In the recent article, “Facebook and Google settled biometrics lawsuits. Look for more.” featured in Crain’s Chicago Business, Partner Jason Stiehl analyzes wider repercussions of Snapchat’s recent settlement after accusations that it used facial recognition technology that collected and stored users’ biometric information without consent. Stiehl explains that he expects more litigation due to Illinois’
Crowell Provides Additional Commentary on the Hermès MetaBirkins Lawsuit
In the recent article, “Why Hermès’ MetaBirkins Lawsuit Has High Stakes for Brands and Creators”, featured in The Business of Fashion, Partner Preetha Chakrabarti expands upon her insights from the her previous blog posts on non-fungible tokens (“NFTs”) and the metaverse. Previously, Chakrabarti reported on how the designer, Hermès, sued an individual named Mason…
In the bag (for now): Hermès survives motion to dismiss in MetaBirkin NFT lawsuit
Earlier this year, Hermès filed a trademark infringement suit against Los Angeles-based designer Mason Rothschild for creating and selling faux-fur digital renditions of the luxury Hermès Birkin handbags and using a collection of 100 NFTs, titled “MetaBirkins,” to authenticate the digital images. In response, Rothschild filed a motion to dismiss Hermès’ trademark infringement claim under the Rogers test on the basis that the digital images of the Birkin bags are “art” and, therefore, receive First Amendment protection. Hermès opposed, arguing that the Polaroid factors— instead of the Rogers test—should apply, to assess likelihood of confusion. On May 18, 2022, the court denied Rothschild’s motion to dismiss, concluding that: (1) the Rogers test applies to the trademark infringement analysis of the “MetaBirkins” title, and (2) the Polaroid factors apply to the explicit misleadingness analysis.…
Continue Reading In the bag (for now): Hermès survives motion to dismiss in MetaBirkin NFT lawsuit
Crowell Provides Insights on Meta Logo Trademark Suit
In a recent Law360 article titled, “Meta Logo Suit May Test How Virtual TM Disputes Unfold,” Partner Preetha Chakrabarti provided her insight on a lawsuit against the similarity between Meta’s infinity-loop logo to a Swiss blockchain company’s logo and the increase in moving, multidimensional logos in the digital space. In the article, Chakrabarti emphasized the…
See You in the Metaverse: What Brands Need to Know
In recent months, the metaverse, a term that is meant to encompass a mixture of virtual reality and augmented reality, has increasingly become a conversation topic for companies and consumers. Companies have begun to invest in this space and have started staking out virtual property on platforms like Decentraland and The Sandbox. Lawsuits and trademark applications have also popped up alongside these investments. This recent legal activity indicates that the metaverse will be a critical area for companies to begin to learn about and monitor to ensure they are adequately protecting their intellectual property and avoiding risk.
In January 2022, designer Hermès sued an individual named Mason Rothschild in the Southern District of New York for his creation and sale of “Metabirkins,” which are non-fungible tokens (“NFTs”) that resemble fur-covered versions of Hermès’ iconic Birkin bag. Among other things, the complaint alleges that Rothschild has engaged in trademark and trade dress dilution and infringement by selling his NFTs, one of which has already sold for $40,000, just as one would by selling a counterfeit physical bag. Interestingly, Hermès’ complaint notes that the defendant’s activity is preempting Hermès from entering the NFT market itself.
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EU Commission Publishes Draft New Rules for Distribution Agreements: What’s to Come for Distribution Relationships in the Digital Age?
On July 9, 2021, the European Commission published its long-awaited draft of the revised Vertical Block Exemption Regulation (VBER) and Vertical Guidelines. The significant changes proposed by the Commission take into account the specific challenges brought about by the growth of e-commerce and online platforms in the “digital age.” The Commission has also taken this…
Maryland’s Digital Advertising Tax: A Contentious Start, and an Uncertain Future
Maryland became the first U.S. state to create a digital advertising tax on February 12, 2021. The Digital Advertising Gross Revenue Tax (DAGRT) was originally passed in March of 2020, but subsequently vetoed by Maryland Governor, Larry Hogan. Maryland’s legislature voted to override the Governor’s veto, however. The contentious journey for DAGRT passage is likely to be overshadowed by a litigious future.
