Pattern Trade Marks in Fashion. The EU General Court Deny Louis Vuitton’s White-and-Blue Damier Azur Trade Mark Claim of Acquired Distinctiveness

Image Source: Louis Vuitton

In an EU decision given today, the General Court has denied Louis Vuitton’s trade mark claim of its white-and-blue Damier Azur pattern, for failing to persuade the court that its checkered pattern had acquired distinctiveness through use across all member states of the EU territory.

Background

Affectionate readers of FLB may remember back to 2015 when we reported two decisions dated 21 April 2015, where the luxury brand Louis Vuitton were faced with cancellation of two of its well-known trademarks in connection with their brown and beige, and light and dark grey chequerboard pattern marks (T-359/12 and T-360/12), which saw the European General Court dish out a double blow to the brand, cancelling the two iconic trademarks, on the basis that in both cases the trademark registrations were ‘basic and banal,’ and ‘lacked distinctive character,’ see here.

It follows that, two months after this judgement, on the 25th June 2015, Norbert Wisniewski the cancellation applicant filed a request for a declaration of invalidity on another of Louis Vuitton’s trademarks this time in pursuit of the brands ‘Damier Azur’ chequerboard pattern. Then, in 2016, for reasons similar to that given in the 2015 case (T-359/12 and T-360/12) concerning the brands brown and beige and light and dark grey chequerboard pattern marks, finding for the cancellation applicant Wisniewski mentioned above, LV’s Damier Azur chequerboard pattern mark was declared invalid.

On 3 February 2017, Legal Counsel for Louis Vuitton filed a notice of appeal with EUIPO against the Cancellation Division’s decision and in 2018 (in Case R 274/2017-2), the Second Board of Appeal of EUIPO dismissed the appeal, finding again for the Wisniewski ‘that the contested mark was inherently devoid of distinctive character and that the applicant had not demonstrated that the contested mark had acquired distinctive character through use.’

In 2019, Counsel for Louis Vuitton appealed against the decision of the Second Board of Appeal, and by judgment of 10 June 2020, Louis Vuitton Malletier v EUIPO – Wisniewski (Representation of a chequerboard pattern, T‑105/19, not published, EU:T:2020:258), the Court annulled the decision of the Second Board of Appeal. Whereas the Court ruled that the Board of Appeal was correct in finding that the contested mark lacked inherent distinctive character, the Court found that the Board of Appeal had infringed Article 59(2) of Regulation 2017/1001, in that it had failed to examine all the relevant evidence submitted by the applicant in order to demonstrate the distinctive character acquired through use of the contested mark and to carry out an overall assessment of that evidence.

As such, following the judgment of 10 June 2020, representation of a chequerboard pattern (T‑105/19, not published, EU:T:2020:258), relates solely to whether the contested mark has acquired a distinctive character in consequence of the use which has been made of it, within the meaning of Article 7(3) and Article 51(2) of Regulation No 40/94.

Thus, the case was thereafter sent back to the Fifth Board of Appeal, which, after examining all the evidence submitted by the applicant, in 2021 (case R 1307/2020-5) decided that Louis Vuitton had failed to provide sufficient evidence to support a finding of acquired distinctiveness through use. In particular, the brand was unable to establish acquired distinctiveness corresponding to 6 EU Member States: Bulgaria, Estonia, Lithuania, Latvia, Slovakia, and Slovenia, according to the Board, and dismissed the action.

The luxury label unsurprisingly appealed.

And, in a judgement handed down earlier today, the GC have thus upheld the EUIPO earlier decisions and rejected Louis Vuitton’s trade mark claim of acquired distinctiveness through use of its ‘Damier Azur’ pattern on grounds of unsatisfactory evidence.

The GC’s assessment acquired distinctiveness through use for EU trade marks

As set out in the forging case, in order to determine whether a mark has acquired distinctive character, the GC highlighted that the courts take into account: “the market share held by the mark, how intensive, geographically widespread and long-standing the use of the mark has been, the amount invested by the undertaking in promoting the mark, the proportion of the relevant class of persons who, because of the mark, identify the product as originating from a particular undertaking, statements from chambers of commerce and industry or other trade and professional associations as well as opinion polls.” (see also Louis Vuitton Malletier v OHIM – Nanu-Nana (Representation of a grey chequerboard pattern), T‑360/12, not published, EU:T:2015:214,).

The GC reiterated that in cases concerning the acquisition of distinctive character through use by a sign that is ab initio, devoid of inherent distinctive character, and therefore requires proof of such evidence. That while ‘No provision of Regulation No 40/94 requires that the acquisition of distinctive character through use be established by separate evidence in each individual Member State.’ Which would be unreasonable to require. Citing the CJEU decision in Nestlé (C-84/17 P, C-85/17 P, and C-95/17 P paragraphs 75 and 76). It reaffirmed that ‘such a mark can be registered pursuant to that provision of Article 7(1)(b) only if can be proved that it has acquired distinctive character through use throughout the territory of the European Union.’ Proof of which could be generated, either collectively for all the relevant Member States or separately for various Member States or groups of Member States. However, it is essential that the evidence supplied includes all EU member states, and be ‘sufficiently specific, substantiated and credible.’

GC rejects LV’s arguments and dismisses brands appeal.

