Katie and Steve talk to attorney Emily Poler, founder of Poler Legal, about the recent lawsuit between the iconic French fashion house Hermès and an NFT creator, Mason Rothschild, over Rothschild’s “MetaBirkin” NFTs. Hermès claimed that Rothschild infringed Hermès’ trademark in the name “Birkin.” Hermès prevailed on this claim (and others) in a jury trial earlier this year. Katie, Steve, and Emily discuss the contours of this lawsuit and the reach of trademark law to police fashion brands, copyright’s limitations, and trademark law’s applicability to artistic expression, especially in the context of NFTs.
Resources
https://news.bloomberglaw.com/ip-law/hermes-gets-win-over-metabirkins-in-first-nft-trademark-trial
https://www.nytimes.com/2023/02/08/arts/hermes-metabirkins-lawsuit-verdict.html
https://news.bloomberglaw.com/ip-law/metabirkin-nft-artist-seeks-new-judgment-after-loss-to-hermes
2022.03.02 Amended Complaint [Dkt. 24]
2023.02.02 Decision and Order [Dkt. 140]
2023.02.07 The Court’s Instructions of Law to the Jury [Dkt. 143]
2023.03.14 Rothschild Brief ISO Motion for Judgment or New Trial [Dkt. 173]
2023.03.28 Hermes Brief IOT Motion for Judgment or New Trial [Dkt. 183]
Episode Transcription
Steve Schindler: Hi, I’m Steve Schindler.
Katie Wilson-Milne: I’m Katie Wilson-Milne.
Steve Schindler: Welcome to the Art Law Podcast, a monthly podcast exploring the places where art intersects with and interferes with the law.
Katie Wilson-Milne: The Art Law Podcast is sponsored by the law firm of Schindler Cohen & Hochman LLP, a premier litigation and art law boutique in New York City. Alright. Hi, Steve.
Steve Schindler: Hi, Katie. How are you?
Katie Wilson-Milne: I’m good. We are back to talk about NFTs again. Can you believe that?
Steve Schindler: Our favorite topic.
Katie Wilson-Milne: Our love-hate topic.
Steve Schindler: Well, after we talked with Amy Whitaker last time about some very broad potential economic and structural and societal issues presented by NFTs, today we’re going to be discussing some important intellectual property issues surrounding NFTs that were underscored by the decision and jury verdict reached on February 8th, in a case brought by the fashion house Hermès against a person who goes by the name of Mason Rothschild.
Katie Wilson-Milne: That’s a very fancy sounding name, too.
Steve Schindler: Yeah. Well, of course it’s not his real name, but we’ll get into that and this is, of course, the case about MetaBirkins. And to help us unravel this case, we are joined today by Emily Poler. Emily is the founding partner of Poler Legal. After graduating from NYU Law School, Emily began her career at the preeminent Manhattan law firm of Cahill Gordon & Reindel.
She then made a brilliant career move and joined the then-ascending litigation and art law boutique of Schindler Cohen & Hochman, where I was privileged to practice with her for almost 12 years. At Poler Legal, Emily represents a broad range of clients, including software-as-a-service providers, direct-to-consumer brands, trademark licensers, art collectors, galleries, and more. Emily has been closely following and writing about the MetaBirkin case, so we are thrilled to have her in the studio to talk about it. Welcome to the podcast, Emily.
Emily Poler: Thanks, Steve. Thanks, Katie.
Katie Wilson-Milne: Yeah, it’s so nice to see you, and even when we worked together here you were our resident trademark expert, so it makes total sense you’re here to guide us through this. Alright, let’s start, Emily. What is a MetaBirkin?
Emily Poler: So in about November of 2021, Mason Rothschild, the gentleman who goes by that name, released a collection of about a 100 NFTs, and each NFT was accompanied by an image of a faux fur-covered bag that resembled a Birkin bag. And for those not in the know, a Birkin bag is an extremely expensive, very rare bag that is hand-produced by Hermès and has been, I think, since maybe the early 80s, and it’s named after the French actress Jane Birkin, who I guess, lore has it, wanted an Hermès bag that was big enough to carry her kids’ diapers and milk bottles.
Katie Wilson-Milne: It’s the least child-friendly-seeming handbag you could have.
Emily Poler: Yeah, I personally, after spending five figures on a bag, would not be sticking diapers in it, personally, but that’s just me.
Katie Wilson-Milne: And who is Mason Rothschilds?
Emily Poler: He is a “marketer,” and he’s designed some clothing and he’s sort of a multifaceted— a artist, marketer. It’s sort of hard to pin down exactly what the right word for—
Katie Wilson-Milne: Content producer maybe?
Emily Poler: Content— ? That would do. Yeah, that would work.
Katie Wilson-Milne: Yeah. So he content-produces these MetaBirkins— you said are sort of NFTs linked to images of objects that resemble the Hermès Birkin bag?
Emily Poler: Correct. I do want to note that the actual Birkin bags are, one, they’re physical handbags that you can carry around, and two, they tend to be made out of anything from leather to very luxurious like ostrich skins. Whereas the MetaBirkins are covered in sort of almost garish fake fur. They look sort of almost like a Muppet was put on a handbag.
Katie Wilson-Milne: Yeah, and of course we’ll link to some of these images in the show notes so people can see, but it’s basically a bag in a white frame covered in fur.
Emily Poler: Correct. And one of the things that did come up, and maybe this is just foreshadowing, because maybe we’ll come to talk about this later— one of the things that was raised by Hermès was the fact that, at least initially, there was sort of this image that was draped with like a white cloth, and that was pre the minting of the MetaBirkins and then when they were minted, that preview image was replaced with the actual MetaBirkins.
Katie Wilson-Milne: MetaBirkin image.
Steve Schindler: So if I had been interested in purchasing a MetaBirkin, would I not know what it would look like until I actually purchased the NFT and the cloth was sort of figuratively removed?
Emily Poler: Correct.
Steve Schindler: Okay.
Emily Poler: That’s my understanding.
Katie Wilson-Milne: What brilliant marketing! So he made people kind of buy in—get on a waitlist basically until the NFTs were actually minted.
