Top IP Law Development in the US
1. BIRKIN OR METABIRKIN? HOW TRADE MARKS EXTEND INTO THE DIGITAL ART WORLD
In December 2021, art and fashion news headlines were abuzz when artist Mason Rothschild published a ‘cease and desist’ letter he received from the renowned luxury design house Hermès alleging trade mark infringement in relation to his offering and sale of a series of NFTs (non-fungible tokens) called MetaBirkins. Rothschild’s NFTs were digital images that resembled one of the most coveted high fashion items, the Birkin bag, but instead of its staple leather material, they were dressed in fur. Rothschild denounced the letter on social media by claiming that his depiction of the Birkin bag in the Metaverse was his First Amendment right (which protects freedom of speech), that allowed him to create art based off of his view of the world.
Case Background
Hermès filed a suit against Rothschild in the Southern District of New York for trade mark infringement and dilution, misappropriation of its “BIRKIN” trademark, cybersquatting, false designation of origin and description, and injury to business reputation. Hermès claimed that the NFTs were misleading and caused consumers to believe the NFTs were associated with its protected trademark as well as the brand overall.
In March 2022, Rothschild filed a motion to dismiss the claim, arguing that because he used “MetaBirkins” as the title of artwork (and not as a source identifier of consumer products), that any use of the Hermès mark was protected under the First Amendment and the test articulated in Rogers v Grimaldi, which allows for the unauthorised use of a trade mark if such use is artistically relevant and does not explicitly mislead consumers. Ultimately, Rothschild’s motion failed. Whilst the Court agreed with his argument that NFTs can be artistic works, it refused to dismiss the claim on the basis that it was sufficiently alleged by Hermès that Rothschild’s use of “MetaBirkins” was misleading, and so a trial was required to weigh the evidence and make a ruling.
Following the trial, on 8 February 2023 the jury returned a verdict in favour of Hermès, finding that Rothschild did intend to confuse consumers and profit from a protected registered trade mark. The decision meant that to the jury, the “MetaBirkins” functioned more as consumer products bound by trade mark laws rather than being seen as art protected under the First Amendment. The jury awarded Hermès US$133,000 in damages for trademark infringement and cybersquatting, US$110,000 of which were profits and resale commissions from the NFTs and US$23,000 of which were for cybersquatting and registering the metabirkins.com domain.
What does this mean for artists and intellectual property rights?
This case was tried in the New York Federal Court, so it has not created a mandatory legal precedent throughout the US. However, the potential effects of this decision has caused concern for artists.
This case is a notable win for brand owners as it sets the precedent that trade marks, and any other intellectual property, can be protected in the digital world. It is worth noting that under this decision, artists are not restricted in the work they create per say, but rather how their work is presented to consumers.
Whilst this case was decided under US law, it has created a cautionary tale for UK artists and consumers alike. NFTs are still relatively new to the market and the guidance on their governance is scarce, which may result in the courts relying on case law from other common law jurisdictions.
2. COPYRIGHTS CHAMPIONED: ANDY WARHOL FOUNDATION V GOLDSMITH
Most people are familiar with the famous Pop artist Andy Warhol and when hearing his name, conjure up iconic images of his Campbell’s soup cans and celebrities such as Marilyn Monroe. But has Warhol’s reverence given famed artists a free hall pass when it comes to art appropriation? Apparently not, according to the US’ most recent Supreme Court decision.
Case Background
Back in 1981, photographer Lynn Goldsmith was commissioned by Newsweek to photograph Prince, who was beginning to break into the mainstream music world. Three years later when Prince was soaring in fame, Vanity Fair commissioned Warhol to create an illustration of Prince and paid Goldsmith US$4004 as a one-off licencing fee for the right to use her image. Warhol used the image to create his Prince series, which consisted of 16 silkscreen illustrations of Prince. One image ran in Vanity Fair attributed to Warhol and included a credit to Goldsmith.
Following his death in 2016, Condé Nast (the magazine conglomerate that oversees Vanity Fair) published a series of images to commemorate Prince in a special commemorative magazine called The Genius of Prince. This included another image from Warhol’s Prince series (the “Orange Prince” print) and Condé Nast paid the Andy Warhol Foundation a US$10,000 licensing fee for the right to use the image. Goldsmith was not credited or paid for this. Goldsmith believed that the use of Orange Prince infringed her copyrights, but it was the Warhol Foundation who ultimately brought the issue to the courts, seeking a declaratory judgement that Orange Prince did not amount to copyright infringement or, in the alternative, that it was protected under the US’ Copyright Act’s fair use defence.
‘Fair use’ under US copyright law is used to promote freedom of expression by allowing the unlicensed use of a copyright protected work. When determining whether something is fair use a court will consider four elements set out by statute: (1) the purpose of use; (2) the nature of the copyrighted work; (3) the amount and substantiality of the copyrighted work used; and (4) the effect of the use on the potential market.
The Warhol Foundation argued that Orange Prince created an entirely new meaning from Goldsmith’s photograph and therefore was protected by the fair use doctrine. The narrow question before the Supreme Court was whether a new message or expression is sufficient to weigh the “purpose and character of the use” factor in favour of fair use, to which the Supreme Court said no.
The Supreme Court’s majority ruling looked to the “purpose and character” of the two works in question (rather than a test of whether the secondary work has “new meaning or message”) and found that the Warhol Foundation exceeded its rights when it supplied the Warhol images to Condé Naste in 2016 because that purpose was too close to the purpose for which Goldsmith used her photograph. The Court found that both Goldsmith’s photograph and Warhol’s image served the same purpose as magazine illustrations with a commercial use.
The Supreme Court’s analysis was based firmly on the notion that the fair use analysis must consider all four statutory elements. This is important because following the Cariou v Prince case some ten years ago, visual works that were deemed “transformative” could on their own meet the fair use test. This case acts as a reminder that all four factors must be met.
It is important to note that the Supreme Court did not rule that the Orange Prince infringed Goldsmith’s copyright, nor did it rule on what art is or the meaning of a work. To this end, the decision leaves many unanswered questions, particularly when it comes to art creation. We have been left to wonder, how much leeway does an artist have to use or refer to pre-existing works?
What does this decision mean for the art world generally?
Supporters of the Warhol Foundation’s position have warned of a chilling effect by the decision – arguing that the use of a new meaning as amounting to being transformative is essential to protecting the creation of future art, without which artists will work in fear of copyright infringement claims. However, this argument is flawed. The ‘fair use’ defence was not intended to be a ‘carte blanche’ for artists and the Supreme Court’s decision has sought to clarify the fair use doctrine set out by statute.
Ultimately, this case will have limited effect on UK copyright law specifically as it does not form any legal precedent for the UK. Further, ‘fair use’ is not a defence under UK copyright law and so whether an artwork is sufficiently transformative or produces a new purpose and character will not be relevant when a UK court is determining whether copyright infringement has occurred. Nevertheless, the case remains important for the art world in the UK when dealing with sales in the US and considerations in relation to ensuring the right licensing permissions are obtained. The copyright debates arising from the decision are equally important, particularly with the developments of AI and generative art and its ability to copy original works at an unlimited and unmanaged rate.
For more bespoke advice on intellectual property rights and art law generally, please contact our specialist Margherita Barbagallo, Head of Commercial Litigation & Art Law by scheduling a discovery call.
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