Interestingly, Louis Vuitton argued that ‘the analysis, in the contested decision, of distinctive character acquired through use of the contested mark is detached from reality, since it ignores the fact that, throughout the European Union, consumers engage in homogeneous behaviour as regards luxury brands, particularly because they travel and use the internet regularly.’ The courts however rejected these arguments for being ‘too general’… on the basis that LV failed to present precise and 'substantiated evidence for that purpose.'

Furthermore, Louis Vuitton then claimed that the distinctive character acquired through use of the contested mark in question for the 6 Eastern European Member States of concern, was ‘corroborated by the geographical and cultural proximity.’ This argument was also rejected by the courts, on the basis that there was ‘that it had grouped those Member States in the same distribution network or that it had treated them, particularly from the marketing strategy perspective, as if they constituted one and the same market.’

Comment

This decision serves as an important validation of the stringent stance taken by EU courts in the assessment of the evidence required to show distinctive character acquired through use. Particularly with regard to the importance of the geographical scope of evidence of distinctive character acquired through use, throughout the European territory. The case helps to provide us with more insight on the landscape of non-conventional trade marks in fashion.

 For a full read of this case can be found here. Thanks also goes to Jerome Tassi for bringing this case to our attention.

 Written by Tania Phipps-Rufus

A New Legal Precedent? UK High Court Recognises NFT's as 'Property'

Image source: Boss Beauties

In a reported landmark ruling the UK High Court has recognised NFT’s as property, in what could be set to become a leading judgment for NFT rights holders.

The case brought by Lavinia Deborah Osbourne, arose when in January 2022 Osbourne, the founder of Women in Blockchain Talks, had two of her purchased NFT artworks from the popular Boss Beauties collection, a series of 10,000 NFTs representing diverse successful career women, taken from her digital wallet without her consent.

Osbourne was able to trace the NFTs to two separate wallets and on March 10 and 31 obtain an urgent injunction from the High Court of England and Wales to freeze the assets - preventing them from being moved.

While the UK High Court has previously frozen stolen cryptocurrencies, this is the first case of its sort involving the freezing of NFTs as a cryptoasset due markedly to the unique non-fungible character of such assets.

This judgment, therefore, can be viewed as a landmark precedent for NFT holders when such cryptoassets are coming under increasing legal scrutiny. Earlier this year, it was revealed that £1.25 million in NFTs were stolen from users of OpenSea, one of the major NFT markets, in a phishing scam.

 “This ruling, therefore, removes any uncertainty that NFTs (as tokens consisting of code) are property in and of themselves, distinct from the thing they represent (e.g., a digital artwork), under the law of England and Wales” says Racheal Muldoon, the Barrister that led on the case.

“Hacks and theft are increasingly a common problem for NFT holders. Now that the courts have recognised that NFTs are property, holders can rest assured that they will be supported and have recourse in this jurisdiction” Muldoon said.

The case comes at a time when proprietary questions of ownership over NFTs are being heavily disputed. The issue as to whether NFTs are property, so far in the UK, seems to have been answered with this case which no doubt is likely to have significant implications for NFT owners. That being said, what exactly NFTs give you ownership of in the virtual sense is still a question left to be answered.

Case details are: Lavinia Deborah Osbourne v (1) Persons Unknown (2) Ozone Networks Inc Trading as Opensea

Full judgment from the High Court is still yet to be published

Louboutin Loses Red Sole Litigation in Japan

In a judgement that was handed down last month, The Tokyo District Court has decided that the red sole of "Louboutin" is a "general design".

In a judgement that was handed down last month, The Tokyo District Court has decided that the red sole of "Louboutin" is a "general design".

Christian Louboutin filed a complaint against the Eizo collection, a Japanese footwear manufacturer founded in 1959 that started to sell a red coloured rubber sole on a women’s shoes from May 2018 - alleging that the manufacture, exhibition and sale of seven types of shoes with a red (rubber) soles by Eizo Collection caused confusion with "Louboutin" products and infringed its intellectual property right under Japan’s Unfair Competition Prevention Law, demanding 42 million yen in compensation for damages.

Eizo Collection Red rubber sole heels

Conversely, Eizo Collection argued, that the red sole of Louboutin’s heels "has no novelty or specificity, and is not “well recognised.” That Louboutin’s “red colour is also one of the red colours sold by Pantone as a colour sample, and is commonly distributed in the market…it is not a special colour created by the plaintiffs, nor is it a colour that can be used exclusively by the plaintiffs… In fashion products (especially for women), it is a colour that is generally used... In fact, in Japan…it is customary for many businesses to use red on the soles of their shoes, from the soles of traditional lacquered clogs to the soles of women's high heels.”

Context - Louboutin trademark application is still pending in Japan

Prior to Japan's signing of the Trans-Pacific Partnership Agreement in 2016, to accommodate for the obligations of the agreement, the Japanese Trademark Law was revised in 2015 to provide additional trademark protection. As a result of the legislation reform, applications for colour trademarks (together with sound trademarks) began to be accepted on April 1, 2015. However, although trademarks of colour are registered in Japan, all of the registrations were made with a combination of two or more colours, and none of them has been registered as a single colour. Louboutin's red sole trademark application was also rejected and currently awaiting an appeal trial.

