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Jury Delivers Verdict in Closely Watched Trademark/NFT Case



A jury verdict Wednesday morning in a closely watched dispute between an iconic fashion house and a creator and seller of NFTs is a dramatic new development in the ongoing dialogue over the question “What is an expressive work and when may it incorporate someone else’s trademark?”

Design house Hermès, whose famous line of handbags known as “Birkin Bags” sell for five- and even six-figure prices, sued self-styled disruptive artist Mason Rothschild over Rothschild’s promotion and sale of NFTs pointing to digital assets resembling furry versions of Birkin Bags identified as “MetaBirkins” and marketed under such slogans as “Not your Mother’s Birkin.”

Hermès argued that Rothschild’s creations are not “expressive works” entitled to First Amendment protection but are instead competing consumer products that knock off Hermès’s famous handbags. Rothschild claimed that his NFTs parody the high-fashion bags in the same way that the celebrated work of Andy Warhol commented on consumer culture and the omnipresence of commercial products. The designer also claimed that his NFTs target NFT collectors, not customers of haute couture, making consumer confusion unlikely. Hermès countered that the NFTs have a specific commercial use as bags carried by fashionable denizens of the still-evolving “Metaverse,” and that Rothschild’s use of the Birkin trademark in exploiting that universe hinders Hermès’s ability to introduce its Birkin line into the digital world in its own way.

Wednesday morning’s verdict from a Southern District of New York jury held Rothschild liable to Hermès for trademark infringement. Rothschild’s “Warhol defense” was harmed by the court’s early exclusion of an expert witness on Warhol, whose testimony did not strike the court as sufficiently relevant to the issues before the jury.

At the heart of the case was the application of the so-called Rogers test to determine whether the First Amendment protection afforded to expressive works outweighs the right of a trademark owner to enjoin unauthorized uses of its mark that are likely to confuse the public (we previously discussed the Rogers test in the context of several pending cases). When an allegedly infringing work is claimed to be expressive and entitled to First Amendment protection, the first question is whether the Rogers test should be applieda very important question because the generosity of the two-step test almost always results in a win for the defendant.

In arguing that Rogers should not apply, Hermès urged that Rothschild’s NFTs are commercial consumer products, not parodic works of art. A key point favoring Hermès is that, while creative digital assets may indeed be expressive works of art, NFTs are only certificates of ownership pointing to those digital assets, and as such are more like digital purchase receipts than artworks. The court remained undecided as to whether to regard the NFTs as expressive works and decided to err on the side of applying Rogers.

Rothschild’s NFTs easily satisfied the first of the Rogers test’s two steps, which asks whether the trademark used is at least minimally related to the allegedly infringing work. However, the court’s and the jury’s attentions were focused on the second step: whether the use of the trademark “explicitly misleads” the public as to the trademark owner’s involvement in producing and promoting the work. The jury was evidently swayed by Rothschild’s express use of the Birkin trademark and by evidence indicating that Rothschild’s purpose was more commercial than expressive.

Hermès v. Rothschild is one of the rare few cases in which Rogers has been applied but resulted in a denial of First Amendment protection to the defendant. The case will likely be appealed butfor nowit is the latest and most important consideration of how courts should determine whether a work is “expressive” and if so what degree of protection that should create.

Wednesday’s verdict could be a sneak preview of how the U.S. Supreme Court might assess the similar issues presented by Jack Daniel’s Properties, Inc. v. VIP Products LLC, now under review by the high court. The questions in Jack Daniel’s include whether the Ninth Circuit erred in holding a commercial pet toy sold for profit to a consumer market to be an expressive work entitled to First Amendment protection. We last discussed the Jack Daniel’s case in a November post.

This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.

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