General / Musings

Dealing with trademarks in the metaverse – Hermes Wins MetaBirkins Lawsuit

By Nicole Vossius, contributor and Alan Behr, Partner and Chair, Fashion Practice, Phillips Nizer

As has been reported, the luxury design house of Hermès has prevailed in its trademark infringement lawsuit against the artist Mason Rothschild over his “MetaBirkins” NFT  project, providing much-needed guidance on how to find a balance between trademark protection under the Lanham Act and artistic freedom of expression guaranteed by the First Amendment.  It is important, however, to take a moment to reflect on how new technology and traditional crafts (such as the handwork on a luxury bag) intersect within the ever-changing digital sphere.

We should consider the nature of NFTs (non-fungible tokens).  An NFT is a digital certificate that “authenticates” a digital asset, such as a digital drawing or a video, as the authentic piece associated with the certificate.   Digital certification helps bring value to digital items that can be easy to copy perfectly: a copy not certified by an NFT is just a copy; only the digital file “traveling” with the NFT is the authorized original. 

NFTs rapidly became business news.  In February, 2021, an NFT of a collage by the digital artist Beeple entitled Everydays: The First 5000 Days was sold at auction by Christie’s for $69.3 million.  In contrast, the most Beeple had ever sold a print for before experimenting with NFTs was $100.  Of course, profit in the digital world can be a question of timing and even perspective.  The purchaser, who is said to have had an interest in driving up the value of the artist’s works, actually paid for the piece with a cryptocurrency that has since plummeted in value.  The prices subsequently paid for NFTs have become more modest.

In November, 2021, however, the artist Mason Rothschild launched sales of his “MetaBirkins”—one hundred NFTs, each associated with a unique digital image based on the famous Hermès’ Birkin handbag.  Some versions had the bags covered in colorful fur or smile emojis; more eccentric variations depicted a reproduction of a fetus in different stages of development.  According to Rothschild, his “MetaBirkins” serve as an “ironic nod” to the renowned brand in an “artistic experiment” that intends to examine how society places value on status symbols.  Hermès sent a demand letter without effect and then it sued Rothschild in the United States District Court for the Southern District of New York (case No. (22-cv 384 (JSR)), in New York City.

IN the course of the litigation,  Rothschild’s legal team offered a First Amendment defense, relying in good part on the case of Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989), in which the federal Court of Appeals for the Second Circuit determined that a film entitled Fred and Ginger (about a pair of Italian cabaret singers whose routine emulated cinematic performances by Fred Astaire and Ginger Rogers), did not infringe upon the trademark rights of the Ginger Rogers.  That holding is the foundation of what has come to be known as the “Rogers test,” which, arguably broadened over time, has been used to support a finding of non-infringement in cases in which trademarks were used in the course of artistic expression.

In deciding against granting summary judgment to either side, and while the trial was already in progress, the judge, Jed S. Rakoff, did agree that Rothschild’s MetaBirkins were in at least some respects works of artistic expression subject to the Rogers test: “Because NFTs are simply code pointing to where a digital image is located and authenticating the image, using NFTs […] does not make the image a commodity without First Amendment protection any more than selling numbered copies of physical paintings would make [them] commodities for the purposes of Rogers.”

Days later, however, the jury sided with Hermès, finding that, by using the BIRKIN word trademark and the trade dress mark for the shape of the bag in his NFTs, Rothschild purposefully utilized and commercialized the marks for his own profit and explicitly misled consumers as to the source of the goods.  As Rothschild himself put it so bluntly in text messages that came out during discovery: he was “sitting on a gold mine.”

The parties are still in litigation over the judgment and further legal challenges, but the decision, for now, leaves important legal questions unanswered.  Key from a business-risk perspective is to what extent a digital token can be said to infringe upon marks for real-world objects.  From a legal perspective, there is a question as to how far precedent based on the facts of (a celebrity objecting to the use of her name in a film title) can be pressed into service in deciding cases in which claims of artistic expression come into conflict with claims of trademark rights.  As is often the case, personal (a performer’s name) or something useful (a carry bag) can make new law.

General / Musings

What You Need to Know About the Proposed New York State Legislature’s Fashion Sustainability and Social Accountability Act

By Alan Behr

Alan Behr published a New York Law Journal article on the proposed New York State Legislature’s Fashion Sustainability and Social Accountability Act, a bill that stands to have a major impact on fashion companies operating in New York state as well as show hints of what may arise elsewhere.