In the current case, Louboutin is not seeking to dispute whether or not the colour red can be registered as a trademark, but rather whether or not businesses other than Louboutin can use red on the sole high heel’s shoes.

Judgement

In the 39-page judgement (that can be found here) the court sided with Eizo and ruled against Louboutin.

In this case, the courts homed in on the difference in characteristics of the two brands’ shoe products. The courts noted the different overall impressions of the products, pointing out that: “the sole of the plaintiff's product is made of leather and has a red lacquer coating on it, so the colour of the sole is a glossy red like nail polish. whereas the sole of the defendant's product is made of rubber, and since it is not specially painted, the colour of the sole is dull red.” Whereas it is recognised that the Eizo sole is red, it does not ‘use’ colour, said the courts, because the defendant’s high heel shoe “sole is made of rubber and is not specially painted.”

Because of this, the courts did not recognise it as being ‘similar’ or even ‘well-known among consumers or purchasers’ as required under Article 2, paragraph 1, sub-section 1 of Japan’s Non-Competition Law because in terms of lustre and texture the characteristics of the goods specified are different, and were not deemed to correspond to Louboutin’s product label.

The use of the colour red is common for shoes in fashion

Interestingly the Japanese courts did not stop there, they went further to say that: "the red colour used for the product of shoes is one of the typical colours traditionally adopted from the viewpoint of the aesthetics of the product, and the sole of the shoe…and a red colour similar to the plaintiff's red colour is in fashion-related fields, a colour that has been used for a long time both in Japan and overseas. In fact, according to the above-mentioned fact, [said the courts] even in high heels for women, it has been continuously used as the colour of soles even before the plaintiff's product was sold in Japan. It can be said that it is a general design now, (see page 27-28).

No confusion at the point of purchase

Elaborating on its finding of no confusion, the courts noted that while consumer of high heels are the source of both products given that: “the plaintiff's product is a high heel in the high price range of at least 80,000 yen, and lacquer red sole and that the accused product is a high heel with a red rubber sole in an affordable price range,” on this basis “it is reasonable to admit that the difference between the two products is sufficiently discernible on its own” judged the court. Moreover, the courts went further to highlight that “consumers who want to buy shoes such as the so-called luxury brand stiletto products, in light of their price range, it is normal to confirm the source of the product not by the form of the product itself but also by the trademark etc., because both the plaintiff's product and the defendant's product have the brand name logo on the insole and shoe sole. Consumers can fully confirm the difference in source by the logo. Moreover, consumers who want to purchase luxury brand products such as the plaintiff's products carefully select and purchase products….”

In addition, and from a commercial standpoint, it was viewed that “the sales period of the plaintiff's products in Japan is only about 20 years, and it cannot be said that they have been sold for such a long period of time, nor that the carried out to meet the requirements for publicity, to satisfy the source labelling requirements as referred to in Article 2, Paragraph 1, Item 1 of the Non-Competition Law. In other words, Masaki Mikami IP attorney of Marks IP law firm, that the commercial use made of the brand’s mark in the region is “insufficient to find Louboutin’s red soles have played a role in the source indicator in Japan.”

Comment

Colours that are readily recognised can serve as a powerful source indicator to differentiate goods and services. While it was once thought that a trademark could only protect symbols and logos currently brands are becoming more aware of the enhanced possibilities of trademark law to protect other distinct brand features. While this is so, with respect to the recognition of Louboutins rights for the use of the colour red the brand’s trademark has been recognised in 50 countries, including major countries such as Australia, Canada, France, the European Union, India, Russia, Singapore, the United Kingdom, and the United States. But what remains particularly interesting in this case and the one pending before the appeal court in Japan is the difference in treatment that the colour red can give rise to across different countries. Most recently it is the trademark law of Japan that the "red sole" was prevented from being protected.

This unfair competition case has increased significance for the brand while they wait to hear the appeal verdict of the refusal of their red sole trademark before the courts, will they find success? For now, it seems clear that you cannot put the same shoe on every foot!

Cartier is suing Tiffany & Co for allegedly stealing confidential info and 'High Jewelry' trade secrets

Cartier is suing Tiffany & Co for allegedly stealing confidential info & 'High Jewelry' trade secrets

Cartier has bought a lawsuit against Tiffany & Co (in a New York Federal Court) for trade secrets claiming that “Cartier has not only uncovered direct evidence of a former employee’s unlawful taking of Cartier’s valuable confidential information and trade secrets, but through determined investigation, Cartier has also opened a window into Tiffany’s disturbing culture of misappropriating competitive information.” 

Introduction 

Cartier, which is owned by Richemont, claims that Tiffany — the new jewel under the ownership of its rival, LVMH ‘used quick money and title advancement to lure away’ Megan Marino, a junior employee who previously worked at Cartier, ‘to perform a high jewelry manager role, following ‘talent departures,’ that left ‘Tiffany’s high jewelry division as being in disarray.’

The suit alleges that Tiffany’s senior leaders including Tiffany’s President and its Vice President for Merchandising then repeatedly and knowingly solicited and received confidential Cartier information from Marino “about Cartier’s North American business and specifically, its High Jewelry Division, to unfairly compete with Cartier.”  

