Hermès manufactures a very high-end line of Birkin handbags, usually priced at over $ 10,000 (often much more). Therefore, when digital artist Mason Rothschild began selling non-fungible tokens (NFTs) in the form of digital images named Meta Birkin, the company was not very happy. In January, Hermès filed a trademark infringement claim against Rothschild in a federal court in New York.
Proceedings that present allegations, including trademark infringement and dilution, raise a series of compelling issues at the crossroads of intellectual property law and digital technology. When considering these issues, it is helpful to take a step back first and provide a brief introduction to NFTs and trademarks.
NFT and trademark
NFTs are digital identifiers that use blockchain technology to authenticate and track ownership of related digital assets. Digital assets such as digital artwork and short video clips of sportsplay are available online for free, but NFT is by definition a non-fungible token, so only one person owns the asset at a time. increase. This creates a market for trading NFTs, some of which can be very expensive. In March 2021, artist Beeple’s digital work “Everydays: The First 5000 days” was sold at Christie’s auction for over $ 69 million.
Under US law, a trademark is “any word, name, symbol, or device.” .. .. Used by people “to identify and distinguish their products, including their own products, from products manufactured or sold by others, and to indicate the origin of the product.” Trademark law plays an important role in preventing consumers from being confused about who actually manufactures the product. For example, entrepreneurs are free to find start-ups aimed at making and selling athletic shoes, but they can’t give new companies confusing names like “Nike” or “Nike.”
US trademark law also protects trade dresses. This is usually defined as the “big picture and overall appearance” of a product, or the whole element, as explained by the United States Patent and Trademark Office (citing a previous court decision). “May include features such as size, shape, color or color combination, texture, graphics, etc.” Regarding handbags, Hermès has a US trademark in both the word “BIRKIN” and the trade dress associated with Birkin bags. I am registered.
Trademark rights and amendments Article 1
Trademark rights provide businesses with important tools to protect their investments in building consumer confidence in their products and services. However, trademark law is not the only legal framework in question in the Hermès proceedings. There is also the First Amendment, which gives artists a wide range of expressive rights to create works that incorporate content related to the intellectual property of third parties. Perhaps the best-known example is Andy Warhol’s portrayal of Campbell’s Soup Can and other products. This is a work of art that quickly gained iconic status and helped define the pop art movement.
Courts have long recognized the importance of preventing trademark claims from being used to deprive artists and critics of the expressive First Amendment. In 1989 Rogers vs. GrimaldiThe US Second Circuit Court of Appeals, which precedes the New York District Court in which the Hermes case was filed, ruled the case filed by Hollywood star Ginger Rogers. Rogers accused the creator of the movie “Ginger and Fred” of choosing a title that infringed her rights under the Lanham Act, the Lanham Act.
In a ruling against Rogers, the Second Circuit found that the title “Ginger and Fred” was “artistically relevant” to the content of the film and was “not clearly misunderstood.” The court explained:[b]Excessive expansion of the Lanham Act’s restrictions in the field of titles can invade the value of the First Amendment, so the law needs to be narrowly interpreted to avoid such conflicts. More generally, the court wrote that the Lanham Act “should only be applied to works of art if the public interest in avoiding consumer confusion outweighs the public interest in free expression.” ..
There are several other cases since the second circuit that have granted the right to use the trademark in engaging in artistic and creative expression, including parody and other commentary. As the Fourth Circuit explained in its 2005 decision, “Parliament leaves little doubt that Trademark Law is not intended to infringe the rights of critics and critics under Article 1 of the Constitutional Amendment. did not.”
However, the rights of artists, critics, and commentators do not allow consumers to be confused as to whether the content in question was created by the trademark owner.Important question to the district court Hermes vs Rothschild So how would Rothschild’s MetaBirkins be measured when evaluated against a second circuit in another case called the “final test of trademark law, or potential confusion” for NFT sources?
Trademark rights in virtual space: some important questions
Details aside Hermes vs Rothschild It emphasizes the potential complexity of trademark rights in virtual space. There are many traditional cases of trademark case law in offline context, but it is not always clear how to best analogize these cases to virtual representation. As NFTs, digital products, and metaverse spaces continue to grow in popularity, trademark law issues such as:
- What is the scope of trademark rights in virtual space, especially in relation to new fact patterns that may not have good offline analogs in case law? Lack of clarity poses a challenge for trademark owners as well as for artists and others who create content in the virtual space associated with third-party trademarks. Artists do not want to be dragged into court over their artwork and will clearly benefit from more legal clarity as to what constitutes an infringement. However, trademark owners are also in an enviable position. On the one hand, they want to avoid expensive and potentially unpopular proceedings. On the other hand, they have an obligation to monitor and enforce the misuse of trademarks. Given the amount and complexity of online content, monitoring online spaces can be difficult, and failure to enforce a trademark can have the de facto consequence of narrowing its scope.
- Under some fact patterns, can the use of third-party trademarks in virtual space probably reduce the likelihood of consumer confusion? For example, an artist exhibits a work of art in a virtual space and draws a product (or a word or image that reminds the consumer) that the consumer knows that it is sold only in physical form by its manufacturer. Suppose you are. Does that distinction reduce the possibility of confusion? So is it heavier than the discovery of trademark infringement? Or is it a virtual / physical distinction that has little relevance to the analysis?
- How should virtual space influence fair use questions?
- What is the exposure of the responsibility of an online intermediary hosting potentially infringing content posted to virtual space by a third party? Section 230, a law that exempts online intermediaries from liability for most content posted by users, contains a list of exceptions, including federal (and possibly state) intellectual property laws. Trademarks are treated at the federal level primarily through Lanham Act. This means that Section 230 does not isolate the intermediary from trademark claims. The Digital Millennium Copyright Act also provides for safe harbors associated with procedures specifically designed for online intermediaries to respond to allegations of hosting content that infringes copyright, but is a trademark. There is no corresponding legal framework for.In addition, there are few judicial precedents regarding intermediate liability related to trademarks (2010 second circuit decision). Tiffany vs eBay Is an example, but its scope is limited), and many of the related issues remain unresolved.
- What is the international meaning of trademark rights in virtual space? In the traditional non-online context, international trademark law is already complicated. In a world where online content is often created in one country, hosted online in a second country, and then accessed in a third country, what are the differences in the nature and scope of virtual trademark rights? Do you need to deal with it?
To address these questions, we need to strike a good balance between the scope of the trademark and the First Amendment. Trademarks of non-virtual goods should provide protection against the use of third parties in virtual spaces that confuse consumers. At the same time, trademark owners should not be allowed an overly broad interpretation of trademark law in virtual space that would interfere with artistic expression. Much of the use of words and images in virtual space that contain, suggest, or evoke trademarks is art, not trademark infringement.