The bill, if signed into law in its current form, would add a new §399-mm to the State’s General Business Law to require that any fashion company with more than $100 million in “annual worldwide gross receipts” disclose on its website “its environmental and social due diligence policies, processes and outcomes, including significant real or potential adverse environmental and social impacts and disclosure targets for prevention and improvement.”  

The effect is something like an accountability value added tax, passing disclosure and remediation along the supply chain as goods mature from “raw material to final production.” A compliant company would have to address not merely the environmental impact issues implicit in the name of the bill but information on workforce wages of suppliers and the disclosing company’s “approach for incentivizing supplier performance on workers’ rights…”

The penalty for noncompliance would be a fine of up to two percent of annual global revenues of $450 million dollars or more—not mere profits but revenues, and not simply revenues in New York but total worldwide revenues, regardless of profitability. The New York State attorney general would be charged with enforcement, but private citizens could also start lawsuits. Fines paid would go to a new “community benefit fund” administered by the New York State Department of Environmental Conservation and would be used for “environmental benefit projects that directly and verifiably benefit environmental justice communities.

The intentions of the Fashion Sustainability and Social Accountability Act are clearly noble, but it is hard to read the text of the current bill without seeing it as a high-minded legislative scold.  Read the full article for some key points.

General / Musings

NFTs and Birkin Bags You Kind of Just Look At (Virtually)

By Alan Behr, Phillips Nizer Partner

In their short history of being the greatest advance in art since cave painting, NFTs have raised new questions of esthetics (which sometimes interest lawyers), new questions about the art market (which interests them now and then) as well as new questions of law (which interest them compulsively). As a member of the Copyright Society, the International Trademarks Association and the Association Internationale des Critiques d’Art, I periodically wade across all those streams. I will not, in my capacity as an art critic, go into my analysis of the artistic merit of the images associated with the NFTs that have become prominent so far—other than to share that I have no intention of buying any of them. As a lawyer, what has my interest now are new legal issues arising from the unique technical aspects of NFTs.

As is often reported, NFTs are part of the blockchain—which, like most lawyers, I understand somewhat less than I do the non-volatile memory of a BIOS chip, which I understand not at all. More particularly, the technology that powers NFTs was created as an add-on to the Ethereum cryptocurrency blockchain. A common misconception is that NFT technology is a new medium—as oil on canvas and fingerpaint on construction paper are artistic media. An NFT is actually an electronic certificate of ownership of, typically, a work of digital art that is available in any common format, such as a JPG, TIFF, or MP4. The certificate has been likened to a property deed: The NFT is not property as in the house you own but recognition of holding title to the house found in the document that certifies that you are the one and only owner. More narrowly for art, it is rather like a certificate of authenticity issued by the artist when selling physical art: you pass it along with the art to verify that the art is neither a forgery nor a duplicate.

The technical problem the NFT technology surmounts is that its certification function gives the buyer a mechanism to resolve a core problem plaguing digital art: as with just about any digital file, digital art can be copied with one hundred percent fidelity. A copy of an oil painting is a just copy, not the original; a sculpture chiseled to look like another is not the same sculpture but a variation of it, and so on. To build verifiable uniqueness and thereby identify the “original” of a digital work, something like the NFT had to come along. Anyone can still make a perfect copy of the underlying image for little or no cost, but the art market will see the NFT as the sole, true original.

And so, all manner of NFTs are being attempted as entrepreneurs and even a few artists properly definable as such try to make large sums of money from selling them. The art market being of far greater interest to the American public these days than art itself, you can see the reason for the buzz: contemporary art (the criticism of which is my core mission as an art critic) is an esthetic muddle, but nearly everyone loves to know when and how big money is made.

With that as a predicate, it had to happen that the NFT market would slide willingly into the market for fashion, and as every commercial lawyer knows, when new money enters an old market, litigation will follow. A lawsuit involving fashion and NFTs that is now in its early stages may help clarify what the law will consider an NFT to be. The case, Hermès v. Mason Rothschild, 22 cv 983 (S.D.N.Y.), was recently filed by Hermès International and an affiliate to halt the marketing and sale of NFTs of images of the brand’s signature Birkin handbag. Each of the defendant’s NFT images is unique but all of them depict bags recognizably in the shape of Birkins clad in virtual fur. To stop their sale, Hermès, which owns United States trademark registrations for both the word mark BIRKIN and the famous shape of the bag (that is, its trade dress), has sued for trademark infringement, trademark dilution and associated wrongs.

