We are pleased to bring our readers a guest post by Abhijay Srekanth and Vivek Basanagoudar on interaction of trademarks with free speech. Abhijay Srekanth is an LLM candidate at the Queen Mary University of London specialising in IP, and a recent graduate of Jindal Global Law School. Vivek Basanagoudar is a fourth year law student at Jindal Global Law School. The views expressed in the piece are personal.
Trademarks as a Barrier to Free-Speech: An Examination of the MetaBirkins Dispute
Authors: Abhijay Srekanth and Vivek Basanagoudar
Non-fungible tokens (‘NFTs’) have occupied a significant space in current legal discourse, in no small part due to the numerous legal questions that have emerged in their wake. This article seeks to examine how trademark law interacts with the freedom of expression of artists to choose the subject matters they wish to engage with, using the dispute between Hermès, a fashion industry giant and Mason Rothschild, a digital artist, as a contextual backdrop.
The Hermès-Rothschild Dispute
On 2nd December 2021, Mason Rothschild began advertising an NFT collection of fur-covered Birkin-like handbags that he designed, advertising them as ‘METABIRKINS’. These NFTs were available on OpenSea- an online NFT marketplace. Hermes, the owner of the Birkin trademark and trade-dress in USA, promptly sent OpenSeas a cease-and-desist notice. They have since filed a lawsuit against Rothschild in the District Court of the South District of New York for, inter-alia, trademark infringement on grounds of source confusion under section 43(a) of the Lanham Act 15 U.S.C. §1125(a) and dilution by blurring under section 43(a) of the Lanham Act, 15 U.S.C §1125(c).
The allegedly infringing NFTs (on the right) can be found below alongside the registered Birkin trade-dress(on the left).
Rothschild has maintained that his NFT collection is a manifestation of artistic expression protected under the First Amendment, drawing parallels between his collection and Andy Warhol’s famous soup can prints. They argue that the public is unlikely to be confused as to the source of the NFTs as all advertising material explicitly discloses no relation between Rothschild and Hermes.
Hermes, however, inter-alia, contend that the NFTs would amount to dilution by blurring as Rothschild’s project would prejudice the distinctive character of the Birkin marks.
The need for artistic-use exceptions to trademark infringement in the Indian Trade Marks Act
While this case is currently pending before the Southern District of New York District Court, it’s worth thinking through how this could have played out in the Indian context. Trademark infringement by way of dilution is usually split into tarnishment of reputation or blurring. Blurring as a cause of action exists to protect the value that marks possess by ensuring the ‘distinctiveness’ of a mark is protected (page 483). Similarly in India, Section 29(4) of the Trade Marks Act, 1999 prohibits the use of a mark by an unauthorised third party which is used in relation to goods dissimilar to those the mark is registered in respect of and such use that takes undue advantage or brings disrepute to the distinctive character or repute of the mark in India. Though the text of the Act does not use the terms dilution, tarnishment, blurring or free-riding, the text of section 29(4), along with caselaw makes it abundantly clear that such acts are actionable in Indian courts.
Mattel (the owner of the Barbie trademark) in 2017 filed an interim application to injunct the distribution of the song “sexy barbie girl” [which was later renamed as “sexy baby girl”] which had already been released ahead of the movie “Tera Intezaar” (covered on SpicyIP here). What this post wants to focus on is the chilling effect trademark notices have on expression. In the Mattel case, the court only had to deal with whether there were grounds to award interim relief. The Court referred to past cases Mattel had filed in the US and noted that in the instant case- (i) trademark owners could not control public discourse over marks and (ii) the speech would need to be commercial to warrant infringement action.
Justice Endlaw notes the difference between commercial and non-commercial speech is unclear, but generally, commercial speech should propose a commercial transaction, and all that does more should be protected as free speech. Justice Endlaw is also particularly concerned with how trademark rights are to be balanced against the public’s speech rights, and therefore on balancing the plaintiffs concerns with the public interest in ensuring expression is curtailed decides not to grant an injunction against the song. His order does not restrain Mattel from filing an infringement suit which is probably why the studio decided to change the songs name as part of a settlement deal with Mattel.
While statutorily absent, a claim that a parodic, critical, or news-related use of trademarks is permitted may be made based on the Delhi High Court’s order in Tata Sons Ltd v Greenpeace Int. and Ors. The case dealt with TATA suing Greenpeace for trademark dilution for a Pac-man-like game Greenpeace developed creatively named TURTLES v TATA where turtles would have to escape the TATA logo- a protest against TATA’s development project allegedly endangering Olive Ridley Sea Turtles populations. TATA promptly sued alleging the game had diluted and tarnished its marks under section 29(4) of the Act. The court noted that section 29(4) prohibited the unauthorised use of a mark on a product not associated with the mark without due cause. As the use of the mark was for non-commercial parodical use highlighting a social cause, the court found that Greenpeace had due cause to use TATA’s marks. Moreover, the court rejected TATA’s argument that just because non-infringing alternatives existed to highlight the same anti-project message, such expression should ipso-facto be held to be infringement.
The authors of this piece feel that the expansive reading of due cause is insufficient to properly afford artists protection against dilution claims. For one, the reliance on a judicial expansion of ‘due-cause’ allows for a high degree of judicial discretion- the unpredictability of which is likely to have a chilling effect on artists using popular marks in their works. Secondly, though the Court in Tata v Greenpeace did not mandate use be non-commercial, the emphasis on such use is likely to dissuade artists from using such marks in artistic projects with commercial value. The bulk of the judgement focussed on the non-commercial social-commentary aspect of the game to carve out an exception for such use, which may result in future courts holding non-commercial use as a necessary condition.
