Citation – 2023 WL 1458126.

Court - United States District Court of Southern District of New York.

Plaintiff – Hermès Int’l & Hermès Inc.

Defendant – Mason Rothschild.

Judge – JED S. Rakoff.

Fashion law, a branch considered to be one of the niche areas of law, perfectly intertwines with the scope of intellectual property rights in the landmark case of Hermes v Rothschild. This case lays down the foundation of convergence between trademarks and Non-Fungible Tokens (NFTs) and poses questions such as to what extent do trademark rights apply to the digital or the virtual world.

FACTS

Hermes, is a French luxury brand which manufactures unique ‘Birkin’ handbags among other products, which range from thousand dollars to one hundred thousand dollars. NFTs, also known as non-fungible tokens, are digital assets stored on a blockchain that allow for the transfer of ownership of physical objects or digital content. After being created, NFTs are made available for sale, trade or exchange on an NFT marketplace, with their transactions governed by "smart contracts".

The defendant, named Mason Rothschild, identifies himself as a strategist who belongs to the fashion industry. In May 2021, he digitally created a design titled ‘baby Birkin’ which depicted an artwork showing a transparent Birkin handbag containing a 40-week-old foetus in the process of gestation, which was also referred to as “tribute to Hermes most famous handbag” and was then sold for $47,000. In response to this, many users as well as magazines were perplexed and mistook the artwork to be a collaboration. On January 14, a lawsuit was filed against him by Hermes in a federal court in New York. The lawsuit alleged that he committed federal and common law trademark infringement, cybersquatting, false designation of origin, trademark dilution, and caused damage to the plaintiff's business reputation and dilution under the New York General Business Law. The plaintiff is seeking financial compensation, including the profits he made from selling the NFTs, as well as an injunction to prevent him from using their trademarks in the future.

RATIO DECIDENDI

Application of the appropriate test, i.e., the Roger’s Test/ Gruner + Jahr test will assist in discerning the other issues.

ISSUE

1. Whether the case will be governed by the Roger’s Test or the Gruner + Jahr Test?

2. Whether the act of the defendant of using the trademark of the plaintiff has led to trademark dilution?

3. Whether the act of the defendant of using the trademark has created an unfair competition under the state as well as the federal law?

4. Whether the act of the defendant of using a website domain which is very close to the trademark of the plaintiff has led to cybersquatting?

ANALYSIS

In this case the first and very important question that the court was supposed to deal with was the application of an appropriate test in order to discern other issues and give an equitable and just decision. Herein, the plaintiff claims the application of the Gruner + Jahr test whereas the defendant claims the application of Roger’s test. These two tests govern different domains of trademark infringements and hence, choosing the right test for application became imperative in this case.

[Image Sources: Shutterstock]

The Roger’s test is mainly concerned with determining that the title of an artistic work is protected under free speech when a) the title of the work has some artistic relevance to the underlying work and b) that the title is not explicitly misleading as to the source of the content of the work.

The court herein was of the opinion that the case should fall squarely within the ambit of Roger’s test as the creation of Rothschild is considered to be an ‘artistic expression’. The reasoning that the court adduced to such a decision was based on the intent or the motive of the defendant in formulating such a creation. If the motive or intent of a person is to use the trademark to one’s advantage and utilise it as a source identifier or to mislead the consumers about the origination or the association of the creation with that of the brand then there will be no application of the Roger’s test. But in this case, as per the evidence produced, the court firmly believed that the acts of the defendant did not stem out of the intent to defraud or mislead the consumers. Moreover, the defendant took extra care and precaution in highlighting the fact that he or his creation aren’t to be associated, affiliated or endorsed with Hermès or any of its subsidiary or affiliate companies. His work was an independent endeavour and not in collaboration with the brand.

Owing to the application of the Roger’s test the defendant also was able to secure his position as he was now well-protected by the exceptions of the First Amendment. The court in the light of such protection further adjudicated upon the issue of trademark dilution and cybersquatting and held that the defendant has not committed any of these offences. With respect to trademark dilution, the court held that the since the defendant is protected by the exceptions, some of trademark dilution will be tolerated as it is necessary to give some liberty in order to ensure broad opportunities in the domain of artistic expression. Moreover, the defendant’s rights to utilise the trademark in lieu of his artistic endeavour supersedes the plaintiff’s right to avoid all dilution of his trademark.

With respect to the offence of cybersquatting, the court held that the defendant cannot be booked under this offence as well. The offence of cybersquatting comes into force when there exists a malafide intent to gain or profit by embarking on a trademark infringement. In this case, as per the evidence on record it can be clearly deduced that the act of the defendant was not to cause himself any undue profit by misleading the consumers. In fact his act of taking active steps to disassociate himself and his creation from the Hermès completely, ensured the consumers that it was not the brand they might have assumed it to be. Owing to such disassociation, he could not have capitalised on the goodwill and brand value of Hermès and created wealth for himself. Hence, the court held that whatever wealth he had garnered owing to his creations were apart from the brand and the website domain he was using.

Hence, in conclusion, Hermes v Rothschild has served as a notable legal precedent with implications for fashion law, offering guidance on how similar disputes should be approached.

Author : Ananyaa Varma, in case of any query, contact us at Global Patent Filing or write back us via email at support@globalpatentfiling.com.