IP Law Daily, TRADEMARK—S.D.N.Y.: Interlocutory appeal denied in ‘MetaBirkin’ NFT infringement suit, (Oct 7, 2022)

By Patricia K. Ruiz, J.D.

The court held that the two issues presented by the creator pf the NFTs would not terminate the litigation and were more appropriate for routine appeal.

The U.S. District Court for the Southern District of New York denied a motion for interlocutory appeal by an artist who allegedly infringed on the trademark rights of Hermès International and Hermès of Paris, Inc. (Hermès, collectively), by selling non-fungible tokens (NFTs) of fur-covered Birkin bags. The court determined that the issues presented by the artist did not meet the high standard required for interlocutory appeal and were more appropriate for routine appeal (Hermès International v. Rothschild, October 5, 2022, Rakoff, J.).

Birkin NFT. Hermès is a luxury fashion company known for designing and producing the Birkin handbag, which, since its inception in 1984 has been virtually synonymous with high fashion, exclusivity, and wealth. Hermès owns trademark rights in the “Hermès” and “Birkin” marks, as well as trade dress rights in the design of the handbag. In 2011, artist Mason Rothschild designed and marketed a collection of digital images depicting faux-fur-covered Birkin handbags titled “MetaBirkins” and used NFTs to sell the images. MetaBirkins are extremely valuable commodities, and the NFTs have sold for more than a million dollars collectively. Consumers and media outlets have expressed confusion as to whether Hermès is affiliated with the line of NFTs, with many believing the NFTs to be a partnership between the two. The artist often portrayed the collection as “a tribute to [Hermès’s] Birkin.” Hermès sued the artist for trademark infringement and unfair competition under federal and New York law. The defendant moved to dismiss the claim on First Amendment grounds. The court denied the motion on May 18, 2022.

Interlocutory appeal. The artist moved to certify an interlocutory appeal of the court’s decision to deny his motion to dismiss the claims of Hermès. A district court may certify an issue for interlocutory review only if it decides that an order “involves a controlling question of law as to which there is substantial ground for difference of opinion” and, separately, “that an immediate appeal [of the issue] may materially advance the ultimate termination of the litigation.” Interlocutory appeals are designed to be rare and reserved for exceptional circumstances.

The artist identified two issues in the court’s order as appropriate for interlocutory appeal. The first was the artist’s disagreement with the determination that there were sufficient factual allegations in the Amended Complaint to survive a First Amendment challenge under the Second Circuit’s Rogers v. Grimaldi test. The artist’s second argument was that the thrust of the Supreme Court’s decision in Dastar Corp. v. Twentieth Century Fox Film Corp was to restrict the scope of the Lanham Act to the misuse of trademarks in the sale of tangible goods, whereas the goods in question in the instant suit were intangible.

Artistic relevance. The artist sought interlocutory review on the court’s determination that the amended complaint sufficiently alleged that the artist’s use of Hermès’s trademarks was not artistically relevant to the MetaBirkins. He argued that the order’s failure to find artistic relevance is legal error; however, the court applied the “artistic relevance” element of the Rogers test and found that there were sufficient factual allegations that the artist used the trademarks to associate his NFTs with the immense popularity of Birkin bags, not as an artistic statement. Questions dependent on the facts of the case are not “the type of questions that are suited for interlocutory appeal, as such questions have not yet been subject to any discovery or summary judgment motion practice. Because discovery in the instant case concluded recently and is schedule for trial, and because reversing the court on the “artistic relevance” point would not by itself terminate the litigation, the court held that review of the ruling by the appellate court on a full record would be more appropriate and that interlocutory appeal was unwarranted.

Consumer confusion. The artist also sought interlocutory review of the court’s ruling that the artist may have been explicitly misleading as to the source of his MetaBirkins, reasoning that (1) the court erred in finding sufficient allegations exist in the amended complaint that the artist’s work was explicitly misleading; and (2) the court should not have applied the Polaroid factors to assess consumer confusion, as they are only relevant where the title of one work allegedly infringes the trademark of another work (“title-vs-title” conflicts.) As to the first argument, the court applied the same reasoning it applied as to the “artistic relevance” element and found interlocutory appeal to be inappropriate. As to the second, the court determined that the question of whether to restrict the scope of the Polaroid factors to title-vs-title conflicts was not controlling and would not terminate the action on reversal. Additionally, the artist failed to show substantial ground for difference of opinion on the applicability of the Polariod Corp. v. Polarad Elecs. Corp. factors, citing little to no caselaw that shows significant disagreements among courts on the correct application of the factors. While the issue may be appropriate for appeal following entry of a final judgment, it was not appropriate for interlocutory appeal.

Tangible versus intangible goods. Likewise, the court found that the artist cannot show that the courts view the Lanham Act as restricted to claims against the misuse of trademarks involving tangible goods after the Dastar decision. However, the court found that Dastar said nothing about the general applicability of the Lanham Act to intangible goods but sought to underscore the subtle distinction between copyright (with its focus on encouraging the production of creative content) and trademark (aimed at preventing confusing regarding consumer goods). Other decisions cited by artists followed the same argument. The court further held that the Dastar issue was not a particularly difficult one constituting exceptional circumstances for interlocutory appeal and was a task that the Second Circuit could handle on routine appeal.

The case is No. 1:22-cv-00384-JSR.

Attorneys: Deborah A. Wilcox (Baker & Hostetler LLP) for Hermès International S.A. and Hermès of Paris, Inc. Christopher Jon Sprigman (Lex Lumina PLLC) for Mason Rothschild.

Companies: Hermès International S.A.; Hermès of Paris, Inc.

Cases: Trademark TechnologyInternet NewYorkNews