Retail is rife with legal battles that pit industry occupants – from luxury brands to sportswear titans – and their valuable trademarks against one another. With the first half of the year behind us, here is a look at roughly a dozen currently pending trademark lawsuits that are worth keeping a close eye on, as brands clash over the use of their trademarks in connection with the marketing and sale of non-fungible tokens (“NFTs”), Chanel continues to face off against a couple of resale entities, footwear brands wage lawsuits over their trademarks (and trade dress), and celebrities and other big companies are slapped with reverse confusion-focused suits over newly-launched (or in Meta’s case, relatively newly-rebranded) endeavors.
No shortage of these cases are expected to provide guidance for brands and trademark practitioners, alike, with matters that are being waged over the use of marks on virtual goods/services (i.e., in the metaverse) and/or in connection with NFTs, likely to be especially useful in helping to lay the groundwork for future actions in this space.
Hermès International v. Mason Rothschild
In one of the first headline-making lawsuits involving NFTs, Hermès filed a trademark infringement, federal trademark dilution, false designations of origin, false descriptions and representations, cybersquatting, injury to business reputation, misappropriation, and unfair competition lawsuit against Mason Rothschild, the individual behind the collection of 100 MetaBirkins NFTs, early this year. Tied to images depicting furry renderings of its famous Birkin bag, Hermès claims that in furtherance of his sale of the NFTs, Rothschild simply “rip[s] off [its] famous BIRKIN trademark by adding the generic prefix ‘meta,’” which refers to “virtual worlds and economies where digital assets such as NFTs can be sold and traded.”
Rothschild has since argued that his “fanciful depictions of fur-covered Birkin bags and his identification of his artworks as ‘MetaBirkins’ are artistically relevant and do not explicitly mislead about their source or content,” and thus, should be protected from trademark liability by the First Amendment. While the court agreed that the Rogers test should be used to determine whether Rothschild’s use of Hermès’ marks is actionable under the Lanham Act, SDNY Judge Jed Rakoff determined in May that Hermès has sufficiently set out allegations that Rothschild’s use of “MetaBirkins” is not artistically relevant or is explicitly misleading and therefore, fails to meet the Rogers test.
Counsel for Rothschild lodged a memo of law in support of “an immediate interlocutory appeal” in early June, arguing that the case addresses “an issue being closely watched by the press because it is of special consequence to society at large and art markets in particular: whether artists are free under the First Amendment to depict or refer to trademarks in their art, and to describe what they have depicted, without fear of trademark liability.” Hermès subsequently pushed back in a memo of its own.
Reflecting on the case, a rep for Rothschild told TFL, “The judge ruled that MetaBirkins are artistic speech protected by the First Amendment. There are two remaining questions that the judge said need to be addressed. First, is the title “MetaBirkins” artistically relevant to the artwork? In our view the answer is clearly yes—the artworks are illustrations of imaginary fur-covered Birkin bags, and the title MetaBirkins describes what the artworks are about. The second question is whether I’ve made any explicit claim that Hermes is responsible for the MetaBirkins artwork, and again we look forward to showing that I’ve always identified myself as the creator, not Hermes.”
The case is Hermès International, et al. v. Mason Rothschild, 1:22-cv-00384 (SDNY).
Chanel v. The RealReal, Chanel v. What Goes Around Comes Around
Chanel’s trademark-centric lawsuits against The RealReal (“TRR”) and What Goes Around Comes Around (“WGACA”) are still underway in the SDNY roughly four years after the cases were filed – with the parties in both cases currently clashing over discovery.
In the enduring trademark and anti-competition lawsuit that Chanel filed against TRR, the brand accuses the resale platform of “selling counterfeit CHANEL handbags, while also “represent[ing] to consumers that it ‘ensure[s] that every item on TRR is 100% the real thing, thanks to our dedicated team of authentication experts,’” and then offering up and selling a number of “counterfeit” Chanel products. Chanel has also taken issue with TRR’s “advertising and marketing practices,” claiming that the reseller “has attempted to deceive consumers into falsely believing that [it] has some kind of approval from or an association or affiliation with Chanel” when no such association exists.
Following a stay in the case while the parties participated in a mediation with the aim of a settlement, counsels for the two companies alerted an SDNY judge in December 2021 that they were “unable to reach a resolution of the matter at this time.” As of July 1, the parties were slated for a discovery hearing, including on whether certain documents should be clawed back as privileged, as Chanel has argued.
Meanwhile, Chanel is still embroiled in the separate – but similar – case that it filed against WGACA. After refusing to toss out the bulk of Chanel’s claims, including its trademark infringement and false association causes of action, a New York federal court ordered that the New York-based reseller provide additional information about its sale of Chanel-branded products. In an order in June, SDNY Judge Louis Stanton ordered WGACA to produce the monthly financial statements dating back to 2018 that its expert used to calculate WGACA’s profits, along with its summary of Chanel-branded product “sales and costs,” along with updated “Google Analytics information, data from Bitly, and internal reports relating to WGACA’s advertising using Chanel’s trademarks” – and the effectiveness of such ads.
Reflecting on the significance of the lawsuits, Foley & Lardner’s Jeffrey Greene and Allison Haugen have stated that the implications “could be broad-reaching, providing guidance to resellers on the parameters of a fair use defense to trademark infringement claims.” They also stand to provide “insights into the validity of antitrust-type claims in instances of claimed interference with the resale market, particularly in connection with Chanel v. The RealReal, as well as how resellers ought to describe the authenticity of the goods they sell.”
The cases are Chanel, Inc., v. The RealReal, Inc., 1:18-cv-10626 (SDNY), and Chanel, Inc. v. What Goes Around Comes Around, LLC, et al., 1:18-cv-02253 (SDNY).
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