Emily Poler: Correct. And now sitting here in early 2023, I mean, to sort of think back to where we were in late 2021— the hype around NFTs and people sort of wanting to get in on things ahead and sort of catch the next wave. I think, you sort of have to think back to that moment in time.
Katie Wilson-Milne: I didn’t understand it then and I still don’t, so that’s not helpful for me, but for other people, it may be. Okay, so give us a sense of the value of these NFTs. What are we talking about here?
Emily Poler: Oh gosh, now I’m blanking, but I think they were in the range of about a $1000.
Katie Wilson-Milne: And then they traded up, right? I remember reading—
Emily Poler: Yeah, they did trade up and then Hermès sued and then— maybe I’m getting ahead of myself— and then the value decreased. And I believe that OpenSea pulled them off of the market. OpenSea is a market for NFTs, and I think just prior to the lawsuit being filed, OpenSea pulled the MetaBirkins.
Katie Wilson-Milne: Yeah. I think I read somewhere— but no one get angry at me if I’m getting this wrong, we will check and link to some resources— but I think I read that they were re-trading into the tens of thousands of dollars at some point. So it’s not nothing.
Emily Poler: Yeah. I think in the low five-figures range.
Katie Wilson-Milne: Yeah. So Mason, as we’ll call him, or Mason? He—
Steve Schindler: I think he probably prefers “Maison.”
Emily Poler: But it’s missing the “i,” if it were Maison in French.
Katie Wilson-Milne: It is, it is.
Steve Schindler: Ah, okay.
Katie Wilson-Milne: Okay. Mr. Rothschild has this idea for these NFTs, he mints them, but he can’t do that on his own, right? He has to use partners to do that and to sell them. So who are the different players here getting these to the market?
Emily Poler: Correct. So as I understand it, there’s a person who helped him, who’s sort of a tech person. Let’s see.
Steve Schindler: I think it was interesting. He was—
Emily Poler: —Bergen is his name.
Steve Schindler: — characterized differently by the two different parties. I mean, it has some legal relevance that he was, basically from Mr. Rothschild’s point of view, he was an assistant, right? And from Hermès’ point of view, he was the artist.
Emily Poler: Right. So he was the person who provided technical support and from, as Steve just said, from Hermès view—
Katie Wilson-Milne: He did all the design.
Emily Poler: —he did all of the design and sort of input whatever needed to be input into the computer to make these images happen.
Katie Wilson-Milne: So they make these images, but they don’t mint them themselves. They use a provider to actually mint them, and then how do they sell them? That’s where OpenSea—
Emily Poler: That’s where OpenSea comes in. And OpenSea is a marketplace for the sale of NFTs— for reselling as well as initially minted.
Steve Schindler: As a technical matter, if OpenSea then pulls the MetaBirkin so to speak, can they still be sold?
Emily Poler: They can still be sold, just not on OpenSea. You can sell them somewhere else. It’s like, to sort of bring this back to art, it’s if Gallery A is has works by a particular photographer up and that gallery decides they no longer want to deal with the artist because of Me Too, or whatever, then that artist could go to another gallery.
Steve Schindler: Right. But assuming that another gallery is willing to represent them?
Emily Poler: Assuming— again, sort of continuing this idea, assuming that second or third or fourth gallery isn’t like, oh dude, you’re toxic I don’t want to work with you.
Katie Wilson-Milne: Right. I think in the world of these NFT marketplaces everyone is eager to make money, and I’m not sure there’s a ton of discernment.
Emily Poler: And I’m not sure that you’re dealing with a world of people who are sort of super concerned about following the rules, or aware even or interested in checking them. I mean, this is not necessarily an industry at this point that has a council or staff where people are going and saying, hey can I do this? Or what do you think of this before they’re putting it out there.
Katie Wilson-Milne: Yeah. And to add complication to that— totally true— this area of law art-meets-trademark-meets-the First Amendment is not crystal clear. So it’s not like there’s a rule that everyone understands, that there’s a black and white line, which we’ll clearly talk about.
Steve Schindler: Clearly.
Emily Poler: Correct. Steve, who was the judge who said, “I know it when I see it,” talking about pornography?
Steve Schindler: Judge Potter Stewart.
Emily Poler: Yeah. I think we’re a little bit in that realm here.
Katie Wilson-Milne: Yeah, and not everyone sees it. Alright, so Hermès doesn’t like this project, and that’s why we’re here talking about this.
Emily Poler: Correct.
Katie Wilson-Milne: And so what happens? Hermès obviously finds out this is going on.
Emily Poler: Hermès finds it out this is going on, it sends a cease and desist letter to Rothschild and says, “knock it off, stop selling these,” and Rothschild says, “no,” and Hermès sues Rothschild.
Katie Wilson-Milne: In pretty quick succession actually.
Emily Poler: Pretty quick succession. I want to say that the NFTs were minted maybe in mid to late November of 2021 and the suit was probably filed in either very late 2021 or very early 2022.
Katie Wilson-Milne: Yeah. It was like a month or two.
Emily Poler: Yeah. The suit was filed in early 2022, and this is a sort of a tribute to the federal courts that this has gone as quickly as it has.
Katie Wilson-Milne: Shocking actually.
Steve Schindler: I think it’s a tribute to Judge Rakoff to some extent, who is known for proceeding efficiently, and it really is amazing that you have a jury trial and two dispositive motions within a year, practically a little more than a year.
Emily Poler: 14 months?
Steve Schindler: Yeah.
Katie Wilson-Milne: I guess before we dive into the specific claims, which we want to spend some time on, you know, it’s worth talking a little more about what Hermès said they were concerned about, and how that looked to an average person. So first of all, they send a cease and desist, Rothchild does not cease and desist, but a few things happen. He puts up a disclaimer, right?
Emily Poler: Correct.
Katie Wilson-Milne: Says immediately, I have nothing to do with Hermès, they haven’t blessed this, you shouldn’t think that. And OpenSeas stops carrying or selling those NFTs, right?
Emily Poler: That’s right.
