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Patent poetry: an NFT showing a physical product can be “artistic” | JD Supra


Court declares NFTs

Can be considered “artistic”

Can’t be misleading


A federal court in New York has ruled that a non-fungible token (“NFT”) for a digital image similar to a Birkin handbag may be an “artistic” work for the purposes of determining whether the NFT infringes the Birkin trademark and other intellectual property rights.

As the court discussed,

Circa December 2021, defendant Mason Rothschild created digital images of faux fur-covered versions of plaintiffs Hermes International and Hermes of Paris, Inc.’s (collectively, “Hermes”) Birkin luxury handbags. Rothschild titled these images “MetaBirkins” and sold them using so-called “NFTs” (non-fungible tokens), explained later.

As Justice Rakoff explained,

NFTs, or “non-fungible tokens,” are units of data stored on a blockchain that are created to transfer ownership of physical objects or digital media. … When NFTs are created, or “minted”, they are listed on an NFT market where the NFTs can be sold, traded, etc., in accordance with “smart contracts” that govern transfers. …Because NFTs can be easily sold and resold with a transaction history securely stored on the blockchain, NFTs can function as investments that can store value and increase in value over time.

The defendant described these fuzzy NFTs as a “homage” to the real Birkin bag, which can sell for over $100,000 and (like the NFTs) can be considered more of an investment than something for everyday use.

The NFTs were sold on four NFT platforms, and the defendant also created social media and marketing channels using the @METABIRKINS profile and slogans such as “NOT YOUR MOTHER’S Birkin”.

However, Hermès was not flattered by this “tribute” and filed a lawsuit against the defendant for trademark infringement, trademark dilution and cybersquatting.

The court noted that

Fashion brands are starting to create and offer digital replicas of their actual products to put on digital fashion shows or otherwise use in the metaverse. NFTs can be linked to any type of digital media, including virtual fashion items that can be worn in online virtual worlds. Brands sometimes partner with collaborators to offer co-branded virtual fashion products.

We have discussed some of these partnerships in this blog.

A key question, in this case, is whether NFTs are “artistic”.

“Artistic” uses of trademarks – such as Andy Warhol’s images of Campbell’s soup cans – are judged by different standards than non-artistic uses.

Thus, the judge had to decide whether a MetaBirkin looked more like an Andy Warhol lithograph or more like a counterfeit “Birkin” sold in an alley.

The federal Lanham Act deals with trademarks. While the Second Circuit was held in Rogers v. Grimaldi (involving a trial of Ginger Rogers over the Fellini film Ginger and Fred),

We think that in general the [Lanham] The law should be interpreted as applying to artistic works only when the public interest in avoiding consumer confusion outweighs the public interest in freedom of expression. In the context of allegedly misleading headlines. . . this balance will not normally support the application of the Act unless the title has no artistic relevance to the underlying work, or if it has some artistic relevance, unless the title explicitly mislead as to the source of the content of the work.

The court in the Birkin case noted that Hermes had admitted in its complaint that NFTs could be “artistic”, saying that “a digital image connected to an NFT may reflect some artistic creativity”.

The judge also noted that

Hermes attempts to single out Rogers on the grounds that Rothschild uses the “MetaBirkins” trademark as a source identifier on social media to promote and advertise NFTs, as a URL, and to identify a website, arguing that the First Amendment does not protect no unauthorized use. of another’s trademark as a source identifier. But that doesn’t do much to single out Rogers or explain why Rogers’ test doesn’t apply here. Using the title of the artwork for social media and online accounts dedicated to selling the artwork is like approved marketing and advertising at Rogers…. And Rogers is not unenforceable simply because Rothschild sells the footage – the defendant movie studio to Rogers sold the film at issue.

Also, the court said,

The “artistic relevance” threshold is meant to be low and will be met unless the use “has no artistic relevance to the underlying work”.

Interestingly, in a footnote, the court suggested that the rules might be different if Birkin bags could be worn by avatars in the metaverse, whereas these, in this case, were not. .

But the judge denied the defendant’s motion to dismiss because the complaint contained enough factual allegations to support a finding that the defendant’s use of the Hermès intellectual property was explicitly misleading:

Amended Complaint Contains Evidence of Actual Consumer and Media Confusion About Hermès Affiliation with Rothschild’s MetaBirkins Collection, Believing Such Affiliation Exists and Erroneously Reporting It as Such .

So the case will move forward. The final decision could have a major impact on the NFT market when unauthorized use of trademarks and registered trademarks is involved.

Just like the haiku above, we like to keep our posts short and sweet. I hope you have found this brief information useful.

#Patent #poetry #NFT #showing #physical #product #artistic #Supra

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