Jury delivers verdict in closely watched trademark/NFT case | Miller Nash LLP

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 can 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 disruption artist Mason Rothschild for Rothschild’s promotion and sale of NFTs that point to digital assets similar to furry versions of Birkin Bags identified as “MetaBirkins” and marketed under slogans such as “Not your Mother’s Birkin.”

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

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

At the heart of the matter 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 use of the mark likely to confuse the public (we previously discussed Rogers test in connection with several pending cases). When an allegedly infringing work is claimed to be expressive and entitled to First Amendment protection, the first question is whether Rogers test should be used—a very important question because the generosity of the two-step test almost always results in a victory for the defendant.

In arguing for it 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 merely certificates of ownership pointing to those digital assets, and as such are more like digital purchase receipts than works of art. The court remained unsure whether to consider the NFTs as expressive works and decided to err on the side of finding Rogers.

Rothschild’s NFTs easily satisfied the first one Rogers the test’s two steps, which ask whether the trademark used is at least minimally related to the allegedly infringing work. However, the court and jury’s attention was focused on the second step: whether the use of the trademark “explicitly misleads” the public as to the trademark owner’s involvement in the production and promotion of the work. The jury was clearly 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 there Rogers has been applied, but resulted in the defendant being denied First Amendment protection. The case will probably be appealed, however—for now—it is the final and most important assessment of how the courts will decide whether a work is “expressive” and, if so, what degree of protection it should create.

Wednesday’s ruling could be a sneak peek at how the US Supreme Court might consider the similar questions presented by Jack Daniel’s Properties, Inc. v. VIP Products LLC, now under consideration by the Supreme Court. The questions in Jack Daniels 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 discussed last time Jack Daniels case in a post in November.

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