Cartier v Tiffany; the story behind the impending litigation 

According to the complaint, Marino was hired by Cartier in August of 2013, where she signed an agreement to keep the company's confidential information a secret. The contractual agreement included a clause that she would maintain secrets even if hired by a competitor. The complaint claims that ‘Marino breached her contractual confidentiality and non-disclosure obligations and misappropriated Plaintiff’s confidential business information by forwarding to her personal e-mail account a large quantity of highly sensitive documents and other files related to Cartier’s High Jewelry business on December 9, 2021, only days before her resignation, ‘and did so for the improper purpose of commercially exploiting that information for the benefit of a direct competitor.’  The complaint states that ‘Marino had no business need to access the drives, files.’ 

It continues that in an exit interview conducted on or about December 27, 2021, Marino advised Cartier that she was leaving to work in an “entirely new space” and that she would be trying something “unknown” to her. The discussions the suit says, ‘left Cartier with the distinct impression that she was not going to be working in luxury Jewelry,’ and not ‘for a competitor’.’  Because Marino did not indicate she was joining a competitive business, Cartier says, ‘she was permitted to work through her two-week notice period, and her final day of employment was December 28, 2021.’ the complaint says.  

January 2022 

In early January 2022 Cartier became aware, ‘through a LinkedIn social media update, that Defendant Marino had commenced employment with Tiffany as a Merchandising Manager.’ Upon commencing employment on January 5, 2022, with Tiffany, the suit says, that on the same day ‘she met with senior colleagues; Tiffany’s Vice President, North America Merchandising, and VP of Client Relations and High Jewelry and was told that Christopher Kilaniotis, Tiffany’s President for the Americas, wanted to “pick [her] brain about Cartier.”   

The commercial value of the shared information 

‘The E-mailed Cartier Information constitutes, among other things, Cartier’s strategy for High Jewelry, including enough information to allow a sophisticated competitor to replicate key strategies and, with relative ease, to reverse engineer how Cartier allocates, merchandises, and prices its High Jewlery stock, and the E-Mailed Cartier Information, therefore, has enormous commercial value.’ Which, according to the suit ‘is only accessible by a limited number of Cartier employees, is not known outside of Cartier, would be extremely difficult to properly acquire.’  

According to the suit, Cartier derives substantial economic value from preserving the secrecy of its confidential and trade secret information. ‘The complaint states that Cartier goes ‘to great lengths to ensure that the E-mailed Cartier Information is not known to or made available to competitors who would unfairly benefit from possessing such information, including, for example, by requiring employees to execute confidentiality agreements and by storing the information on secure servers and restricting access to Cartier’s employees.’ 

Cartier is seeking Injunctive relief from the courts requiring that Tiffany & Co return to Cartier, and not retain ‘of any and all business information, records or documents containing Confidential Information and Trade Secrets’ and that Judgment is entered for Cartier ‘for compensatory damages caused’ by Tiffany & Co’s ‘wrongful conduct.’  

Commentary

The case is interesting not least because it involves two of the most prominent luxury jewelry brands, but also because it brings up the contentious issue of protecting trade secrets and valuable information. “Misappropriation or theft of trade secrets, according to industry estimates, is said to cost between 1-3% of GDP in developed economies” (Passman, 2014, Searle 2021). Trade secrets can encompass an extremely broad scope of subject matter, from business confidential information such as customer lists to recipe formulas like Coca-Cola. 

Laid down in the WTO’s 1996 Trade-Related Aspects of Intellectual Property (TRIPS) agreement, trade secrets are intellectual property (IP) rights on confidential information and in order to be protectable the information must meet three criteria: 1) It must be a secret, 2) reasonable steps should be taken to maintain its secrecy, 3) it must derive (commercial) value from its secrecy. 

The merits of the Cartier v Tiffany case 

Depending on the legal system, the legal protection of business secrets forms part of the general concept of protection against unfair competition or is based on specific provisions or case law on the protection of confidential information (WIPO n.d). In the US, Trade secrets are protected by: Federal law under the Economic Espionage Act, as amended by the Defend Trade Secrets Act of 2016. specific state law requirements for, and scope of, protection vary from state to state, and in New York, the definition of trade secrets can be found in the Restatement of Torts § 757 (1939), which defines a trade secret as “any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it,” and can be any confidential business information that provides an organisation with an economic advantage or competitive edge.  

While whether trade secret protection is violated or not depends on the circumstances of each individual case, the Cartier v Tiffany case will rest on whether the emailed information shared rises to the level of a protectable trade secret. While there was no non-compete restriction that prevented Marino from working for Tiffany, the complaint refers to provisions of Marino’s confidentiality and non-disclosure agreement upon commencement of her role at Cartier, back in 2013 which include contractual obligations of non-solicitation. Commonly, unfair practices in respect of secret information include breach of confidence and breach of contract.

Under LVMH's creative relaunch, Tiffany's high jewelry section has been a crucial aspect of the jeweler's ascent. Tiffany announced the appointment of Nathalie Verdeille, Cartier's longstanding creative director for jewelry, as vice president, artistic director of jewelry and high jewelry in July. LVMH leadership is said to be hoping to build a unison between French management's savoir-faire and Tiffany's uniquely American sensibility. The two rival luxury brands are owned by rival luxury conglomerates. Cartier is owned by Richemont, and Tiffany was purchased last year by LVMH.