The Indian counterpart of fair use in trademark law is embodied in Section 30 of the Trade Marks Act, 1999. The positive defence rests on the usage being bona fide in nature and such usage not resulting in unfair advantage being taken of or detrimental to a trademark. S. 30(2)(a) permits usage of a mark relation to goods or services indicates the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services or other characteristics of goods or service without infringing on a registered trademark. S. 30(2)(d) permits the usage of a registered trademark, without consent, if such use is reasonably necessary to indicate goods adapted to form part of or be accessory to other goods or related services of the registered trademark. The precedent set in Consim Info Pvt. Ltd vs Google India Pvt. Ltd, Hawkins Cookers Ltd. vs Murugan Enterprises and Prius Auto Industries Ltd. vs. Toyota Jidosha Kabushiki Kaisha require courts to observe whether the following conditions have been met for nominative fair use to be contended as a defence – (i) whether the usage was bona fide in nature (ii) whether the usage indicated any form of endorsement or sponsorship by the proprietor of the registered trademark (iii) whether the usage confused the public or deceived them about the source of origin and (iv) whether a similar style and font of the registered trademark was used.
Additionally, the analysis of ‘bona-fide use’ may, in the authors’ opinion, be complemented by the inclusion the factors present in 15 U.S. Code § 1125(3)(A) which lists out a set of exceptions to dilution by dilution or tarnishment –
(A) Any fair use, including a nominative or descriptive fair use, or facilitation of such fair use, of a famous mark by another person other than as a designation of source for the person’s own goods or services, including use in connection with—
(i)advertising or promotion that permits consumers to compare goods or services; or
(ii)identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner.
(B) All forms of news reporting and news commentary.
(C) Any non-commercial use of a mark.
Fair-use of marks in artistic manners in the pursuance of critical, parodic, newsworthy, or educational purposes are unlikely to hamper the distinctive character of a mark. The success of such artistic comment would be contingent on consumers recognising the values the mark used represents to then connect it to the purpose of the artistic comment. The use of a company’s logo in a game criticising said company’s environmental degrading activities would not decrease the logo’s distinctiveness in consumer’s eyes. It would be used to help consumers recognise that said company may be engaged in environmentally irresponsible behaviour.
A Rothschild dispute in India- How should it be adjudicated?
As discussed until now, trademark law can and has unduly been invoked to silence expression that holders take offence to as was the case in Greenpeace. Discussing the dilution claims alone, it is unclear how an Indian court would rule on a similar set of circumstances. Referring to precedent, the Tata v Greenpeace decision doesn’t allow for much wiggle-room. The bulk of the Greenpeace decision refers to the value implicit in social commentary and satire as a basis for locating ‘due-cause’. Moreover, the fact that the game did not involve any profit played a decent role in why an injunction was never granted.
Moreover, on examining India’s jurisprudence on disparagement, it is likely that Rothschild would be found liable for dilution. The Delhi High Court’s order in Anhueser Busch Llc v Rishav Sharma (examined in detail on SpicyIP here) is a perfect example. The defendant “Foolish Post” in the instant case uploaded a video and news article on a satire website where they claimed a worker Budweiser had been urinating into beer-tanks. While the post contained an explicit disclaimer as to the post being a joke and having no basis in truth, it was picked up by people on social media who stripped the post of context, and subsequently by NDTV, a popular news station. Budweiser sued Foolish Post for, inter-alia, trademark infringement and dilution. The order is incredibly short and does not seem to provide any real justifications for why the provisions of section 29 would apply. It fails to explain how the originator be held liable for others alteration of their material?.
What a court should rule is a different matter. A Mattel approach far better respects the balance between speech and trademark rights than a Budweiser approach. Reference to a handbag company’s trade-dress through creations of designs entirely unique in the pursuance of an artistic goal, even if profit-centered, does not diminish the distinctiveness of Hermes’s marks- if anything it makes references to it and is successful in conveying its artistic message because of how distinctive the trade-dress is. Referring to the two conditions in Mattel– A Rothschild like NFT could amount to public discourse over a mark that is not to be interfered with unduly and (ii) the NFT was minted for an artistic purpose and is therefore not entirely commercial speech. It should be noted that this analysis is contingent on utility the NFT offers not including use in virtual spaces (like your avatar now wearing said meta-Birkin) as then a strong argument that the use is commercial and not in fact artistic may arise. On a balancing exercise between freedom of speech and trademark rights, Rothschild’s use of Hermes’ marks should not amount to dilution u/s 29(4).
The Hermes-MetaBirkin dispute serves as an ideal opportunity to examine the readiness of Indian trademark law to adapt to emerging technology and forms of expression that will become more popular as interaction with the meta-verse increases The dispute opens the door to many questions that fall outside the scope of this article but nonetheless should be considered, such as how the twin-condition test in Mattel would adapt to varying utilities offered by an NFT. Additionally, where trade-mark registration does not cover classes where NFTs would fall, how would common-law passing off actions stand to protect mark-owners? There is an urgent need examine these legal grey areas to ensure the development of creativity and cultural commons is not unnecessarily curtailed