The company took legal action in Germany against a Swiss firm, Colloseum Holdings, for breaching its trademark rights by selling jeans with a similar rectangular red cloth bearing its own brand name stitched into the right seam of the back pocket.
Levi Strauss has won a trademark battle over a small patch of red cloth stitched into the seam of the rear trouser pocket on its jeans.
Levi Strauss argued that, through years of use, the red cloth "flag" would be recognised by consumers as a sign of "red tab" jeans made by Levi Strauss - even without the LEVI's brand logo which is printed on it.
Levi Strauss currently owns as European Union (EU) trademarks the red tab itself in a certain position on jeans pockets, as well as the "composite" mark of the same red tab carrying the word LEVI's.
But the company has not used the red tab on its own and Colloseum denied any risk of its own red label causing confusion because its company name was included.
Colloseum also argued that Levi Strauss should lose the trademark rights to the red tab alone as it had never used it, contravening EU "genuine use" requirements for brands which can mean loss of a trademark which is not used for at least five years.
But the European Court of Justice (ECJ) in Luxembourg decreed that the red tab could be seen as an integral part of the LEVI's brand, even though the company had not used the red tab separately.
London-based international law firm Berwin Leighton Paisner (BLP) said the ruling was key for all brand owners trying to protect their packaging deigns and "distinctive elements" of their brands.
BLP partner Simon Clark said: "This is a sensible decision, as a finding to the contrary would have had extreme consequences. Take, for example, the well-known triangular shape of a Toblerone packet. Toblerone should be able to protect the distinctive shape of its packaging as a trade mark. However, they would never use that packaging without also adding the brand name Toblerone.
"Accordingly, a finding by the ECJ that you could not take into account use of the packaging shape when used together with the Toblerone brand would have effectively removed trademark protection for any distinctive packaging design."