The defendant filed a motion to dismiss, claiming to be an artist whose “MetaBirkins” “comment on the fashion industry’s animal cruelty and the movement to find leather alternatives.” When you look at the marketing the defendant has done for his creations, that response appears cheeky rather than contemplative—but because anything can be art these days, it is hard to predict how that might resonate with the court.

The defendant’s motion says, as such motions must, that there is nothing to litigate because the facts as pleaded, even if taken as true, do not support a finding in favor of the plaintiffs. To my reading, however, the memorandum in support of the motion appears to raise more triable facts than the complaint itself, making me wonder what the defendant’s strategy might be at this point. The defendant’s legal argument is further complicated by an overreliance on an important case regarding the right of publicity, Rogers v. Grimaldi, 695 F. Supp. 112 (S.D.N.Y. 1988). That case concerned Ginger Rogers, who was a real actress and dancer, not an imaginary handbag that will not hold your hairbrush or car keys. What is possibly more interesting here is the defendant’s statement about what an NFT actually does from a technical point of view:

Nor does the fact that [defendant] is using a new technological mechanism to authenticate his art change the fact that he’s selling art. An NFT is merely code that points to a digital asset…. [T]he NFT is not the digital artwork; it is code that points to a place where the associated digital image can be found, and that authenticates the image.

An important implication of that argument would be that an NFT is not a copy as that term is understood under United States copyright law. There is indeed a line of cases in which courts tried to unravel whether a type of digital technology created an infringing copy of a work protected by copyright. A relatively early such case was Micro Star v.FormGen 154 F.3d 1107 (9th Cir. 1998), for which I served as head of the legal department for the parent company of the party made the defendant in a complaint for declaratory judgement. The plaintiff, Micro Star, argued that its disc incorporating user-made unique levels (i.e., battles) for play with the videogame DukeNukem 3D and sold in violation of the license, did not actually copy the artwork of the game. The argument was that the code in the level discs only contained digital instructions (in what were known as MAP files) for what pieces from the game’s art library were to be accessed to create the combat challenge played by a user. That argument did not prevail, and the disc was found to be infringing. Similar questions of whether actual, fixed expression had been copied and, if so, if the result was infringing, were central in a later Supreme Court copyright case. In American Broadcasting Cos., Inc. v. Aereo, Inc., 573 U.S. 431 (2014), the Supreme Court found that the use of individual, miniature antennas, each dedicated to a single program seen by a single subscriber (as opposed, for example, to a single large server streaming to many) did not overcome the fact that that a broadcast service was illegally performing “publicly” the works held under copyright by others. Although the defendant in Hermès may have raised the issue of the electronic function of NFTs in support of its trademark defense, it is worth considering where that position might lead should copyright become a core issue in the next NFT case.

When that technical issue is tucked for now into its appropriate conceptual corner, the trademark question in the Hermès case remains traditional whether the marketplace would be confused into believing that the NFT of a MetaBirkin originated with Hermès or if the presence on the market of the NFT or the underlying image would dilute the value of the BIRKIN word mark and Birkin handbag trade dress. Looking at it strictly from that point of view, it appears that the plaintiffs have made a compelling case in their complaint.

It is hard to conceive what might happen if the court allows the defendant to keep selling his virtual Birkins (or MetaBirkins, if that is really a distinction). Luxury brands have probably never played such a starring role in popular culture as they do today. They can only do so through the enjoyment of a legal monopoly over their brands—including the trademarks that identify them and the stories that they tell. At The RealReal store in downtown Manhattan, for instance, aspiring luxury consumers troll for secondhand, affordable examples of major luxury products. In the bathrooms, recorded voices coach enthroned shoppers on the correct pronunciation of names of major luxury brands. Through that kind of retailing, social media and all the other instruments of pop culture, luxury has morphed from a reference point for rarified prosperity to a locus of collective aspiration. To allow NFTs to pop up randomly with cagey digital versions of the products of those brands would appear to allow others to control, in part, the messaging of those brands. That would surely cause consumers to confuse the source of the brand’s products with the sources of those NFTs.

