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Two years before Lawdit and the Trademarkroom came in to existence, the landmark case of BT v. One In A Million [1999] FSR 1 served as the primary authority in English law on the subject of whether domain name registration may constitute passing off.
The amazing Jonathan sumption KC now Lord Sumption ( he of the 100 years war The Hundred Years War Series by Jonathan Sumption (goodreads.com)) and the Iraq war enquiry where he represented Prime Minister Blair), rendered his decision in the case involving several defendants who had registered numerous domain names that were either associated with or included well-known businesses, including Virgin, BT, and Marks and Spencer. Although it was argued that there was no infringement on trademarks, the fact that all of these brands had registered rights made a clear statement that they would always take precedence over employing a sign in the same way but in a different media. That time it was domains today its the metaverse.
Consequently, a New York court determined that a set of digital images of handbags covered in fur attached to an NFT called “MetaBirkins” was likely to confuse consumers with the high-end fashion brand, Hermès Birkin bag (Hermès International v. Mason Rothschild, Case 1:22-cv-00384-JSR), in one of the first rulings to apply trade mark infringement analysis to non-fungible tokens (NFTs). The ruling made by the Court of Rome in Juventus Football Club s.p.a., v. Blockeras s.r.l. a few months prior (Docket No. 32072/2022, Court of Rome IP Chamber, 20/07/2022) bears European parallels.
Hermès claimed that “MetaBirkins” infringed the “Birkin” trade mark owned by Hermès.
The “MetaBirkin” brands infringed its trade dress rights in the design of the Birkin handbag.
Unfair competition and cyber-squatting were evident. The Court granted Hermès’s requests in full on February 8, 2023, and granted the brand $130,000 in damages. An appeal of the verdict is still possible.
The Court applied the Rogers v. Grimaldi test (875 F.2d 922, 1000 (2d. Cir. 1989)) to the infringement question. It takes a speech-protective stance when assessing claims of trade mark infringement in “artistic expression” works. As long as the accused person’s work is neither deceptive or lacking in artistic merit, they cannot be held accountable for trademark infringement. But if the alleged infringement purposefully misrepresents the work’s source or content, it is not protected.
Hermès effectively contended that the NFTs misled buyers about the product’s origin by giving them the impression that Rothschild’s work was connected to or approved by Hermès. Regarding this, Hermès provided proof of the @METABIRKINS Instagram and Twitter handles, along with promotional phrases like “#NotYourMothersBirkin,” which purportedly demonstrated genuine misunderstanding regarding Hermès’ involvement in Rothschild’s venture.
Rothschild’s claimed that the term “MetaBirkins” refers to the NFTs rather than the pictures of the bags that are being sold and are connected to them via a smart contract—which determines which digital files are attached to each of the NFTs—make this case even more intriguing. Thus, ownership of the term “MetaBirkin” would not necessarily be transferred when selling the NFT. The Court rejected this argument, though. It was decided, using the consumer confusion test, that the name “MetaBirkins” applies to both the NFT and the corresponding digital image. From the standpoint of the customers, there was no difference at all between the NFTs that Rothschild was offering and the background pictures of the “MetaBirkins” bags that were connected to them.
How does this ruling affect the commercial world?
Despite the fact that this decision is not legally binding in Europe, it is noteworthy because it suggests that trade mark rights that are currently in place for physical goods may be enforced against their unauthorised use in virtual environments, even if the owner of the mark is not currently involved in the metaverse or the market for NFTs certified digital assets. Additionally, it suggests that in the USA, digital images linked to NFTs that utilise an already-registered trademark for “further plausibly expressive purposes” may qualify as artistic expression. Although this can weaken further infringement claims, the ruling of the New York Court makes it clear that consumers cannot use brand owners’ goodwill for their own gain. Courts may be required to weigh the basic rights involved when evaluating trade mark infringements connected to new forms of artistic expression and NFTs.
Lastly, it implies that even though it may not seem important to consumers, the difference between who owns the digital photographs and who owns the ownership rights to the NFT may indicate who a trade mark owner can sue to prevent infringement.
Juve? How does the Juve case apply?
In the Juventus case, the Court of Rome in Europe examined comparable problems. The digital cards featuring Christian Vieri, a well-known Italian player, wearing a Juventus jersey were sold by Blockeras as NFTs. Juventus successfully argued that these cards violated its word marks for “JUVE” and “JUVENTUS,” as well as the figurative mark that consists of the black-and-white striped jersey with two stars on the chest. These cards are registered in Class 9 of the Nice Classification for downloadable electronic publications.
Unlike the Hermès case, Juventus demonstrated that it was in the same industry as Blockeras and held trade mark rights for non-physical items in Class 9. especially in the area of cryptocurrency games that make use of NFTs and blockchain technology, in addition to conducting extensive merchandising operations via online platforms and specialised retail outlets. Notably, the protection of NFTs is now included in Class 9 of the Nice Classification, after the Juventus ruling.
The Juventus ruling affirms that, in cases where the owner has been involved in the same market as the claimed infringer, non-franchised trademarks (NFTs) that replicate existing trade mark rights for digital goods without permission from the rights owner may be considered unfair competition and trade mark infringement. Unlike the US, the EU has not yet reached a decision on whether the owner of a trade mark registered only for physical goods may bring an infringement lawsuit for unauthorised uses of these rights in virtual environments, even if the other party is not involved in the same industry as the alleged infringer.
The quantity of newly issued NFTs raises the possibility of trade mark infringement on both sides of the Atlantic. Both the Juventus and the Hermès rulings deal with well-known trademarks, which are typically simpler to legally enforce than less well-known trademarks. The Juventus ruling emphasises the importance of allowing owners of trademarks for physical goods to extend their protection to similarly named virtual goods in downloadable format (whether or not they are verified by non-fungible tokens) under Class 9 of the Nice Classification.
Conclusion!
The Trade Mark is King! Don’t Leave Home without one!
