HERMES INTERNATIONAL and HERMES OF PARIS v. "MASON ROTHSCHILD" a/k/a SONNY…

Background

Hermès International and Hermès of Paris, Inc. sued Martin Rothschild under the federal trademark law known as the Lanham Act. The complaint alleged that Rothschild designed and marketed digital images of faux-fur-covered Birkin handbags called “MetaBirkins” and sold them using non-fungible tokens. Hermès alleged ownership of trademark rights in the “Hermès” and “Birkin” marks and trade-dress rights in the handbag’s design. The complaint also alleged that consumers and media outlets were confused about whether Hermès was affiliated with Rothschild’s project.

The court had previously denied Rothschild’s motion to dismiss Hermès’s claims. Rothschild then moved to certify an interlocutory appeal, meaning an appeal before the district court case reaches final judgment. Under 28 U.S.C. § 1292(b), such an appeal requires a controlling legal question, substantial disagreement about that question, and a showing that immediate review may materially advance the end of the case.

Proposed First Amendment Issues

Rothschild first challenged the court’s earlier conclusion that Hermès’s allegations were sufficient to survive a First Amendment challenge under the Rogers v. Grimaldi framework. That framework considers whether a work is artistic expression, whether the trademark use has artistic relevance to the work, and whether the work is explicitly misleading about its source or content.

Judge Rakoff held that the artistic-relevance issue was not a pure legal question suitable for interlocutory review. The earlier ruling applied the legal standard to the allegations in the complaint, viewed in Hermès’s favor. The court also held that the issue was not controlling because a finding of artistic relevance would not by itself end the case; the court would still need to consider whether the work was explicitly misleading.

Rothschild also challenged the court’s conclusion that the complaint adequately alleged explicit misleadingness. The court again found that this issue involved applying legal standards to alleged facts that could be developed and placed in context through the litigation. It therefore was not an appropriate issue for immediate appeal.

Rothschild separately argued that the court should not have used the Polaroid factors to assess consumer confusion because, in his view, those factors apply only when one title allegedly infringes another title. Judge Rakoff stated that this was a legal question, but held that it was not controlling because adopting a different consumer-confusion test would not necessarily require dismissal. The court also found that Rothschild had not shown substantial disagreement among courts about the issue.

Dastar and Intangible Goods

Rothschild’s second principal issue concerned Dastar Corp. v. Twentieth Century Fox Film Corp. In Dastar, the Supreme Court explained that the Lanham Act’s reference to the “origin” of goods generally concerns the producer of the tangible product sold in the marketplace, rather than the creator of the intangible creative content embodied in that product.

Rothschild argued that Dastar prevented Hermès from bringing Lanham Act claims involving intangible goods such as MetaBirkins. The court rejected that interpretation for purposes of the motion. It explained that Dastar and related cases focused on the need for confusion about the source of the defendant’s goods, not on whether those goods were tangible. The court concluded that Hermès plausibly alleged confusion about the source of Rothschild’s MetaBirkins themselves, including whether Hermès was associated with the project.

The court also held that Rothschild had not shown the required substantial ground for disagreement. It found that most courts applied the Lanham Act to intangible goods, and that Second Circuit precedent had at least implicitly rejected the view that the statute applies only to physical goods. The court further concluded that the issue was not sufficiently difficult, exceptional, or new for the Second Circuit to justify an interlocutory appeal.

Disposition

Judge Jed S. Rakoff denied Rothschild’s motion for interlocutory appeal in its entirety. The clerk was directed to close the motion on the docket. The opinion stated that the parties could raise disagreements of this kind in an appeal after final judgment, but it did not authorize an immediate appeal here.

Uncertainty

The opinion’s signature-date line is corrupted in the provided text. This summary uses the supplied filing date of October 5, 2022 in the metadata header.