Just asking intuitively: if you saw an NFT of a Birkin bag, even a fuzzy one, would you not assume that Hermès was involved? If you did not, the only interest you might have in the image certified by the NFT would have to be for its esthetic value—that is, as proper art. If the artist really had confidence that he could make the artistic power of furry handbags into the driving force behind the commercialization of his vision, why would he bother snipping recognition (and profits) from a famous luxury brand? Would not any handbag, real or fictional, not do quite as well? The point should therefore not be whether MetaBirkins are represent real purses or not or whether they have artistic value or not; the point should be whether the market for the source of all this—real Birkin handbags—would be damaged.

General / Musings

Zegner Opts for Popular SPAC IPO

Shopper watches window of Ermenegildo Zegna store in Vienna

By: Brian Brodrick, Phillips Nizer Partner

Ermenegildo Zegna N.V., a world-renowned Italian luxury fashion group, has completed its previously announced “going public” business combination with Investindustrial Acquisition Corp. (NYSE:IIAC) (“IIAC”), a special purpose acquisition corporation (SPAC) sponsored by investment subsidiaries of Investindustrial VII L.P.  The shares of the newly combined company started trading on the New York Stock Exchange on Monday, December 20, 2021 under the ticker symbol “ZGN.”

Zegna was founded in Trivero, Italy in 1910 by Ermenegildo Zegna.  The company was in its third generation of family ownership and operation at the time of the initial public offering (IPO).  It is internationally recognized for the distinctive heritage of craftsmanship and design associated with its Zegna and Thom Browne brands and the noble fabrics and fibers of its in-house luxury textile and knitwear business.  Zegna designs, manufactures, markets and distributes luxury menswear, footwear, leather goods and other accessories under the Zegna and the Thom Browne brands, as well as luxury womenswear and childrenswear under the Thom Browne brand.

The transaction delivered approximately $761 million in gross proceeds (before transaction expenses and the repurchase of shares from the controlling shareholders), consisting of $169 million cash from IIAC’s trust account (after redemptions), a fully committed $250 million private offering (which, in light of strong investor demand, was upsized by $50 million versus the original target amount), $125 million from the additional backstop private offering previously announced, and approximately $217 million in a forward purchase agreement with Strategic Holding Group S.à r.l., an affiliate of IIAC’s sponsor (“SHG”).

According to a statement released by the company, based on the transaction value, the merged entity is expected to have an initial enterprise value of $3.1 billion, an initial market capitalization of $2.4 billion and will be well capitalized.  The Zegna family will continue its long-term stewardship of the company through an ownership stake of nearly 66%.

Although all indications are that the IPO was carried out in a manner worthy of the Zegna brand, the vehicle chosen for the process, the SPAC, has recently drawn regulatory attention.

A SPAC is effectively an inactive company that offers securities for cash and places substantially all the offering proceeds into a trust or escrow account for future use in the acquisition of one or more private operating companies.  Following its IPO, the SPAC will identify acquisition candidates and attempt to complete one or more business combination transactions; the company will then continue the operations of the acquired business as a public company.

SPACs first appeared in the 1980s but have gained accelerating popularity in recent years, especially since 2020.  SPAC sponsors generally raise money in IPOs for future acquisitions of other private companies.  Because finding acquisition targets can take time (typically two years), the cash raised (typically $10 per share) is held in a trust while the sponsors search for a target.  After the SPAC completes a merger with the target company, the privately held target company becomes a publicly listed operating company.  This last step of creating the listed successor company is referred to as a “de-SPAC” transaction.

A SPAC is required to keep 90% of its IPO gross proceeds in an escrow account through the date of acquisition.  The SPAC should complete acquisitions reaching an aggregate fair market value of at least 80% of the value of the escrow account within 36 months.  If the acquisitions cannot be completed within that time, the SPAC must file for an extension or return funds to investors.  At the time of de-SPAC transaction, the combined company also must meet stock exchange listing requirements for an operating company.

According to statements released by the staff of the Securities and Exchange Commission (SEC), over the past six months, the United States securities markets have seen an unprecedented surge in the use and popularity of SPACs.  The SEC has noted a number of concerns about the increased use of SPACs in IPOs, including risks of excessive fees, conflicts of interest, and sponsor compensation.  It has also identified risks of reliance on celebrity sponsorship and baseless hype, and the sheer amount of capital pouring into the SPACs.

The staff at the SEC has announced that the agency is continuing to look carefully at filings and disclosures by SPACs and their private targets; the staff has announced proposed guidelines for increasing such disclosure.