Katie Wilson-Milne: And he continues to sell on a couple of other platforms.
Emily Poler: Yeah. I don’t remember the names of those platforms, but yeah.
Katie Wilson-Milne: But platforms nonetheless, and they keep trading these NFTs. But Hermès is not— that’s not enough. They feel like there’s some infringement on their ability to market this brand, to make money off this brand, to control this brand. And it’s sort of interesting that a powerhouse, an old French very fancy company like Hermès is threatened by this NFT marketer, who just throws up some pictures of fuzzy handbags.
Emily Poler: Yeah. I mean I do sort of wonder whether Hermès gave this fire a lot more oxygen that it could have—
Katie Wilson-Milne: Right. Than really threatened it.
Emily Poler: Yeah. I think somewhere when this case first started, I was reading something about the history of Warhol and Campbell’s Soup and I guess at some point, I don’t know whether it’s true or not, but Campbell’s made the decision not to sue. And there was internal discussion at Campbell’s about whether to sue Andy Warhol, and they decided not to.
Steve Schindler: It was a brilliant decision.
Emily Poler: Yeah. And it was actually—
Katie Wilson-Milne: Very good for Campbell’s.
Emily Poler: Yeah. I mean, I think it sort of brought you know, a somewhat stodgy brand and gave it a little bit of hip-ness that didn’t hurt the brand. And on the flip side, as a trademark owner— and we can get into this more— you know, Hermès does have to police the use of its brand and if it doesn’t, faces the possibility of losing control of the trademark, which no trademark owner wants.
Katie Wilson-Milne: Yeah. And it is critical to Hermès business, certainly, even if this particular NFT, we might not think it was so confusing. Alright. So what’s the dispute about?
Emily Poler: So there’s a couple of different claims, but really the biggest one, and I think the one that that most people have focused on is Hermès claims that by using the term “MetaBirkin,” Mason Rothschild has infringed on Hermès’ trademark on the word “Birkin.”
Katie Wilson-Milne: I did read this in some of the papers. I mean, I guess the claims technically are about the mark of the name, but also the mark of the design and the trade dress, but they do seem to focus more on the name.
Emily Poler: Correct. And my understanding is that Hermès did not sue on the trade dress. They sued on the mark, on the name “Birkin” rather than the design. I don’t entirely remember the reason for that, but there’s sort of two things that come to mind. One is that these bags are fur and I mean, yes, they have the same shape, but physically they appear differently than the physical Birkins, one. And two, they’re digital images and not physical bags. And I believe that Hermès’ trademark, their design mark was for the physical item, and not for the NFT and that in fact they hadn’t gotten round to filing a new application to cover Birkins in the Metaverse.
Katie Wilson-Milne: Yeah. Although, I guess they still could have brought a trademark claim based on the—
Emily Poler: Common law.
Katie Wilson-Milne: Yeah. On the image, and I thought they originally did do that and it just sort of got lost by the wayside. No?
Emily Poler: There was some discussion of that in the initial pleadings and then sort of as time went on, Hermès focused on the name.
Steve Schindler: Right. And they also brought something called a cybersquatting claim. And just— could you explain what that is?
Emily Poler: Sure, I mean like I said, there’s a couple different threads. Most of the attention has been focused on the trademark infringement. One of the other claims that Hermès brought is a claim for cybersquatting. There’s a federal law that says you can’t take somebody else’s URL and use it in bad faith. So if Schindler Cohen & Hochman, for example has a website, which they do, I can’t go out and take that and sort of sell my own stuff using that URL, is the essence of that claim.
Katie Wilson-Milne: So the trademark— maybe let’s take a step back. We’ve talked a lot about copyright on this podcast, because we talk about fine art. We’ve talked less about trademark. Can you just give us a very easy to understand explanation of what trademarks are? How they’re different than copyright, and if you want, I mean, one thing I’m curious about is why there were no copyright issues in this case. Why this is really about trademark, even though it’s intersecting with so-called art?
Emily Poler: It’s actually a good question, because I think that’s gotten lost in the sauce and a lot of the discussion about this case. So trademarks at a really basic level tell consumers where a product comes from. So if you see, just to use a super famous example that I think everybody, even though we’re doing this as a podcast, everybody can see in their head: a box from Tiffany. Everybody can picture that color. And when you see a box in that color with a little white ribbon on it, in that robin’s egg blue, you know that that box came from Tiffany. That is the epitome of a trademark. The Nike Swoosh is another super example. You see that swoosh and you know, that product was made by Nike. And so copyright protects a creator’s investment of time and energy in making something. Whereas a trademark has sort of two functions. One, it protects the trademark owner’s interest in the brand and sort of ability to market its products. It also protects consumer’s abilities to know where a product comes from and the source of that particular product.
Katie Wilson-Milne: Right. I think of it as like the heart of copyright is in protecting creators and incentivizing them to create, trademark’s not really concerned with creators. It’s concerned about protecting the public against confusion for the most part.
Emily Poler: That is the purpose it’s also I think, come to be increasingly over time concerned with protecting brands and their investments in making sure their trademarks are known or the extent to which their trademarks are known by the public.
Steve Schindler: Right. And that also, I mean, accounts for the fact that to some extent why a trademark owner brings a lawsuit like this. Obviously, you can say that they’re concerned with protecting consumers, et cetera, but they are clearly protecting an economic interest in their own brand.
Emily Poler: The value.
Steve Schindler: Right.
Katie Wilson-Milne: Yeah, and they could get damages that represent the economic loss. So that’s absolutely true. Although when you look at the analysis, what Hermès— unlike if they’d brought a copyright case— what they had to prove here essentially was that this was confusing to the public. So that was where the evidence sort of developed.
Emily Poler: Yeah. And two other differences between trademark and copyright law that I think might be worth noting. Unlike patents and copyright, trademarks are not mentioned in the US Constitution. And two, trademarks are generally speaking, for an unlimited period of time. They don’t sort of sunset as long as the trademark owner is vigilant in protecting their rights and enforcing the trademarks through things like cease and desist letters and filing—
Katie Wilson-Milne: And using the trademarks.
