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February 2, 2023; June 23, 2023
Making a Statement or Making a Buck — Are MetaBirkins Artistic Enough?
In Hermès Int’l et al. v. Mason Rothschild, 1:22-cv-00384, 2023 U.S. Dist. LEXIS 17669 (S.D.N.Y. Feb. 2, 2023), a trademark suit of first impression, the Southern District of New York was tasked with determining whether the defendant’s NFTs should be evaluated under the Rogers v. Grimaldi test for artistic works, or the Gruner + Jahr test for general trademark infringement.
Plaintiffs Hermès International and Hermès of Paris, Inc. own trademark and trade dress rights in the iconic Birkin handbags. In December 2021, defendant Mason Rothschild created a collection of digital images he called “MetaBirkins,” using nonfungible tokens (NFTs) to sell the digital images of the handbags.
Faced with cross-motions for summary judgment, the court held that Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989) test was the appropriate test to utilize under the facts of this case. The court recognized that the Rogers test is applied when the use of a mark involves an expressive purpose, rather than simply functioning as a source identifier. Even though the evidence indicated that the mark was used for both an expressive purpose and to identify source, the court found that the Rogers test remained the applicable one. The court further held, however, that material issues of fact were present, and as such a summary judgment determination regarding infringement was precluded. Id. at *26-27.
After this decision, the Supreme Court clarified the applicability of the Rogers test in Jack Daniel's Props., Inc. v. VIP Prods. LLC, 599 U.S. 140, 143 S. Ct. 1578 (2023) (also discussed below).
This matter then proceeded to trial, where a jury returned a unanimous verdict against Defendant, awarding Hermès International and Hermès of Paris, Inc. approximately $133,000 in damages. Post-trial motions were filed and Plaintiffs sought to personally enjoin Defendant from certain actions that Plaintiffs believed continued to infringe and dilute their trademarks.
The court ultimately enjoined the Defendant from “using the Birkin marks or otherwise misleading the public about the source of the MetaBirkins NFTs”. The court further required transfer of the domain name www.metabirkins.com to Plaintiffs, as well as disgorgement of Defendant’s profits derived from the NFTs from the start of trial until the date of the order.
March 21, 2023
The Metes and Bounds of Lanham Act Protection
In Abitron Austria GmbH v. Hetronic Int'l, Inc., 143 S. Ct. 2522 (2023), the U.S. Supreme Court determined whether 15 U.S.C. § 1114(1)(a) and § 1125(a)(1) extended to foreign territories. There, Abitron claimed rights to Hetronic’s brand and began selling products using Hetronic’s marks almost entirely outside the United States. Hetronic successfully sued Abitron under the Lanham Act and received a substantial award. Abitron appealed, arguing that Hetronic sought an impermissible extraterritorial application of the Lanham Act. The Tenth Circuit affirmed the judgment.
The U.S. Supreme Court held differently, finding that the Lanham Act extends trademark protection only to claims where the infringing “use in commerce” is domestic, explaining that the relevant inquiry is where the conduct occurred. The U.S. Supreme Court further clarified that it was not enough that effects of the infringement were found in the United States as the use of a mark in one country will almost inevitably have effects that radiate to other jurisdictions. Id. at 2534. Ultimately, since the use in commerce at issue in this case was not in the U.S., the decision of the Tenth Circuit was vacated.
March 22, 2023
The Supreme Court Clarifies the Line Between Satire and Infringement
In Jack Daniel's Props., Inc. v. VIP Prods. LLC, 599 U.S. 140, 143 S. Ct. 1578 (2023), the limits of parody and satire were clarified by the U.S. Supreme Court. Under the Lanham Act, a third party is prohibited from using a trademark in a way likely to cause confusion as to the origin, sponsorship, or approval of goods or services. Due to the creative nature of trademarks and marketing, courts are often forced to grapple between enforcing the rights of trademark owners without violating First Amendment protection.
VIP Products LLC (“VIP”), a manufacturer of dog toys, created a dog toy designed to resemble Jack Daniel’s classic bottle. In place of “Jack Daniel’s” and “Old No. 7,” the toy displays “Bad Spaniels” and “The Old No. 2 on your Tennessee Carpet.” VIP brought an action for a declaratory judgment of noninfringement against Jack Daniels.
When faced with balancing trademark rights and the First Amendment, courts typically apply the two-prong test developed by the Second Circuit in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). Applying this test, the Ninth Circuit opined that the toy was an expressive work entitled to free-speech protection.
On appeal of the Ninth Circuit Decision, the U.S. Supreme Court provided additional clarity on the manner in which the test is to be applied. It found that Rogers cannot insulate an infringer from using another’s mark as a source identifier. Rather, Rogers has been, and should continue to be, confined to cases in which a mark is used to perform an expressive function, and not to function in the same way a trademark traditionally functions (that is, as an identifier of the source of the goods and/or services). Jack Daniel's, 599 U.S. at 1587-1588.
The case will return to the lower courts, where the case will center on whether consumers are likely to be confused as to the source of the Bad Spaniels toys.
April 21, 2023
Non-Fungible Tokens (“NFTs”) are “Goods” for Purposes of Trademark Protection
In Yuga Labs, Inc. v. Ripps, CV-22-4355, 2023 U.S. Dist. LEXIS 71336 (C.D. Cal. Apr. 21, 2023), Plaintiff and Counter-Defendant Yuga Labs, Inc. (“Yuga”) is the creator of the popular and well-known Bored Ape Yacht Club (“BAYC”) NFT collection. Defendants and Counterclaimants Ryder Ripps (“Ripps”) and Jeremy Cahen (“Cahen”) created their own NFT collection, known as the Ryder Ripps Bored Ape Yacht Club (“RR/BAYC”). Yuga filed a complaint with numerous allegations, including false designation of origin, false advertising, unfair competition, and cybersquatting to name a few.
Faced with a motion for summary judgment, Defendants, in part, argued that Yuga did not own any trademark rights in the BAYC marks as NFTs are ineligible for trademark protection because they are intangible. The court found otherwise. According to the decision, NFTs are “goods” for purposes of the Lanham Act because “NFTs and some other blockchain-based assets are sold specifically for their connection to a particular brand, creator, or associated creative work.” Id. at *18 (citation omitted) . The fact that NFTs are virtual and intangible is inconsequential. This finding is consistent with the court’s decision in Hermès Int’l v. Mason Rothschild, 1:22-cv-00384, 2023 U.S. Dist. LEXIS 17669 (S.D.N.Y. Feb. 2, 2023) Yuga, 2023 U.S. Dist. LEXIS 71336, at *18‑19.
Ultimately, Yuga was granted summary judgment as to its claims for false designation of origin and cybersquatting. The court additionally ruled in Yuga’s favor with respect to several of Defendants’ defenses and counterclaims.