Anita Gogia is a IPilogue Writer and a 2L JD Candidate at Osgoode Hall Law School.

On on the intriguing case. engages novel issues of trademark infringement, trademark dilution, and cybersquatting (MetaBirkin.com domain name in this case) by artists in the metaverse.

Rothschild that depicted the Hermès Birkin bag in digital fur instead of leather, seemingly present in luxury handbags. The NFTs were on every further sale. After Hermès took down the NFTs from OpenSea, Rothschild moved to a different marketplace and “MetaBirkin” on Discord. Rothschild argued that “” and that the NFTs were a “” under First Amendment protection. Essentially, he argued that “MetaBirkins” were .

The jury found that Rothschild’s “MetaBirkin” NFTs . The key issue was whether the “MetaBirkin” was artistic expression under First Amendment protection, or a commercial product that causes consumer confusion. The jury concluded that while artistic expression was present, Rothschild intended to confuse consumers.

During the trial, Hermès provided evidence of actual consumer confusion which included about if “MetaBirkins” were connected to Hermès. Rothschild rejected these claims by providing that he to his website clarifying that the “MetaBirkins” were not connected with Hermès in any way and that his .

The jury was also influenced by Judge Rakoff’s reasons to deny the motion for summary judgment, and his exclusion of expert testimony. Judge Rakoff held that the test for artistic works applies where the key inquiry is This test was applied as opposed to the test, . Thus, Judge Rakoff held that the artistic relevance was present. Blake Gopnik provided expert testimony that Rothschild brought forth in this case. Had this been admitted, the jury ; thus aligning them in the artistic expression context.

Following the decision, Rothschild’s legal team that the dispute is “.” The team also pointed out Hermès’ hypocrisy as a luxury fashion brand who claim they care about artists but “.” This case has been followed by many to observe how the court resolves the issue of NFTs using intellectual property for the purpose of artistic expression. It is unknown whether this decision stands as precedent since intellectual property right disputes are significantly context-based. After this decision, artists can only conclude for certain the importance of obtaining legal advice before using IP in their NFTs, even if it is in the name of artistic expression.

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Nancy Chen is an IPilogue Writer and a 2L JD/MBA Candidate at the University of Toronto.

Imagine a Birkin bag – an iconic, timeless piece that arguably embodies luxury. Now make it digital, cover it in fur and sell it as a non-fungible token (NFT) called “MetaBirkin” for at least (about $6900 Canadian). Does this count as an artistic expression protected under First Amendment rights of expression and speech, or is it a trademark infringement upon a beloved fashion icon? This is the issue at the core of the ongoing lawsuit.

Brief Timeline of the Lawsuit

January 14^th, 2022 – Hermès files a complaint

Catching wind of the furry MetaBirkin NFTs, Hermès filed a trademark infringement and dilution lawsuit against Mason Rothschild, the creator. In their , Hermès claims that the label “MetaBirkin” infringes upon their “BIRKIN” trademark and likely causes confusion in the minds of consumers that Rothschild’s products were “authorized, sponsored, or approved by Hermès.” Further details about this initial action can be found in our earlier article .

February 9^th, 2022 – Rothschild files motion to dismiss the action

Legal counsel for Rothschild maintained that the NFTs constituted protected expression under the test set out in , which held that the use of a famous trademark is protected from trademark infringement if 1) the name is “minimally artistically relevant” to the product and 2) that the use of the trademark does not explicitly mislead consumers as to source or content of the product.

Regarding the first prong, that the term “MetaBirkin” was minimally artistically relevant to his project of questioning the nature of luxury and value and bringing awareness to the prevalence of animal cruelty in the fashion industry. Regarding the second prong, Rothschild’s counsel pointed to the lack of explicit mention of Hermès in the advertising of the NFTs. Rothschild’s counsel further argued that the First Amendment right of speech and expression outweighs the “slight risk” of consumer confusion.

that Rothschild’s usage of “MetaBirkin” was akin to a trademark, namely to “brand a product line, and to attract public attention and signify source.” This form of use is outside the scope of First Amendment protection, making the Rogers test inapplicable.

May 18^th, 2022 – Judge Radkoff denies Rothschild’s motion to dismiss

Judge Radkoff found that the Rogers test applied because the . Judge Radkoff that “[because] NFTs are simply code pointing to where a digital image is located and authenticating the image, using NFTs to authenticate an image and allow for tradeable subsequent resale and transfer does not make the image a commodity without First Amendment protection.”