Emily Poler: —and using the trademark. I mean, use of the trademark, you will lose a trademark in a couple of different ways, but one is if you cease using it.
Katie Wilson-Milne: Right. We’ll talk about this in the First Amendment context, too. Whereas obviously there are First Amendment concerns and sort of protections in the copyright regime. We talk about fair use, there are terms, you know, there are things built into copyright, but it’s much less concerning because of the constitutional mandate of copyright. And when we have trademark, a creation of Congress, we think about the First Amendment concerns in a much different way, which this will come out in this case and why art is different. Alright, so—
Steve Schindler: So we know that a jury heard this case in late January, early February, and rendered a decision on February 8th. But before that, the judge had to do some consideration of some of the legal issues in the case. And actually, right before, I guess, the trial or at the time that the trial was beginning, Judge Rakoff handed down his summary judgment decision. And maybe we should start there and talk about what the judge did, and then we can go and talk about the trial.
Katie Wilson-Milne: What he did during the trial.
Emily Poler: Yeah. That was kind of interesting. I presume that—
Katie Wilson-Milne: He issued his decision way ahead of time, but not the reasoning for the decision.
Emily Poler: Right. I mean, I wasn’t in court that day. I presume that he indicated in some shape, manner, or form to the parties prior to actually issuing his written ruling, which came down while the trial was going on.
Katie Wilson-Milne: Somewhat, what the reasoning was.
Steve Schindler: Right. So both parties, and we can say this for the non-lawyers in the audience, a little bit before a case gets to trial the parties have a chance to ask the court to render a decision making the trial unnecessary and the basis of that decision called summary judgment.
Katie Wilson-Milne: Actually at two junctures, right?
Steve Schindler: Yes.
Katie Wilson-Milne: And they both happened in this case.
Steve Schindler: Right. There’s a motion to dismiss at the outset of the case which Mr. Rothschild made and lost. And then there was summary judgment, which was decided right before the case went into trial, where both parties basically said to the court, “we all know what the facts are. There are no material facts that are disputed, and you, judge, can make a decision as a matter of law and rule in favor of either the plaintiff or the defendant.”And essentially the judge basically denied both of those motions for summary judgment, indicating that there were material facts that needed to be heard and decided by a jury. But in reaching that decision and ultimately publishing a written opinion, Judge Rakoff did dive into some of these important issues and the interplay with the First Amendment and how they sort of play out in the context of a claim based on an NFT.
Katie Wilson-Milne: It’s interesting to read the summary judgment opinion so immediately before the jury decision, because Rakoff’s decision does make some legal holdings and does acknowledge that there absolutely could have been infringement, but also that this is clearly an artistic project no matter how much Hermès argued that it wasn’t and that the First Amendment analysis, which we call the Rogers test — which we’ll talk about— has to apply here. So you’re kind of seeing, I read it, you’re seeing him sort of go in this direction of it’s art we have to be really careful. I’m really feeling hesitant about, deciding an infringement case to shut this kind of expression down. And then the jury, of course, we don’t have a benefit of a long written decision from them. The jury’s said no, this is clearly trademark infringement across the board. Not a lot of damages, which we’ll also talk about. But— so it’s just interesting, it almost seems like they’re going in slightly different ways.
Steve Schindler: Opposite directions, yeah. So maybe let’s start with this question of is this art and why is that important—
Katie Wilson-Milne: To the analysis.
Steve Schindler: —to the analysis? Because there are two different tests that can be used, depending on whether this is considered to be art or whether it’s just commercial use. And maybe let’s start there, Emily.
Katie Wilson-Milne: Yeah. What’s trademark infringement and then why does it matter what type of market is or service?
Emily Poler: Sure. So at a basic level, trademark infringement happens where consumers are confused about the source of goods. They think that Tiffany Blue box, going back to that analogy came from Tiffany’s, but in fact it—
Katie Wilson-Milne: Came somewhere else.
Emily Poler: —it came from Mr. Friendly’s jewelry shop.
Steve Schindler: Just let me stop you for one second, because if you are a plaintiff trying to prove trademark infringement and you have to prove that consumers were confused, how do you do that?
Emily Poler: You usually do it through surveys. So there are, in fact, experts out there in the world. There’s a couple of different ways. I mean, if the issue sort of goes anywhere, if it gets sort of beyond the initial stage, you usually use surveys of consumers. Those are supposed to really be actual people who are in the market for the good that is at issue. So here it would’ve been people who are presumably out potentially buying an Hermès bag and there’s—
Steve Schindler: It’s a very small market relatively speaking.
Emily Poler: It’s a pretty small market.
Katie Wilson-Milne: You can survey all of them, actually.
Emily Poler: And I think there’s some interesting discussion about that in this case that we can talk about later. There’s also sort of a presumption there that the more expensive a good is the more careful consumers are in purchasing that, and the less likely they are to be confused by somewhat similar or close trademark or potential—
Katie Wilson-Milne: How discerning are the— ?
Emily Poler: Yeah. So you’re going to look for a different level of consumer confusion when you’re talking about a pack of gum versus a $10,000 handbag.
Katie Wilson-Milne: Right. But so this sounds like it’s a very discovery-heavy fact intensive inquiry, not suitable to a motion to dismiss typically.
Emily Poler: Correct. There are times where, either because of First Amendment concerns or because it’s just so clear that there was no consumer confusion or the plaintiff didn’t allege really any consumer confusion, that a case here could get thrown out at the motion to dismiss stage. Right.
Katie Wilson-Milne: Or it’s not actually a trademark.
Emily Poler: Or it’s not actually a trademark. Or the trademark doesn’t actually cover the use that somebody is complaining about.
Katie Wilson-Milne: Alright, so we get to this sort of trademark infringement level where there’s a similar-looking mark, there’s consumer confusion about the source identification, but then we branch into these two different analyses, and clearly Hermès anticipates this in its complaint, its very long and detailed complaint—
Emily Poler: Yes.
Katie Wilson-Milne: —because it goes to great lengths to explain why this is confusing: listing public examples of actual confusion, magazine articles, public statements, third parties—
Emily Poler: Instagram.