For Zegna, so far so good.  For SPACs in the broader marketplace—this is one of those situations in which time will tell.

General / Musings

The Story of the Iconic I ❤ NY T-Shirts (and more)

By: Phillips Nizer Partners: Alan Behr, Charles LaPolla, Andrew Tunick and Intern: Yann Rimm

Those of you who remember New York City from the late 1970s do not need anyone to tell you that the City has changed drastically since then.  Back when New York City experienced its all-time high crime rate that helped frighten away tourism (and residents), the City desperately needed help.  Overheated municipal spending in prior years and other factors led to serious financial problems.  In 1975, President Gerald Ford denied the federal assistance requested in order to stave off a potential filing by the city for bankruptcy.  Two years later came one of several power blackouts to strike the city, but this one created opportunity for massive looting that resulted in 4,500 arrests.

At about that moment, however, the New York State Department of Economic Development (NYSDED) began its program to make the City more desirable as a place to live, work and visit.  And that is how the I ❤ NY logo mark was born.  It was designed for free by Milton Glaser, the graphic designer already famous for a Bob Dylan poster and many other works.  He was recruited by William S. Doyle, the deputy commissioner of the New York State Department of Commerce.  The design was an immediate success, helping keep the campaign going far longer than what was initially anticipated to be a duration of only a few months.  Using a reference to New York City as the “Big Apple” dating from the 1920s, the New York Convention and Visitors Bureau, as it was then known, began again promoting the city as the “Big Apple”—and the revived nickname stuck.

By the time that the COVID-19 pandemic had disrupted travel everywhere, New York City had become the most-visited city in the United States and the eighth most visited in the world.  According to NBC News, the Big Apple is also the world’s most photographed city.

Perhaps because the individual elements of the Glaser logo are common, it is a frequent misconception that the Glaser logo is in the public domain.  However, the overall logo mark was in fact registered in 1989 by the NYSDED as a service mark in Class 35 for, “promoting the state of New York as a tourist attraction and enhancing its economic development.”  But that has not stopped a large trade in knockoffs, even within major tourist centers in Manhattan.  

There is some indication in media articles that NYSDED was lax in the past about preventing uses by others of the “I❤NY” logo mark.  However, in recent years, the NYSDED has sent about two hundred cease-and-desist letters annually.  Many of the alleged infringers claim to have not been aware that they were using a registered mark.  In 2009, a coffeeshop owner who had “I [coffee cup] NY” tattooed onto his hand reproduced the image from the tattoo on his storefront.  That earned him a cease-and-desist letter from the NYSDED, an action which is indicative of the aggressiveness with which the NYSDED has recently policed the marketplace in an effort to prevent what it believes are infringements of its logo.  The NYSDED has also opposed several trademark applications by entities applying for the “I❤” symbol in combination with other place names such as Santa Barbara, San Francisco, New Orleans and New Jersey—to name a few.

Those accused of infringing the I❤NY logo may ask if it should remain a registered trademark or if it is now diluted to the point where it has lost its distinctiveness.  On the other hand, in at least one trademark opposition proceeding, NYSDED has taken the position that the mark has become famous as a result of long-term exclusive use, advertising and promotion.  If this position is upheld, it would help to blunt any claim that the “INY” logo mark cannot be enforced against others who use “I” formative marks for goods or services unrelated to those for which NYSDED uses its logo mark.  In such event, NYSDED could assert that another party’s mark dilutes the distinctiveness of the “INY” logo and prevent others from using or applying for a similar mark even if the use of the other party’s mark has nothing to do with promoting tourism.

Although there is no doubt that the “INY” logo has been widely exposed to the public, the question of its distinctiveness is nuanced: a mark is distinctive when the public readily accepts it as identifying a particular source.  

In its notices of opposition against other “I❤” trademark applications, NYSDED has stated that I❤NY is synonymous with New York State.  However, an issue remains whether a survey would support a claim that most people associate the logo with a single source of goods and services or simply as an expression of love for New York by the user of the logo.  