Cartier has said in a statement it: “fully respects the rights of competitors to pursue their commercial objectives. In this case, however, Tiffany’s commercial ambition crossed the line between the ordinary course of business and unfair competition.” 

“Tiffany formally denies these baseless allegations and intends to vigorously defend itself” assures the US firm

The original complaint details are here and the accompanying motion of law can be viewed here. For more helpful information on trade secrets, this can be found here.

The outcome of Hermes' lawsuit against MetaBirkin NFT might show us what the future holds for fashion and art in the metaverse

Hermes recently sued a digital artist for knocking off its Birkin handbag through the issuance of MetaBirkin non-fungible tokens (“NFT”). For those not aware of the filing or related media attention, the artist created fuzzy images of the Hermes Birkin handbag and minted them as NFTs.

NFTs are digital records of data stored on a blockchain and uniquely identifiable. NFTs are associated with a larger digital file that is itself too large to store in a blockchain. The digital record can then be traded or sold as an asset identifying the NFT owner as the true owner of the original digital file.

Using NFTs has, in part, allowed digital artists to associate ownership in an original version of their art through the NFT that can be monetized much like the physical paintings or sculptures of artists creating in physical media.

The artist in the Hermes lawsuit branded his images MetaBirkins and is attempting to sell them on various internet sites using MetaBirkins as a brand name. Hermes is suing the artist for trademark infringement, trademark dilution, and cybersquatting. Hermes based its allegations of trademark infringement and dilution on the artist’s use of MetaBirkin as a trademark to promote his NFTs and at his metabirkin.com website.

Success not guaranteed - what existing legal precedent highlights when art incorporated a trademark

A review of the complaint may lead one to the conclusion that the artist is in line for swift rebuke, but under established trademark law Hermes’ success is not a given.

The Hermes lawsuit raises all sorts of questions for brand owners, artists, and truthfully almost any business owner as to the intellectual property rights in emerging technology, whether it is the metaverse, NFTs, or other expressive mediums that have not yet been conceived.

Fundamentally, the images and related NFTs are expressive works given a large latitude to avoid findings of trademark infringement under the Second Circuit’s test in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). Under this line of cases, a two-prong test was developed to assess cases of alleged trademark infringement by artistic works for balancing situations where “public interest in avoiding consumer confusion outweighs the public interest in free expression” that determined use of a trademark in the title of an artistic expression is trademark infringement only if 1) the title has no artistic relevance to the underlying work or 2) explicitly misleads consumers as to source or content of the work. The courts confirmed that only in such cases, the underlying work itself will not be protected under the First Amendment as expressive art.

The First Amendment rights Defence

With this in mind, Rogers is widely thought of as providing for the protection of uses of trademarks in artistic work, to those accused of trademark infringement. In recent times though, there has been a departure away from the Rogers test. In Stouffer v. Nat'l Geographic Partners, LLC, 460 F. Supp. 3d 1133, 1142-43 (D. Colo. 2020), the courts viewed that following Rogers “means that trademarks registered for arguably artistic products and services are not worth the paper that the trademark registration is printed upon. As long as a junior user makes no overt claim to association with the senior user, the junior user can market precisely the same artistic product or service under precisely the same mark.” The court questioned “why this should be permitted in the name of the First Amendment?” Opining that the Rogers test is “needlessly rigid and fails to account for the realities of each situation.”

Rather than focus on the ‘artistic relevance’ of a work. The Court came to the conclusion that the Rogers test, “did not strike the appropriate balance between trademark rights and First Amendment rights,” and devised a new a six-factor ‘genuine artistic motive test’ with additional elements to be considered trademark claims:

1. Do the senior and junior users use the mark to identify the same kind, or a similar kind, of goods or services?

2. To what extent has the junior user added his or her own expressive content to the work beyond the mark itself?

3. Does the timing of the junior user’s use in any way suggest a motive to capitalize on popularity of the senior user’s mark?

4. In what way is the mark artistically related to the underlying work, service, or product?

5. Has the junior user made any statement to the public, or engaged in any conduct known to the public, that suggests a non-artistic motive?

6. Has the junior user made any statement in private, or engaged in any conduct in private, that suggests a non-artistic motive?

The point of these factors is to assist in answering the question, "Did the junior user have a genuine artistic motive for using the senior user's mark or other Lanham Act-protected property right?"

Moreover, even if Rogers does not apply, Hermes’ trademarks are for leather goods, specifically handbags. The NFTs being sold are decidedly not leather goods. Generally, trademarks only apply to the goods or services listed on the registrations and those that are reasonably related to the listed goods or services. Hermes will need to prove its trademark for leather goods extends to expressive images based on the leather goods, which is what the MetaBirkin trademark is selling to consumers.

To succeed on a claim for trademark infringement, the alleged infringer’s conduct must lead to a likelihood of consumer confusion. Whether Hermes can demonstrate that consumers will confuse Hermes and its handbags with digital images of altered handbags using MetaBirkin is an open question — and it will be interesting to see how the court resolves the issue.

According to Mason Rothschild, creator of the MetaBirkin NFT and defendant named in the Hermes complaint, he is exercising his First Amendment rights — just as Andy Warhol did when he created his famous Campbell’s Soup Cans in the early 1960s.

What does all this NFT discussion mean for a business owner?