DAGRT (full text here) imposes a progressive tax on the sale of digital advertising services’ gross revenue within the state. DAGRT focuses on large providers of digital advertising services; entities with revenue exceeding $100 million. The rate of the tax imposed, based on global revenue, is 2.5% for annual global gross receipts of $100 million to $1 billion, 5% for gross receipts of $1 billion to $5 billion, 7.5% for gross receipts of $5 billion to $15 billion, and 10% for gross receipts exceeding $15 billion. The rate then applies to digital advertising services’ gross revenue in Maryland. However, DAGRT does require all entities with an annual gross revenue derived from digital advertising services within the state over $1 million to file a specialized tax return. DAGRT’s focus on large providers of digital advertising services might incentivize these providers to find avenues to avoid the tax by changing their digital advertising strategies. For example, more companies may offer advertisement-free subscription options. It’s also possible that the companies faced with paying the tax may simply pass the cost on to the smaller businesses purchasing the advertisements and to consumers.
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Digital Services Act: The European Commission Proposes An Updated Accountability Framework For Online Services
On December 15, 2020, the European Commission (EC) presented its long-awaited proposal for a Digital Services Act (DSA), together with a proposal for a Digital Markets Act (DMA), which we discussed in a previous alert. Whereas the DMA aims to promote competition by ensuring fair and contestable markets in the digital sector, the DSA proposal intends to harmonize the liability and accountability rules for digital service providers in order to make the online world a safer and more reliable place for all users in the EU.
Most notably, the DSA would impose far-reaching due diligence obligations on online platforms, with the heaviest burdens falling on “very large” online platforms (i.e., those with more than 45 million average monthly active users in the EU), due to the “systemic” risks such platforms are deemed to pose in terms of their potential to spread illegal content or to harm society. In this day and age when the perceived power of online platforms to independently control content publication and moderation is headline news daily, with governments throughout the globe grappling with different legislative and regulatory proposals, the DSA stands out as an ambitious effort by the EC to create a consistent accountability framework for these platforms, while striking a balance between safeguarding “free speech” and preserving other values and interests in a democratic society. Like the parallel DMA proposal, the DSA proposal has been criticized for targeting mainly U.S.-based companies, which would make up most of the “very large” platforms. Given the huge commercial interests at stake, the passage of both laws will no doubt be the subject of intense debate and lobbying, including with respect to the asymmetric nature of the proposed regulation and the powerful role that the EC reserves to itself in both proposals.
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Digital Markets Act: The European Commission Unveils Plans to Regulate Digital ‘Gatekeepers’
On December 15, 2020, the European Commission (EC) published its proposal for a Digital Markets Act (DMA). The proposal aims to promote fair and contestable markets in the digital sector. If adopted, it could require substantial changes to the business models of large digital platform service providers by imposing new obligations and prohibiting existing market practices. These changes not only would create significant new obligations on “gatekeeper” platforms, but also opportunities for competitor digital service providers and adjacent firms. Further, the proposed requirements of the DMA have the potential to transform the way that businesses engage with “gatekeeper” providers – including, for example, companies that sell goods and services, distribute apps, and/or purchase advertising on large platforms.
Digital Markets Act Proposal: Main Takeaways
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IoT Goes Federal under Newly Signed Law
Last week, the President signed the Internet of Things (IoT) Cybersecurity Improvement Act into law, kicking off a multi-year process that will culminate in the first-ever federal requirements for IoT devices. Under the law, the National Institute of Standards & Technology (NIST) is now charged with drafting and finalizing security requirements for IoT devices, as…