The global fashion marketplace is experiencing unprecedented digital transformation with the emergence of the metaverse and NFTs. Given implementation is still in its early stages, fashion brands have closely watched the Hermès vs. Rothschild “MetaBirkins” dispute as a case that has the power to help define the future boundaries for what constitutes trademark infringement in the metaverse.
Allegations of trademark infringement against celebrity-founded brands are not new. In 2015, resort-wear brand Island Company LLC sued Kendall and Kylie Jenner for use of the phrase “Run Away, Fall in Love, Never Return,” which resembled Island Company’s trademark phrase “Quit Your Job, Buy a Ticket, Get A Tan, Fall In Love, Never Return”.[1] The case was settled in January 2016. In 2021, an Italian tribunal ordered social media influencer Chiara Ferragni to pull her snow boots from her footwear line, finding infringement on Tecnica group’s trademark for the world-renowned Moonboot.[2] Now, Vans, Inc., a sneaker company born out of 1960s California counter-culture, alleges trademark infringement by MSCHF, a Brooklyn art collective endorsed by rapper Tyga.
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.[1] 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.[2] Hermès opposed, arguing that the Polaroid factors— instead of the Rogers test—should apply, to assess likelihood of confusion.[3] 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.[4]
Continue Reading In the bag (for now): Hermès survives motion to dismiss in MetaBirkin NFT lawsuit
We recently reported on the Federal Trade Commission’s (“FTC”) increased enforcement against review curation policies that disproportionately restrict or remove negative reviews. Now, the Consumer Financial Protection Bureau (“CFPB”) has issued a Bulletin that makes clear that the suppression or manipulation of consumer reviews posted about financial products and services is an unfair and deceptive act or practice. The CFPB’s Bulletin drew from recent FTC guidance and enforcement activity as well as the Consumer Review Fairness Act of 2016 and stated that conduct such as (1) deceptively posting fake reviews that appear independent, (2) suppressing or manipulating reviews such as by limiting the posting of negative reviews, or (3) imposing contractual ‘gag’ clauses on consumers in form contracts that prohibit honest reviews is generally a violation of the Consumer Financial Protection Act.
Continue Reading CFPB Announces Policy Against Consumer Review Suppression
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.
Continue Reading See You in the Metaverse: What Brands Need to Know
A few months after putting the nation’s top advertisers on notice that consumer endorsements are high priority, the Federal Trade Commission (“FTC”) recently announced a settlement with online retail company Fashion Nova, LLC (“Fashion Nova”) for allegedly blocking negative reviews from being posted on its website, signaling to retailers that the FTC is cracking down on companies that inflate consumer reviews. In conjunction with the settlement, the FTC also released guidance regarding the collection and publication of online reviews directed to online retailers and review platforms and announced that it sent letters to 10 companies offering review management services.
Continue Reading FTC Ramps Up Enforcement on Consumer Reviews
Earlier this month, New York State Assemblywoman Kelles and State Senator Biaggi introduced the Fashion Sustainability and Social Accountability Act in the New York State Assembly and Senate. If the legislation becomes law, it would amend New York’s general business law to require fashion companies to publicly disclose extensive information about their environmental, social, and governance (“ESG”) policies, impacts, and targets for improvement.
Specifically, the Act would require all fashion retail sellers and manufacturers doing business in New York that have annual worldwide gross receipts surpassing $100 million to disclose:
Continue Reading Will New York’s Fashion Sustainability and Social Accountability Act Set a Trend?
At the end of 2021, the California Statewide Commission on Recycling Markets and Curbside Recycling (the “Commission”) sent a letter to The California Department of Resources Recycling and Recovery, also known as CalRecycle, and California Attorney General Rob Bonta, asking them to investigate illegal labeling of plastic bags as recyclable by retailers. The Commission is alleging that businesses in the state are falsely implying that their bags are capable of being recycled through curbside collection with the “chasing arrows” logo and words such as “recyclable” and “recycle.” The Commission believes this labeling is impeding the curbside recycling process.
Continue Reading California Recyclability Labeling Scrutiny Poised to Increase Retailers’ Liability Risk
On November 11, 2021 activewear apparel brand lululemon athletica canada inc. (“lululemon”) sent a cease and desist letter to interactive fitness platform Peloton Interactive, Inc. (“Peloton”), alleging that five of Peloton’s products, including four bras and a pair of leggings, were infringing upon six of lululemon’s design patents and that Peloton’s One Luxe Tight infringed upon lululemon’s Align pant trade dress.
Rather than spinning its wheels, on November 24, 2021, Peloton responded with an action for declaratory judgment against lululemon in the Southern District of New York, seeking (1) a determination that Peloton did not infringe lululemon’s design patents, (2) invalidity of these patents, and (3) a declaration that lululemon does not have trade dress rights in the Align pant and/or that Peloton did not infringe upon this trade dress. Specifically, Peloton argues that there are clear and obvious differences between its products and lululemon’s design patents, the presence of the brands’ trademarks on the products eliminates confusion, and the design patents are anticipated and/or obvious based on prior art. For example, Peloton emphasizes that the back of its Peloton Branded Strappy Bra is cut straight across and has a mesh layer, while the design patents depict a scooped back and no mesh layer, among other differences. Peloton also argues that the asserted Align trade dress does not possess the requisite distinctiveness to be protectable, and even if it does, Pelton’s One Luxe Tight is not likely to cause marketplace confusion.
Continue Reading Peloton and lululemon Yet to Work Things Out, File Cross Lawsuits
On October 8, 2021, the Federal Trade Commission (“FTC”) settled its charges against mattress company Resident Home LLC and its owner for allegedly making unsubstantiated claims that DreamCloud mattress’ are “proudly made with 100 percent USA-made premium quality materials.” In reality, the DreamCloud mattresses are finished abroad, and in some cases, they are completely imported or contain significant imported materials.
Continue Reading The FTC Settles “Made in USA” Case for $753,000 After New Rule Goes Into Effect