However, the motion was ultimately denied because the Hermès had filed adequate evidence (such as Rothschild’s statements in public interviews) to support the allegation that the label was artistically relevant and explicitly misleading to consumers. Rothschild appealed this decision, which was subsequently

October 8^th, 2022 – Hermès files a motion for summary judgement

In a newly filed motion, the instead of the Rogers test, which asks: 1) whether the plaintiff’s mark (“BIRKIN”) is entitled to protection and 2) whether the defendant’s use of the mark (“MetaBirkin”) is likely to cause consumer confusion. Hermès argues that Gruner is the appropriate test given the recent development of “undisputable facts” that pushes the First Amendment considerations out of the question.

The facts that Hermès points to include: the similarity between the parties’ marks, evidence of actual confusion amongst consumers, and the fact that both parties are selling the same product, albeit in different universes. Counsel for Hermès claims that a summary judgment on the action should be granted due to the clear and undisputed nature of the material facts.

The Big Picture

All eyes are on the court as they navigate this new digital terrain and attempt to balance the freedom rights of creators against the IP rights of consumer brands. As Mr. Dan Bereskin emphasized in his , an IP owner’s rights should not go unchecked for fear of imposing a “chilling effect” on artists’ creative freedoms. On the other hand, the metaverse presents a new avenue for trademark infringement that is difficult to police, given the ever-evolving digital landscape. Hopefully, the continuing battle between Hermès and Rothschild will provide some guidance about the legal relationship between brands and creators in this new digital world.

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Raenelle Manning is an IPilogue Writer and 2L JD Candidate at Osgoode Hall Law School.

Meta platforms (“Meta”), formally known as Facebook, is the leading developer of the Metaverse. The Metaverse is described as a of the internet where users can participate in a variety of activities, some of which include attending concerts, playing games, buying digital clothing, and working. People can enter the Metaverse through virtual reality (VR) headsets, augmented reality glasses, smartphone apps, and other devices. While inside, users are represented by a Through the avatar’s point of view, one experiences the avatar’s virtual reality. Essentially, the Metaverse is a virtual simulation of the physical world.  However, a recent report from , a non-profit advocacy organization and online community that campaigns to hold corporations accountable, suggests that the darkest aspects of the physical world have manifested in the Metaverse.

Sexual Assault in the Metaverse

A   researcher wanting to study users’ behaviour on Meta’s social networking platform, , reported that her avatar was sexually assaulted only an hour after she entered the virtual space. Her avatar was led into a private party room where a male user sexually assaulted her while also making lewd comments. Meanwhile, other users outside the room watched and passed around what appeared to be a digital vodka bottle. The researcher expressed that although she was not physically harmed, the experience left her feeling disoriented and confused.

This is not the first time that VR users have reported abuse in the Metaverse. In December 2021, a woman published an article on describing her nightmare of an experience in the Metaverse. She explained that she had been harassed and sexually assaulted by a group of male users only one minute after entering Horizon Worlds. She also admitted to feeling helpless and being unable to access the safety features during the encounter.

What Makes the Experience Feel So Real?

The Metaverse is designed to give users an immersive experience; they are meant to psychologically feel like they are in the environment. This is achieved through immersive like acoustic input for the ears, haptic simulation for touch and high-resolution imagery. For example,  if you have either played or seen videos of people playing , the experience feels eerily realistic; you feel like you are actually the target of a zombie attack. The can make it difficult for the mind and body to differentiate between the physical and virtual world. This lack of discernment between reality and VR demonstrates the severity of this situation, and how traumatic it must feel to experience sexual violence in the Metaverse. Although the user’s body is not being physically violated, the experience may render significant psychological impacts.��

What is Meta Doing About This?

The Metaverse has default safety features like “”, which prevent users from coming within a four feet distance from each other. They recommend not turning this feature off when interacting with strangers. Another safety feature called, “”, allows users to immediately transport to an isolated area. These features still seem to put the onus on the users to protect themselves against cyber assault. Nick Clegg, Meta’s president of Global Affairs, stated in a recently published “ In the physical world, as well as the internet, people shout and swear and do all kinds of unpleasant things that aren’t prohibited by law, and they harass and attack people in ways that are. The metaverse will be no different. People who want to misuse technologies will always find ways to do it.” While this statement may be true, the current minimally-moderated nature of the will inevitably allow abusive and harmful behaviour to thrive.