Katie Wilson-Milne: —Instagram that says, “look Hermès is getting into NFTs. Isn’t this great?” Well-known magazines that Hermès had to correct.
Emily Poler: Yeah. I believe, was it Vogue or Elle?
Katie Wilson-Milne: Vogue, Elle.
Steve Schindler: Elle, I think.
Emily Poler: Yeah. There was some confusion in trade publications in—
Katie Wilson-Milne: So not minor.
Emily Poler: Yeah.
Katie Wilson-Milne: That Hermès points to, to say, “Actually, there was confusion.” And then they also go to great lengths to plead that Rothschild is a marketer and business person only concerned with profits, basically that he’s selling widgets and nothing more, to make money. And is a masterful marketer, but not an artist.
Emily Poler: Correct, yeah. I think it was in the amended complaint and in various, maybe in the opposition to the motion to dismiss, they make a huge deal out of saying this is just a guy who’s into marketing.
Katie Wilson-Milne: And cares about making money.
Steve Schindler: Which the judge rightly pointed out, is irrelevant. Because artists are entitled to make money.
Emily Poler: Right.
Steve Schindler: It’s not—
Emily Poler: I mean, and a documentary film has huge First Amendment protections. And certainly, Michael Moore is happy to make money.
Katie Wilson-Milne: So why do they anticipate that? Why do they go to great lengths to say this guy’s not an artist? This stuff isn’t art. We know why, that there’s substantial consumer confusion here already.
Emily Poler: So they go— because they want this case to be decided solely on the basis of consumer confusion. They don’t want the court weighing and bringing in First Amendment concerns into any kind of analysis about, of their claims against Mason Rothschild.
Katie Wilson-Milne: And why does that change things? Like it sounds like there’s a two-tier analysis here, and if you’re a brand, you want to be on the non-First Amendment track.
Emily Poler: Yeah. Because it’s fewer hoops to hop through. It’s a lower standard. We can talk, I think, about what standard actually got applied here. But basically there’s— the court here sort of sees this as like a fork in the road where you either go to Gruner + Jahr, which is sort of straight up were consumers confused? Or do you have to first look at Rogers v. Grimaldi and determine whether you even get to the point of looking at consumer confusion.
Katie Wilson-Milne: Because if it’s artistic expression, trademark law doesn’t apply unless there’s some much more extreme behavior going on.
Emily Poler: Correct.
Katie Wilson-Milne: And we don’t need that extreme behavior if it’s not artistic expression.
Emily Poler: Correct.
Katie Wilson-Milne: Because we’ve decided as a policy matter now in the law that for commercial activity, the First Amendment doesn’t come into play. That’s not speech implicated by the First Amendment.
Emily Poler: Purely commercial. Speech that does no more than propose a transaction, is purely commercial speech, doesn’t get First Amendment protection.
Katie Wilson-Milne: Yeah. I think if our listeners feel like that is a fuzzy line, I feel that as well, right. I mean, advertising, marketing, the overlap between commercial activity and what is artistic expression is not at all clear.
Steve Schindler: Yeah, no. It’s difficult. But I think going back to what you said earlier before, Emily, the fact that these MetaBirkins seem to be taking a slightly ironic, making fun of perhaps, approach in the materials, the sort of gauche materials that are being simulated digitally seems to suggest a kind of parody-like approach.
Emily Poler: Absolutely. Or a little bit of a poke to an establishment.
Steve Schindler: Exactly. Which is—
Emily Poler: A thumb in the eye, or whatever you want to call it.
Steve Schindler: — the whole— one of the things that underlies the concept of fair use and copyright.
Katie Wilson-Milne: Right, and it is the way we protect the First Amendment right.
Emily Poler: Yeah. I mean there’s certainly parody going on. At least I see parody. I think maybe the jury didn’t. I see parody. I certainly see a lot of commentary about— we haven’t really talked about it, but one of the points I think that Mason Rothschild makes is he is, at least in his telling, commenting on people’s willingness to plunk down a lot of money for this thing that doesn’t have—
Katie Wilson-Milne: Something silly.
Emily Poler: Yeah. I mean, it has that value, because people think it has that value. And it has that demand, because people demand it. You know? It doesn’t clear the snow out of your driveway.
Katie Wilson-Milne: I guess we should say, because this raises so many of the issues we talk about in copyright law, it’s not the same that things like parody or different forms of artistic or social commentary or cultural commentary provide a defense to trademark infringement. But there’s a way in which trademark law developed, as we talked about, where the analysis gets stricter if we’re talking about the same kinds of things that would get you into a fair use analysis in the copyright realm.
Emily Poler: Exactly. I mean, the courts have sort of given room to creators to use brands in a couple of different ways and said, in these particular cases trademark— we’re going to say that trademark law doesn’t apply, or we will not find a later user to be liable.
Katie Wilson-Milne: Right. So the court, on summary judgment says, this is artistic expression, at least a little bit. And even if it’s just a little bit artistic expression, we get into the Rogers test, which is a much stricter First Amendment protective test. Even though Hermès has argued since the beginning that there’s nothing artsy about this, the judge doesn’t buy that.
Emily Poler: Right.
Katie Wilson-Milne: So he decides summary judgment on the Rogers test. But the Rogers test, which maybe Emily you should describe— and we can talk about actually the Rogers case itself and how it sort of developed this test— it still allows for liability.
Emily Poler: Correct. So just to go back to, I mean I actually love the Rogers, because it’s a kind of fun case.
Katie Wilson-Milne: Ginger.
Emily Poler: Yeah, Ginger. Yeah, Ginger Rogers. So I think it was in the late 80s. I think Rogers was decided in 1989, I want to say. So a case is brought by Ginger Rogers against a company that produced and released a film called Fred and Ginger. And the film, I believe, is directed by Fellini?
Steve Schindler: Yeah.
Katie Wilson-Milne: Yes.