First, if your business has an interest in joining the NFT marketplace, it would be wise to update any trademarks currently used to include NFTs as a good. This can be done by filing an intent-to-use application if you are not ready to immediately enter the digital realm.

Second, be on the lookout for competitors and opportunists knocking off your design patents, goods, and services, or causing consumer confusion.

Third, be careful in creating NFTs. Copyright and right of publicity rules apply to the use of third-party works. As noted in the Hermes lawsuit, trademark rules may apply depending on the circumstances. Design patents can also apply depending on the goods and circumstances.

IP rights in flux

Finally, properly protecting your NFTs requires contracts with specific terms as to minting, royalty rights, and intellectual property ownership. Ownership fights over who owns the NFT and/or the underlying work are only going to increase soon as Miramax’s fight with Quentin Tarantino over “Pulp Fiction” NFTs demonstrates.

NFTs allow brands the ability to directly connect with consumers using new technology. Consumers and brands can interact with each other in brand-specific environments through the decentralized metaverse. Artists and creators can monetize ownership of their digital creations.

This emerging technology is a powerful tool that if used properly can strengthen the ties between brands/artists and consumers. However, the technology and the decentralized nature behind NFTs have placed the extent and scope of existing intellectual property rights in flux. Before venturing into this new world, it is best to fully understand what you are stepping into, so you don’t become lost in the void.

Written by Joseph Barber, a partner at Howard & Howard Attorneys with additional edits from Tania Phipps-Rufus, Founder and Editor at FLB.

Tiffany & Co and Pharrell's Partnership brings up questions of cultural appropriation over diamond designed sunglasses

Image Credit: Pascal LeSegretain/Getty (Pharrell Off-White fashion show March 2022)

High-end fashion businesses have recently often come under fire for cultural appropriation, and the latest company to be embroiled in this debate is jewellers Tiffany & Co. for the creation of a pair of almond-shaped emerald, diamond-encrusted sunglasses collaborated on with singer Pharrell Williams. 

Back in January, Tiffany & Co released a photo of the singer and entrepreneur wearing the "custom-made" diamond-encrusted glasses with a caption that read, "Doubletake, Pharrell attended Nigo’s Kenzo show in Paris wearing a pair of custom-designed Tiffany & Co. sunglasses in 18k gold with 61 round brilliant diamonds of over 25 total carats and two emerald-cut emeralds." Alluding to Pharrell's relationship with the jewellery company.

But it appears that Tiffany & Co are not the only ones to be seeing ‘double’ as the Instagram fashion critic account Diet Prada pointed out that Williams' sunglasses looked almost identical to a pair of 17th century spectacles called Emeralds for Paradise that are on auction at Sotheby's, for an estimated value of £1.5 – 2.5 million and believed to have originally belonged to Mughal royals, who once ruled over the Indian subcontinent.

While it is clear that from an intellectual property rights perspective, there would be no design right protection in the UK or design patent in the US for that matter that would cover a copy of a 17th-century design. Primarily because these forms of IP rights mentioned provide creators with protection for designs only for a certain period of time (25-year term in the UK and 15 years in the US respectively). Leaving the luxury brand Tiffany and rapper Pharell free to create his own interpretation of such design. The case does raise concerns over ‘cultural appropriation’ in the luxury and fashion industry a term not legally defined.

Fashion is part of a broader system of culture, and many designers draw from the past, present and future to produce their designs. Yet this often poses a problem for the law. Arushi Sinha for Vogue Business comments that “while it is not outside the norm to take inspiration from history or historical artefacts when it comes to fashion, what stands out here is Williams' lack of acknowledgement that his creations are, in fact, moulded to closely resemble the Mughal pair. At a time when the politics of cultural appropriation have reached a fever pitch, it feels like a curious misstep on the part of both Tiffany & Co. and Williams to not cite the Emeralds for Paradise spectacles as their inspiration.”

Cultural appropriation, in search for a legal definition - where we are now?

There has been a definite recognition for the need for policies protecting Traditional Cultural Expressions in the last couple of decades. At the international level, UNESCO and the World Intellectual Property Organization (WIPO) have enacted instruments such as the International Convention for the Safeguarding of the Intangible Cultural Heritage which serve as guidelines for the creation of provisions within national IP legislation to protect traditional knowledge and cultural expressions and more recently the WIPO Intergovernmental Committee (IGC) has been working on the development of a set of draft provisions for the protection of traditional cultural expressions against misappropriation and misuse, in the form of a binding legal agreement, these bids to address cultural misappropriation emphasise a need for minority communities of non-western countries to maintain better control over their traditional cultural expressions (TCEs).

But while this gives us a pretty good start with a search for a definition of cultural (mis)appropriation, no doubt it will take some time yet until these concepts become harmonised international IP law.

Resale is scaling, and so too are the lawsuits

Nike sues online reseller StockX over the sale of Nike branded sneaker NFTs

Image source: Solesupplier

Nike, this week has filed a lawsuit against the streetwear platform StockX over the sale of Nike branded sneaker NFTs. The complaint largely concerns the sale of NFT’s bearing Nike’s famous (trade) marks, and as per the suit comes from "StockX's unauthorised use of Nike's well-known trademarks in connection with StockX's entrance into the Non-Fungible Token market."