Conclusion

There are calls for increased user regulation in the Metaverse. However, the prevailing response is that moderating user’s behaviour will be practically impossible because these in real time and are thus difficult to track. We have seen first-hand, on networks like Twitter and Facebook, that as online communities expand, it becomes difficult to monitor harmful behaviour and content. The immersive nature of virtual reality arguably warrants serious consideration about what more can be done to protect users from virtual violence. The Metaverse is still in early stages of development and it is anticipated to significantly transform the future of human interaction. Meta and other companies involved in the Metaverse’s development should work to minimize the potential harms associated with their products to ensure users’ safety, as a company would in our non-virtual lives.

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Anita Gogia is an IPilogue Writer and a 2L JD Candidate at Osgoode Hall Law School.

The by Judge Rakoff for a motion to dismiss in the case of clarified the applicability of and the on NFTs containing trademarks for artistic expression.  This case has significance in the application of our current understanding of trademark infringement in the metaverse.

Suggested reading: The March 2, 2022 article titled written by Jasmine Yu was posted on IPilogue and covers the early developments and key legal issues of this case.

Background

In brief, on January 14^th, 2022, Hermès filed a complaint against Rothschild for his use of Birkin bag trademarks in his NFTs. This case differed from other counterfeit trademark infringement cases because Rothschild’s work (100 NFTs of various Birkin bags) has no physical form. Hermès these “MetaBirkins” diluted their trademarks and goodwill contrary to s. 43(a) of the and are commercialized similarly to their valuable real-life products.

The Arguments

On February 9^th 2022, Rothschild submitted a motion to dismiss. On March 21, 2022, Rothschild , where he argued that  his MetaBirkin commented “on the animal cruelty inherent in Hermès’ manufacture of its ultra-expensive leather handbags, and that the MetaBirkin is speech, art, and expression protected by the First Amendment. Harvard Law School Professor Rebecca Tushnet, representing Rothschild, .

the Rogers test from a 1989 2^nd Circuit ruling— those using trademarks for artistic expression which doesn’t explicitly mislead consumers are protected from infringement claims. The bar is high, and a slight risk that the use of a trademark suggests endorsement or sponsorship is “outweighed by the danger of restricting artistic expression”. Tushnet has also stated that anything but a dismissal of the case may have a on artists.

On the other hand, that Rogers does not apply because Rothschild’s actions of setting up an online store and the marketing materials support a goal of selling a digital good. To this, Tushnet that artists are protected in marketing their work to make a profit. Hermès also argues that in which he said that there wasn’t “much difference” between having the crazy handbag or “now” bringing that into the metaverse illustrates that the MetaBirkin NFTs are a commodity. that the court should apply the Polaroid factors to evaluate whether the use of the trademarks confuse the public.

The Decision

In May, Judge Rakoff Rothschild’s motion to dismiss, releasing detailed for his decision on May 18^th, 2022. that the Rogers test applies in this case because the MetaBirkin NFTs “could constitute a form of artistic expression”. Using the NFTs . .However, the motion was ultimately denied because the Court held that the MetaBirkin does not satisfy the Rogers test at this stage as Rothschild intended to associate the NFTs with the goodwill of their Birkin marks. that Hermès made sufficient allegations of “explicit misleadingness” and so denies the motion to dismiss. Rothschild’s argument that the court should not follow the Polaroid likelihood-of-confusion factors in assessing whether MetaBirkin explicitly misleads per Rogers.

It is notable that Judge Rakoff was influenced by Rothschild’s marketing efforts and commercial actions — this casted doubt as to whether the NFTs were meant only for artistic expression and not as commercial goods.

Although freedom of artistic expression varies globally, the inherent idea that art is interpretative and holds meaning beyond a superficial level is arguably a universal truth. The metaverse allows artists to explore a new source of income, undoubtedly increasing the volume and popularity of NFTs and other virtual commodities. Such a cultural movement illustrates the significance of this case; and while it originates in the US Southern District of New 91��ɫ, the importance transcends borders. This decision has important implications as to how courts may interpret metaverse-related trademark infringement claims moving forward.

