclude an applicant’s declaration of ‘substantially exclusive’ use.” Id. CONCLUSION For the foregoing reasons, the Amended Counterclaim must be dismissed. Dated: July 5, 2011 McCARTER & ENGLISH, LLP

By:

/s/Harley I. Lewin Harley I. Lewin Lee Carl Bromberg

Harley I. Lewin 245 Park Avenue, 27th Floor New York, NY 10167 Tel: (212) 609-6800 Fax: (212) 609-6921 hlewin@mccarter.com Lee Carl Bromberg McCarter & English, LLP 265 Franklin Street Boston, MA 02110 Tel: 617-449-6500 Fax: 617-443-6161 lbromberg@mccarter.com

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