Emily Poler: And it involves two fictional performers who go by the stage names of Ginger and Fred. The film as a whole, sort of contrasts the banality of the world in which this sort of post-World War II world with the sort of elegance of Fred Astaire and Ginger Rogers. And it’s sort of meant to be a comment on that. Anyway, Ginger Rogers sued the producers of the film saying they were trading on her name and suggesting that she had somehow endorsed the film. And the court created this analysis, said there’s a couple of things we’re going to look at to see in the case of a name that involves a trademark, if trademark infringement exists.
And one is whether the name has any artistic relevance to the newly created work. So in the Rogers case, the movie, and the other thing we’re going to look at is to see whether it’s explicitly misleading.
Katie Wilson-Milne: Or as the court in the MetaBirkins case described it, intentionally misleading.
Emily Poler: Intentionally misleading.
Katie Wilson-Milne: Which is a little easier to understand. Okay, so if there’s any relationship between the use of the mark and the artistic expression, First Amendment protections come into play.
Emily Poler: Correct.
Katie Wilson-Milne: And then we would look at even, so was the alleged infringer doing it to intentionally mislead consumers?
Emily Poler: Correct.
Katie Wilson-Milne: Okay. So it’s a harder test.
Steve Schindler: Right. And that in the same way that we see it, the fair use defense developing, if you want to poke fun at a Birkin bag, you have to use some reference to the Birkin bag, otherwise you can’t express that thought.
Emily Poler: Right. I mean— and you have to have an intent. And I think it’s sort of an interesting question as to whose intent and how you’re sort of viewing it. From whose standpoint.
Steve Schindler: Right. And it sort of raises an interesting question about Mr. Rothschild and the way he presents himself and whether or not if in this particular case he had been a little bit more explicit about being an artist.
Katie Wilson-Milne: Yeah. If he just said, “I’m an artist, here’s my art collection,” would that have mooted the whole case?
Emily Poler: I don’t think it would’ve mooted the whole case. I do think that— and certainly Hermès made a lot of hay out of it— he brings a certain baggage to it. He does have a background in marketing. And I think that it’s entirely possible— and also I think his explanation for the project evolved a little bit over time. And he probably could have, with good legal counsel or somebody, made it a little easier on himself to set up a record. That this was, in fact, art. I personally think it’s art.
Steve Schindler: Yeah. I agree, I think.
Emily Poler: Yeah.
Katie Wilson-Milne: Well, and that’s also maybe why Hermès, again, didn’t bring copyright claims and they didn’t focus on the image, right. They were focused on the name, and I think that’s because they understood that in a fair use analysis in the you know, very creator-protective realm of copyright, the use of an image, altered image, commenting on an image feels much more like art than the use of a name.
Emily Poler: Yeah.
Katie Wilson-Milne: And so I think that was a smart decision and that the case is harder with the use of the name, you know, in all caps, rather than just looking at the picture, which feels like commentary or some kind of expression.
Emily Poler: And it’s not an exact— I mean, even if you take a picture of an actual Birkin bag and you hold it up to a MetaBirkin, they’re not similar. I mean, if you’re talking about the copyright realm you look at these two things and go, oh no, they’re different.
Steve Schindler: Right. Substantial similarity maybe not even there.
Katie Wilson-Milne: Right. It’s different. And also there are other complicating facts. We don’t want to make it seem like the jury— we weren’t at the trial, first of all. We don’t know the basis of the jury decision. But there were plenty of facts on the record prior to trial about him doing this to try to get an Hermès partnership, that he had very commercial motives, that he was kind of baiting Hermès by using their mark. So there are facts in the record that lean towards that his use of the name not always being for artistic purposes.
Emily Poler: Right, and this sort of goes back to the point I was making, which is that I think he could have made the case a little easier for him to win by sort of being a little more proactive before launching this.
Katie Wilson-Milne: Yeah, the practice pointer here is call yourself an artist and label your store an art— like an art exhibit or an art boutique.
Steve Schindler: Yeah, yeah. Who knows what it would’ve done to the promotional value of these things, but seems like it couldn’t have hurt.
Emily Poler: Yeah. And I think also being a little more— like I said, it seemed like his story about why he was doing this evolved over time. And I think starting the project with more of a clear narrative about the commentary or the parody probably wouldn’t have hurt.
Katie Wilson-Milne: I want to also just say that part of Hermès’s argument that the jury had to buy, was that even though they don’t produce any NFTs now, that they might want to and they have the right to do that and if they did that, then this would be confusing because there’d be his NFTs out there with the Hermès logo and using the Birkin name, and then there’d be their NFTs out there, but they don’t have NFTs yet. So this is a very prospective consumer confusion argument, which of course they can make NFTs other very high end brands have gotten into the NFT market. But I just thought that was sort of interesting, that they may not ever do that, because it may not make sense for the kind of company Hermès is to mint NFTs and make that part of their business model.
Emily Poler: Yeah. I’m a lawyer and not a marketing expert by any stretch of imagination—
Katie Wilson-Milne: None of us are, yeah.
Emily Poler: —but it’s really hard for me to see how this brand that is so focused on like physical luxury goods and goods made out of like the most exclusive materials is really going to—
Katie Wilson-Milne: And handmade.
Emily Poler: And handmade, yeah. By a skilled artisans somewhere in the mountains of Italy is going to—
Steve Schindler: Right out of ostrich skin.
Emily Poler: Shark skin, or ostrich, or whatever.
Steve Schindler: But I guess I would I maybe push back a little bit on that, just because I think to me the cybersquatting claim seems a little bit more potent to me.
Emily Poler: A little more— ?
Steve Schindler: A little more potent or—
Katie Wilson-Milne: Convincing.
Steve Schindler: —convincing, because even though—yeah, I take the point about the type of company that Hermès is— but we see sort of in the art world a lot of artists trying to jump on that NFT bandwagon who you wouldn’t necessarily think of as artists who would sort of tilt toward NFTs and—
Katie Wilson-Milne: And high-end galleries.
Steve Schindler: —and high-end galleries that follow that.
Katie Wilson-Milne: Museums.
Steve Schindler: So if there was some evidence that Hermès was contemplating getting into that market that, just strikes me as more interesting than the trademark infringement and dilution. But should we talk about the jury verdict?