StockX LLC, an online resale marketplace created in 2016 rose to popularity reselling shoes, streetwear, and other coveted products on its platform.  In 2021, the platform was estimated to be worth $3.8 billion, after a funding round last year.

According to its complaint, “Unlike its e-commerce business which caters to buyers and sellers of goods originating from various companies, nearly all the NFTs minted by StockX to date are Nikebranded NFTs, yet none of those NFTs originate from Nike.”

The suit also says: Recognizing firsthand the immense value of Nike’s brands, StockX has chosen to compete in the NFT market not by taking the time to develop its own intellectual property rights, but rather by blatantly freeriding, almost exclusively, on the back of Nike’s famous trademarks and associated goodwill. Specifically, without Nike’s authorization or approval, StockX is “minting” NFTs that prominently use Nike’s trademarks, marketing those NFTs using Nike’s goodwill, and selling those NFTs at heavily inflated prices to unsuspecting consumers who believe or are likely to believe that those “investible digital assets” (as StockX calls them) are, in fact, authorized by Nike when they are not.” argues Nike.

NFT’s incorporating a brands intellectual property, such as its trademark have been increasingly used as a rights management tool to track and guarantee product ownership.

The lawsuit comes less than two months after Nike acquired Rtfkt, a digital art and collectible creative studio that produces NFT collectibles, for an undisclosed sum. Nike Chief Executive John Donahoe said the purchase would help “extend Nike’s digital footprint and capabilities.” As yet, Nike has not released any NFTs.

In the lawsuit, Nike complains that ‘StockX unauthorized and unapproved branding of NFTs with Nike trademarks likely to confuse consumers, create a false association between the parties, jeopardize the capacity of Nike’s famous marks to identify its own digital goods in the metaverse and beyond, and harm Nike’s reputation through an association with inferior digital products’

Comment

Nike lawsuit is the latest example of brands seeking to control how their trademark is used and across what products in the metaverse. The legal complaint Nike v StockX can be viewed here

Hermès sues artist for trademark Infringement over the sale of his 'MetaBirkin' Bag NFTs

Full analysis coming soon…

In the meantime please read the following documents related to the case.

Hermes original filed lawsuit complaint against Rothschild here

Hermes evidence and cease and desist letter here

Rothschild defence against complaint

Chanel prevails in unfair competition case over its No5 perfume bottle in China.

Chanel prevails in unfair competition case over its No5 perfume bottle in China

In an interesting case, Chanel has won an unfair competition lawsuit over a copycat fragrance imitating the iconic trade dress of its N°5 perfume in China. The Trial Court and the Court of Appeal both afford the iconic brand, protection over the unique trade dress of CHANEL N°5 perfume.

Background

Chanel discovered in 2019 that a Chinese company, Yiwu Ai Zhi Yu Cosmetics Ltd ('Ai Zhi Yu'), had created an N°9 Flower of Story perfume that was highly similar to the distinct trade dress of the CHANEL N°5 classic perfume bottle.” (See the comparison below).

N°5 Chanel perfume bottle and packaging [Left] | Flower of Story perfume bottle and packaging [Right]

The production and sale of which, in a Trial Court, and Court of Appeal decision in China - Chanel was able to successfully prove constituted an act of unfair competition.

Facts and law

In a decision that we note was first reported by World Trademark Review. Chanel filed the original lawsuit back in December 2019. In a first instance Trial Court hearing back in 2020, legal counsel acting for Chanel Wanhuida Intellectual Property, relying largely on Article 6 (1) of the Anti-Unfair Competition Law in China, proved that the defendant company Ai Zhi Yu acts amounted to unfair competition.

Article 6 of the Anti-Unfair Competition Law of the People's Republic of China stipulates that: ‘the unauthorized use of the same or similar logos as the name, packaging, decoration, etc. of commodities that have a certain influence on others, leading people to mistakenly believe that they are commodities of others or have a specific connection with others. constitutes an act of unfair competition.’

This provision shows that to determine whether the accused infringement of the defendant constitutes an act of unfair competition over the packaging and decoration of the plaintiff's commodities, the factors to be considered are:

“Whether the packaging and decoration of the plaintiff's commodities constitute packaging or decoration that has a certain influence; whether the packaging and decoration of the accused infringing goods are the same or similar to the packaging and decoration of the plaintiff's goods; (and) whether the similarity causes others to misunderstand that there is a specific connection with the plaintiff (Chanel) or the plaintiff's (Chanel’s) goods.” (Emphasis added to translation)

The main basis for determining whether the packaging and decoration of the product constitute a certain influence is first, whether the product has a certain market reputation in China and is known to the relevant public; and second, whether the packaging and decoration of the product have distinctive features that distinguish the source of the product.

Despite arguments from the defendant that the Chanel N°5 bottle was not ‘distinctive’ nor ‘original’. In a hearing judgment in 2020 – Chanel was able to prove that:

• Through continuous, large-scale, and extensive sales and promotion of its perfume products in mainland China, the Chanel N°5 classic perfume bottle and packaging have gained a high reputation and reputation in the industry and among Chinese consumers, and the bottle and packaging serve as a key source identifier of the perfume.’

• The layout and design of the Chanel N°5 bottle shape, as well as the colour of the characters on the front label, are distinctive, and the arrangements of the trade dress of the infringing N°9 product were highly similar to the Chanel N°5 product, which was likely to ‘confuse and mislead’ consumers.