The post What’s New in the Metaverse? The Line Between Artistic Expression and Commercial Goods May Soon Exist! appeared first on IPOsgoode.

Photo by Wen-Cheng Liu ()

Jasmine Yu is an IPilogue Writer and a 1L JD Candidate at the University of Toronto.

The Hermès Birkin is undoubtedly among the most iconic bags in history. Most of us can recall Samantha from Sex and the City being told: “it’s not a Bag, it’s a Birkin.” The Birkin has become the ultimate status symbol: its limited production makes it incredibly . The bag is immediately recognizable due to its timeless silhouette, features in TV shows and movies, and popularity with .��

The Birkin’s distinctive shape has acquired a secondary meaning, such that its trade dress has a with the US Patent & Trademark Office. The Birkin’s hefty price tag — a Diamond Himalaya Birkin for over $400,000 in 2017 — has made it a . Hermès is embroiled in constant defending the Birkin against trademark infringement and passing-off.

Recently, Hermès has tested out the scope of their intellectual property rights in the metaverse. On January 14, 2022, Hermès a trademark infringement and dilution lawsuit against Mason Rothschild, the designer of MetaBirkin Non-Fungible Tokens (NFTs), a collection of 100 fur-covered Birkin-shaped bags, which launched in December 2021 on the NFT exchange platform .��

Hermès’ Action

Hermès claims that beginning on December 2, 2021, Rothschild’s advertising of his MetaBirkin NFTs infringed Hermès’ “globally recognized” “BIRKIN” trademark and Birkin bag trade dress. They claim that Rothschild’s usage of their marks was likely to cause confusion in the minds of the purchasing public and create a false impression that Rothchild’s NFTs were authorized, sponsored, or approved by Hermès.��

Hermès claims trademark infringement, false designation of origin, and trademark dilution. They seek monetary damages, an injunction to bar the further use of Hermès’ marks, a transfer of Rothschild’s metabirkins.com domain, and delivery of all unauthorized products and advertisements.��

On December 16th, 2021, Hermès sent a cease-and-desist letter to both OpenSea and Rothschild, notifying them of the “blatant violation of intellectual property.” While OpenSea, the NFT exchange platform, removed the NFTs, Rothschild still advertises and offers his NFTs. However, Rothschild has since added disclaimers on his website, stating “We are not affiliated, associated, authorized, endorsed by, or connected with HERMÈS,” and provides a link to the official HERMÈS . Hermès notes the absence of these disclaimers from all other channels that sell MetaBirkins, creating confusion among consumers.��

Trademark Protection in the Metaverse 

Rothschild addressed the cease-and-desist letter in an Instagram , claiming that in creating MetaBirkin NFTs, he “re-interpreted the form, materiality, and name of a known cultural touchpoint” and that selling his MetaBirkin NFTs was “akin to selling them as physical art prints.”

Hermès, however, states that MetaBirkin NFTs’ success undoubtedly arises from the “confusing and dilutive use” of their trademark. MetaBirkin NFTs were even described as a “tribute to Hermès’ most famous handbag, the Birkin,” in its initial offering on OpenSea. Citing one commentator, Hermès claimed that but for the NFT being called a Birkin, Rothschild’s NFTs would not get any attention.

Is this Fair Use?

Several barriers may preclude Rothschild from successfully claiming fair use. His extensive use of Hermès’s trademarks — i.e., the name “MetaBirkin,” the metabirkins.com domain, the hashtags #MetaBirkins and #NotYourMothersBirkin — is likely commercial in nature, which conflicts with fair use claims.

Fair use also does not provide protection when the alleged infringer used the mark as a trademark of their own, which Rothschild has done by repeatedly complaining of ‘counterfeited’ or ‘fake’ MetaBirkins on NFT exchange platforms.��

In support of Hermès’ contention of commercial use, the 100 MetaBirkin NFTs for $42,000 initially, and have garnered re-sales of $1.2 million, of which, Rothschild is entitled to 7.5%. Rothschild has already earned over $120,000.��

Future of Fashion in the Metaverse

While trademark law has well been established for luxury fashion, the metaverse complicates existing law. This legal battle has raised the novel issue of whether Hermès’ trademarks extend to digital content. Other big-name brands are testing the waters of the metaverse, such as .

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