Katie Wilson-Milne: Yeah, I mean we don’t know a lot. We do have the court’s instructions.
Steve Schindler: Well let’s just start with the actual result and then we can maybe work backward to the instructions, because we know that you know, the jury had to indicate, and we can publish the verdict form. There were really three questions on liability. Do you find the defendant liable for trademark infringement? Second trademark dilution, which we haven’t really discussed.
Katie Wilson-Milne: But very similar.
Steve Schindler: Similar. And then cybersquatting. And all three of them, the jury found that the defendant was liable. But the one that I think is kind of intriguing, given the judge’s decision that we’re talking about, the jury then had to make a determination whether or not, having looked at the claims for infringement, dilution, and cybersquatting, whether the First Amendment protects Rothschild from liability. And they found very specifically that it does not. So in some ways, implicitly— and maybe if we look at the jury charge— the jury was saying, we don’t really consider this to be art.
Katie Wilson-Milne: Or I think what the instructions say is, Rakoff says, this is art guys, there’s at least a little bit of art here. So what you have to decide is, first, is there infringement? If you find there’s infringement, then we go to step two, which is, given that this is artsy, even if not full-on art— if it was a little artsy, did Rothschild try to intentionally mislead consumers? I think that’s what the analysis is, and they must have found that he intentionally tried to mislead.
Emily Poler: Yeah, I agree. I mean, I think that’s the only real way that a jury reaches this—
Katie Wilson-Milne: Because Rakoff didn’t really allow them to say it wasn’t art, at least that’s what I know.
Emily Poler: Correct. No. I mean, the jury instructions I think presumed that there was some artistic expression. I don’t think that Rakoff gave them a whole lot of guidance about what they were supposed to be looking for or sort of the degree of intentionality that was required. It just said sort of, hey if it’s intentional or explicit, then no First Amendment protection. And I’m not sure that, that squares with either Rogers or the Twin Peaks case, which is another case that sort of came after Rogers that sort of talks about balancing the protections for brands of the Lanham Act of the trademark law and First Amendment protections.
Katie Wilson-Milne: Tell us the gap. What—
Emily Poler: Well, I mean, all of the case law sort of says there has to be sort of a heightened standard where there’s some First Amendment protections, but it doesn’t really say what that heightened standard is. And certainly, I don’t read Rakoff ‘s instructions or the court’s instructions to the jury as giving any guidance as to what that heightened standard is.
Katie Wilson-Milne: Except that he uses the word “intentional.”
Emily Poler: Correct.
Katie Wilson-Milne: Which is a lot more concrete than “explicit.” Which I guess he assumes they’re synonyms, but—
Emily Poler: I mean they are, but I’m not entirely sure that they are. I mean, we’re lawyers, this is a legal matter. I mean, “intentional” means you did something on purpose. And that’s really looking at the creator’s motivation, whereas “explicitly” really goes more to how something is perceived by somebody, by a third party.
Katie Wilson-Milne: Yeah. Or how it’s expressed.
Emily Poler: Yeah.
Steve Schindler: It seems like that instruction is the thing that could potentially form the basis of an appeal by Rothschild. I guess as we’re sitting here today, he’s got a few more days to file a notice of appeal. But he hasn’t so far.
Emily Poler: I believe he’s said in press statements or Twitter or somewhere that he plans to. And I don’t know if you guys have any insight— I’d love to know I mean, we can talk about the damages. The total damages here were $133,000, I think, which is not a lot of money, given—
Katie Wilson-Milne: Much more than Hermès paid to litigate this by zeros.
Emily Poler: Yeah, and probably much more than Mason Rothschild paid to litigate this, but it’d be interesting—
Katie Wilson-Milne: Much less, yeah.
Emily Poler: Much less, sorry. I mean, an appeal is another—a lot more money. And you know I don’t know who’s sort of funding the litigation from Mason Rothschild’s— I presume there’s investors of some kind of private—
Katie Wilson-Milne: It’s actually—
Steve Schindler: And he’s made some money though. So presumably, he could probably pay for it.
Katie Wilson-Milne: —yeah, but—
Emily Poler: He’s made some money. But I mean–
Katie Wilson-Milne: It’s the damages, but it’s also the judgment of the court that prohibits future activities. So Hermès, even though they’re not getting a lot of money, they make out pretty well, even if they got no money, because he has to stop selling these, marketing them, they can’t be displayed. They got what they wanted, even if they’re not getting paid back for his profits, which is probably not what they cared about.
Emily Poler: Yeah. I don’t think you know— multi, like probably a billion-dollar brand, or whatever they are. I don’t know how much they’re worth, but it’s a lot.
Katie Wilson-Milne: I keep coming back to why Hermès was so threatened by this. I mean, that’s the really interesting question. They saw this as something they had to—
Emily Poler: A potential threat.
Katie Wilson-Milne: —do for, like, brand protection hygiene and that, I mean this is my guess, that maybe not this case or this example or right now these sort of spinoff NFTs were going to be a problem, but that they could be.
Emily Poler: Yeah, I think that’s right. And I think that looking at it from the perspective of 2023 versus 2021, early 2022, I think it’s a little bit easier now sitting here in 2023 to be like, “God, they were threatened by NFTs? Really?” But if you think back to late 2021, early 2022, everything all the time was NFTs.
Steve Schindler: Yeah, we know that.
Emily Poler: It came from, I guess I want to say August maybe of 2021 it just sort of—
Steve Schindler: I think the Beeple sale was the day. So then things started to really take off.
Emily Poler: Take off. And I feel like by August it was like everything, like NFT everything. And we’d been living in a sort of pandemic world, and everybody was much more focused maybe on their phones than going out to dinner. And so it was easy for things to take off and sort of install themselves in people’s imaginations. So I think, yeah, I think Hermès was very threatened by this, because it was unclear in late 2021, early 2022, where this was going and there were people making insane amounts of money overnight.
