Hermes succeeds in banning Metabirkins - What IF the case was tried in Singapore?
What is a Birkin?
Designed by Hermès’ artistic director Jean-Louis Dumas in 1983 with actress Jane Birkin in mind, the Birkin bag is now considered the epitome of handbags. Constructed with a spacious trapeze-shaped body and delicate metal feet for added structure, this Birkin 30 version is crafted from the brand's Togo leather in a classic black hue.
2023 pre-owned Birkin 30 handbag offered for sale for a price in excess of $46,000
Case Facts
In a recent and highly anticipated US District Court case, Judge Jed Rakoff granted luxury goods behemoth Hermes a permanent injunction against artist Mason Rothschild, permanently banning him from selling, marketing, and even minting his “MetaBirkins” Non-Fungible Tokens (NFTs), after a jury found that they violated trademark rights. Pictured below are actual Hermes Birkin bags and their MetaBirkins NFT counterparts.
This judgment follows an earlier decision by Judge Rakoff, who had sided with Hermes (and awarded damages in their favour), but elected not to impose harsher restrictions on Rothschild due to First Amendment concerns (the US First Amendment protects free speech, and trade marks qualify as speech protected by the same). However, as Rothschild continued to promote, market, and benefit from the MetaBirkins NFTs despite the initial decision, Hermes sought harsher sanctions against the defendant and succeeded.
The Decision
In this second decision, the jury expressly found that Rothschild purposefully sought (with some success) to confuse consumers into believing that his MetaBirkins NFTs and associated metabirkins.com website were affiliated with Hermes’ iconic ‘Birkin’ trademarks. The Judge held that a permanent injunction was justified as Rothchild’s continued marketing of the NFTs would likely confuse consumers and cause irreparable harm to Hermes. Further, he found that Rothschild’s defence pertaining to the First Amendment was untenable because he had purposely and intentionally misled consumers into believing that the MetaBirkins NFTs were backed by Hermes. The evidence adduced by Hermes was sufficient to convince the Judge that Rothschild fully intended to “cash in on the Birkin name” and in doing so, exploit their goodwill and reputation.
Can real-world rights reach into the Metaverse in Singapore?
A key hurdle faced by Hermes was that its BIRKIN mark was only registered in respect of real-life goods, but not for virtual goods or NFTs. Reasonably so because Hermes reportedly did harbour intentions to sell virtual goods or NFTs. Hermes argued that NFTs fell within the ‘natural zone of expansion’ of its trade mark registrations - as evidenced by the fact that many fashion brands have entered the Metaverse and its own plans to launch NFTs and virtual bags, such that it was entitled to protection in this realm as well.
In the US, the ‘natural zone of expansion’ doctrine allows a trade mark owner to extend its protection over other goods/services that are a natural expansion of the goods/services already registered. While no such doctrine exists in Singapore, that does not mean that Hermes would have lost in Singapore.
Here, trade marks are protected against goods or services which are similar to those designated by the registration. This is even so where goods or services fall into different classes so long as this criterion is satisfied.
If a trade mark is considered “well known” in Singapore, the protection conferred increases. If a defendant uses a similar mark which would “indicate a connection” between the defendant’s goods or services and that of the trade mark owner and is likely to cause damage to the trade mark owner, infringement can be made out. For marks like Hermes which are widely known to the public at large, connection and damage need not be proven. All Hermes would need to show was that the defendant’s use would cause dilution in an unfair manner, or take unfair advantage, of the distinctive character of its well-known mark.
If the case was litigated in Singapore, we think Hermes should be able to demonstrate that Rothschild’s use of “Metabirkins” would suggest that his NFTs are at least somehow licensed by or endorsed by Hermes.
The key defence “free speech” defence relied upon by Rothschild is not applicable in Singapore.
Takeaways for Brand Owners
Even though we are of the view that Hermes would likely have succeeded in Singapore, we may not have reached the same conclusion if it were another lesser-known brand. Here are some lessons for brand owners:
Subject to use requirements, it is probably a good idea for brand owners who may feel aggrieved if their trade marks are used on NFTs to seek registration for their brands in the virtual world as well. Hermes would not have had to argue ‘natural zone of expansion’ if they had registered their trade marks in respect of these virtual items in the first place. Registration may also be a deterrent to would-be ‘infringers’ who may, upon discovering that the brand is registered in respect of virtual goods, look for another brand to hijack instead. In Singapore, registration would obviate any need to prove the similarity of goods or “well-known” status in order to justify an extension of protection to the digital realm - particularly for lesser-known brands that (a) may not cross the threshold, or (b) even if they are sufficiently “well known”, may have trouble raising the cash-flow to prove that their brands are “well known” or “well known to the public-at-large”.
Next, it is probably also a good idea to monitor the Internet for budding infringement. Infringement typically falls into two groups: (a) intentional infringement, and (b) unintentional infringement – both of which are actionable with secured trade mark rights. Regardless of the type of infringement, prompt and proactive enforcement is the way. In our experience, the likelihood that an infringer will agree a brand owner’s demands decreases with delay.
Conclusion
Many players in the virtual space are under the impression that, inter alia, the decentralised nature of the blockchain would be sufficient to protect them against any recriminations stemming from real-world IP law. This decision is a major statement warning the NFT industry that trade mark law is enforceable against the blockchain.
Despite this step forward, we believe that certain fast-paced and dynamic industries still lack adequate IP protection.
It is time perhaps for brand owners to conduct an audit of their existing IP portfolios to identify their strengths, weaknesses, opportunities, and threats to their intellectual property rights, and to plug these gaps, if necessary, to ensure that they are well placed for the challenges that lie ahead where competitors exploit what the digital realm has to offer.
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Disclaimer
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. That.Legal LLC represents neither party in this dispute and is not privy to any confidential information pertaining to the parties. All facts stated herein are compiled from publicly available sources. If you require any advice or information, please speak to a practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of That.Legal LLC accepts or assumes responsibility, or has any liability, to any person in respect of this article.