As a result, the court determined that the defendants' actions constituted unfair competition, ordered the defendants to cease such behavior and to pay damages of CNY 600,000 (about 69,000 pounds).

The appeal

Ai Zhi Yu filed an appeal with the Shaanxi High Court in January 2021. Ai Zhi Yu, the makers of N°9 Flower of Story Perfume contested the distinctiveness of the Chanel N°5 perfume's trade dress, claiming that the trademarks N°5 and Chanel, rather than the bottle itself (trade dress), served as the source identification of the items. To support its argument, the defendant company presented an earlier ruling of the Beijing High Court rejecting Chanel's three-dimensional (3D) trademark application No. 27067168 (in 2020) for the bottle of the N°5 perfume (as a base for its claim).

Regarding the claim that the shape of the N°5 perfume bottle has not been protected by three-dimensional trademarks and are not distinctive, the courts dismissed this argument, the Court noted that the outcome of the 3D trademark application had no bearing in the current case, moreover because of the differences between the legal protection requirements to stop unfair competition and protect overall image design, from the requirements of three-dimensional trademarks.

Focusing squarely on the requirements of unfair competition law then, the courts assessed the inner and outer packaging of the Chanel N°5 perfume to determine whether unfair competition was at play.

 In the Courts assessment of the outer packaging and decoration of Chanel’s perfumes, and whether within the meaning of Article 6, Chanel perfume belongs to the packaging and decoration of commodities that have certain influence. The courts held, no - that the Chanel N°5 perfume packaging and decoration do not have the distinctive features that distinguish the source of the commodity firstly, on the basis ‘that the design of the black frame on a white background is a common decoration for perfume packaging and the arrangement of the text in the centre was common, general and not significant, and difficult to associate them with the source of a specific product.’

 Secondly, Chanel claimed that the outer packaging involved in the case had a certain market reputation, but on this point - the courts did not feel that the brand ‘provided sufficient evidence to substantiate its claim. In particular, Chanel was unable to ‘prove that the packaging and decoration were promoted and publicised by Chanel, so that consumers had formed a perception that the packaging and decoration at issue were commercial signs. Therefore, the outer packaging and decoration did not qualify as packaging and decoration of commodities with a certain influence, (under Article 6 of Chinese Anti-Unfair Competition Law), and should not be protected the courts said.

Turning next to the assessment of the inner packaging and decoration of Chanel perfume (bottle) belonging to the packaging and decoration of commodities that have a certain influence. Judging from its interior packaging and decoration, the Courts held:

‘The packaging and decoration to be unique because of the arrangement and combination of the elements, such as graphics, colors, shapes, sizes, fonts, etc.,’ that in the Courts view ‘form a remarkable overall image, which does not belong to the general packaging of similar products. And according to the photos, advertisement screenshots and other evidence provided by Chanel, it can be proved that the packaging and decoration have been used for a long time and, the publicity surrounding the product has been enough to make the relevant public compare the overall image of the (defendants) packaging and decoration with Chanel's N°5 perfume series products.’ It has the function of identifying the source of its goods. (and) It can be determined that the inner packaging and decoration have had a certain impact, which should belong to the provisions of Article 6 of the Anti-Unfair Competition Law.’

Finding that, the use of identical or visually indistinguishable product packaging and decoration on the same product to be sufficient to cause confusion with the packaging and trade dress of Chanel’s perfume bottle .

Pointing to similarities between the trade dress of the two bottles the Courts noted:

“The perfume bottle of the accused infringing product and the perfume bottle of Chanel N°5 perfume are of the same shape and material height. They are both rectangular transparent glass bottles with slightly curved shoulders. The bottle cap presents an octagonal rectangle with a diamond-shaped cut side; the upper part of the bottleneck is a raised ring design, and the lower part is surrounded by a decorative band of about 5 mm wide, with golden lines on the top and bottom of the decorative band; the proof label design of the perfume bottle. The color scheme, text arrangement, size ratio, and position are all highly similar. Since the packaging and decoration of the perfume involved in the case of N°9 Flower of Story company are basically the same as the inner packaging and decoration of the Chanel N°5 - is enough to cause the relevant consumers to misunderstand the source of the perfume, including the misunderstanding that the two parties have a commercial alliance and license.

Ai Zhi Yu, The N°9 Flower of Story perfume producer maintained that the price of its perfume is much lower than the price of Chanel perfume, which will not cause confusion among consumers, but the courts confirmed that “difference in price is not the criterion for identifying confusion. Generally, confusion has occurred before the actual purchase of relevant consumers.” And on appeal upheld the original judgement.

The case illustrates the different laws brands can rely on to protect iconic trade dress features of products – where trademark law may fall short.

Commenting on this case:

Wen Cui and He Wei of Wanhuida Intellectual Property representing CHANEL in prevailing in the unfair competition lawsuit commented that: “The registration of 3D trademarks has become an uphill battle in China. Brand owners hoping to protect the design of their iconic products are increasingly shifting to alternative remedies, such as seeking trade dress protection based on unfair competition.”

The two judgments for this case can be accessed here: https://wenshu.court.gov.cn/

Additional translation by FLB – This case was first reported by World Trademark Review.