Katie Wilson-Milne: Yeah, and only because they were referencing other brands. I think— and we’re not a fashion law podcast, but this really does tie into how difficult it is for fashion brands in particular to protect their product, right. You can have very artistic or distinct looking clothing that does not get the same type of protection as fine art, right? And this has been a struggle in the fashion industry for a long time and there’s this push, pull in the law about whether, you know, functional objects, what kind of protections they can get. And so fashion brands have really had to rely on trademark and trade dress when they’d much rather rely on copyright. But the law hasn’t really permitted that, because we call it functional no matter how pretty and non-functional like the ruffles or the pattern or the sewing is. And so I think I’m guessing that one thing Hermès and many other brands felt like is, “oh my God, this is one more area in which—“
Emily Poler: We have to hold the line.
Katie Wilson-Milne: Right. We’re going to be exploited, and we might not have the legal tools or we need to establish the legal tools to protect, because we’re already all the time dealing with counterfeit goods and having to fight about it.
Emily Poler: Yep. And I think that these brands have, again to the sort of idea of a push pull, they have this fight of being exclusive but also like installing themselves in everybody’s consciousness so that they’re desired. And this maybe goes back to a little bit of what Mason Rothschild was getting at with the MetaBirkins project. You can have a jacket that is exquisitely made and made out of beautiful wool, or beautiful fabrics, and that has value, because it’s going to last a long time, the quality of craftsmanship. But a lot of it also is just they want people to buy stuff, and they want sort of to generate interest and demand. And there’s not necessarily a reason for that.
Katie Wilson-Milne: Yeah, and that’s I think one reason why courts and legislatures have felt like fashion is different than art— that no matter how pretty you make it, it’s about branding, it’s about selling multiples. It’s about use in a way that fine art isn’t and you know, has more protections. So to finish, Emily, I mean there’s been a lot of attention to this case. Like, people who don’t know anything about art or fashion thought this case was interesting. It’s the intersection of a lot of different worlds and concerns. How generalizable is the outcome of this case, going forward for NFTs and NFT creators or fashion houses?
Emily Poler: Well, I think it’s the first case to go this far to go to a decision in liability that involves NFTs. There’ve been a couple other cases filed late 2021, 2022. I think almost all of them have settled or are still pending. So I mean there is that. Like, anybody who sues, and it’s a case involving NFTs are going to go, “oh, we got to look at Hermès versus Rothschild.” On the other hand, it’s you know, this case has its own particular facts, and those are not necessarily generalizable. And if another artist does something where— we’ve talked about— maybe pays more attention to sort of the backstory and making sure that his or her project is perceived as art, then we may come with a different result. I think also it’s going to depend if this case goes to the second circuit, and it is appealed. That’s going to be one thing we’re going to have a decision presumably then from the court of appeals.
Katie Wilson-Milne: Right. That will have some binding effect in the whole circuit.
Emily Poler: Right. Otherwise, I mean yes. The Southern District of New York has an outsized influence, probably, in the world of media and art and fashion in the United States, but it’s one judge and it’s one jury and we’ve talked a little bit about this. The jury’s reasoning is a bit of a black box. So I think it’s a somewhat limited application.
Katie Wilson-Milne: I guess one takeaway for me, which is not necessarily— it doesn’t have any legal general applicability beyond this case but just is that maybe, as we talk about in this podcast, the perspective of people in the NFT world, the perspective of the art world is not how a random sample of people who live in Manhattan and end up on this jury understand this question of fairness or expression or what art is that the jury just didn’t get it. And maybe that’s not because they missed something obvious they should have gotten, but just that normal people could make a fair assessment that these kind of NFT projects aren’t that creative or they’re not that important.
Emily Poler: Yep.
Steve Schindler: But interestingly, too, I think Judge Rakoff’s decision may have some lasting kind of legs, because he did grapple with this just overall question as to whether or not this was art and found that it was and you know, applied the Rogers test. And I think that’s a decision that seems fairly solid.
Katie Wilson-Milne: Yeah.
Emily Poler: Yeah.
Steve Schindler: And so the fact that the jury in this particular case kind of went in a slightly different direction than the judge was seemingly going is just the function of juries.
Emily Poler: Right.
Katie Wilson-Milne: Right. His case will be cited, which was his intent.
Steve Schindler: Yes.
Emily Poler: Yeah. And it’s interesting that he decided that this should go to a jury, that he found that the First Amendment concerns weren’t so pressing that it couldn’t go to a jury.
Steve Schindler: That’s right, yeah.
Katie Wilson-Milne: Oh, that’s interesting. Yeah. Well, I guess that goes to his feeling that there was ultimately, even at the very end of the First Amendment analysis, a decision on intent.
Emily Poler: Correct.
Katie Wilson-Milne: And that’s when couldn’t make—
Steve Schindler: Unless the evidence is so overwhelming, hard to decide that without a jury.
Katie Wilson-Milne: Yeah.
Emily Poler: Right, but this goes back to what we were talking about, whether there’s any difference between explicit and intentional, or explicitly and unintentionally.
Katie Wilson-Milne: Yeah, maybe setting up a some splits in different courts.
Steve Schindler: Alright.
Katie Wilson-Milne: Well, thank you, Emily.
Emily Poler: Thanks, guys.
Steve Schindler: Thank you, Emily. It was great to see you.
Emily Poler: Good to see you.
Steve Schindler: Yeah. And that’s it for today’s podcast. Please subscribe to us wherever you get your podcasts, and send us feedback at podcast@schlaw.com. And if you like what you hear, give us a five-star rating. We are also featuring the original music of Chris Thompson. And finally, we want to thank our fabulous producer, Jackie Santos, for making us sound so good.
Katie Wilson-Milne: Until next time, I’m Katie Wilson-Milne.
Steve Schindler: And I’m Steve Schindler, bringing you the Art Law Podcast, a podcast exploring the places where art intersects with and interferes with the law.
Katie Wilson-Milne: The information provided in this podcast is not intended to be a source of legal advice. You should not consider the information provided to be an invitation for an attorney-client relationship, should not rely on the information as legal advice for any purpose, and should always seek the legal advice of competent counsel in the relevant jurisdiction.
Music by Chris Thompson. Produced by Jackie Santos.