Interestingly, the French have addressed an effort to register and claim exclusivity with respect to the designation IParis.  A French trademark registration for this designation was obtained by the company France Trading, which used the registration as the basis for opposing an application by Paris Wear Diffusion for the mark Paris Je t’ (which translates literally as Paris Iyou) for T-shirts.   In its response, the applicant challenged the validity of the opposer’s registered mark as being generic and non-distinctive, and the Paris Court of Appeals agreed.  The case ultimately made it to the highest French court, the Cour de cassation, where the opposer argued that the use of IParis on the T-shirts was distinct enough because the T-shirts were labeled as products of  France Trading.  However, the court found that argument to be insufficient because the identifiers on the T-shirts did not readily identify the source at first glance.  In other words, under the reasoning of the court, if the owner needed a label stating the source of the product to justify its distinctiveness, the logo did not fulfill the very purpose of trademark registration.  

The reasoning of the French court is clearly not consistent with U.S. trademark law which authorizes the source of the goods and services to be unknown or anonymous.  It is, however, consistent regarding its reluctance to protect merely ornamental marks.  In particular, the French court noted that the targeted clientele of the IParis T-shirts were mostly tourists visiting Paris and that when customers buy these clothing articles, they do not think, “Hey, look at me I am wearing an authentic France Trading” shirt but rather, “Hey, look: I made it to Paris.”  The French court therefore found that “the average consumer will not perceive the logo as identifying a source but merely as decoration.”  This finding is consistent with EU case law (see, Windsurfing v Boots, CJEU May 4th 1999, where the Court found that the name of a geographic location can be registered as a trademark so long as the public associates the mark with the owner and not the place) according to which, even if a mark looks worthy of registration on paper, it is ultimately the public perception that matters whether it can be protected as a trademark.

The chances of the same outcome ever happening in the United States with respect to NYSDED’s “INY” logo mark is probably low considering its strong presumption of validity stemming from its registrations as well as NYSDED’s strong case for acquired distinctiveness.  As a result, we can all continue to New York—within the limits of the law, of course.

General / Musings

How the European Union Tries to Protect Fashion Designs

By: Yann Rim, Phillips Nizer Intellectual Property Intern

Being home to Paris and Milan, the European Union (“EU”) has every reason to draft its laws to protect fashion designers and their works with particular care.  An efficient way of protecting fashion designs is through the Unregistered Community[1] design, which protects design works without requiring any registration process for a limited period of three years (instead of the five years of protection, with renewals, given to registered designs[2]).  As the fashion industry often depends on short-lived, seasonal designs, many designers have concluded that the burden of going through the registration process each season is not worth the trouble.

However, design law is not the only way to protect fashion designs.  In fact, a fashion design can also be protected by copyright.  The EU has set ground rules regarding the interaction between copyright and design law. One could expect that it would be extremely difficult to set such rules for twenty-seven jurisdictions with local laws and rules that differ considerably for cultural or historical reasons, but that has long been the challenge of a united Europe in so many different ways.

For example, Italy and Germany grant copyright protection to fashion design works on the condition that the work be of superior artistic value pursuant to the scindibilità principle in Italy and the Stufentheorie in Germany.  In contrast, France does not require such a showing of artistic value because a 1793 statute prohibits imposing such a requirement. The French rationale is that, if superior artistic value were to be considered in granting copyright protection, the judge would effectively act as an art critic or, at the very least, expert witnesses would have to be called to testify on the question of superior artistic value, thereby enabling art critics to influence copyright law in unforeseeable ways.

So how does the EU deal with such differences?  In the Cofomel case (Cofemel v G-Star Raw, C-683/17 – Sept 12, 2019), the Court of Justice ultimately chose to follow the French rule and held that, if the law of a member state were to require a showing of some sort of “aesthetic” value for a design to be eligible for copyright protection, that would contradict the requirement of objectivity (as to taste and art) as mandated under EU law.  The Cofomel case had been initiated by the highest Portuguese court, which asked the Court of Justice if it should be inferred from Article 2(a) of the InfoSoc Directive[3] that member states are not allowed to interpret the word “work” in conformity with their own copyright law definitions.  The answer was “Yes.”  The notion of work in Article 2(a) is an independent EU notion that is not subject to interpretation by member states.  Therefore, EU courts are not bound by the states’ own interpretation of the word work and will disregard any national requirement that a work have superior artistic value for it to receive copyright protection.  As a result, EU law can be said to prohibit member states from denying copyright protection to designs that meet the requirements for copyright protection – including designs other than registered ones (subject to Article 17 of the Design Directive).

That raises a theoretical question: would a fashion designer in Milan–whose work does not qualify for copyright protection under Italian law–have to move to Paris to benefit from French copyright law?   Fortunately, the answer here is “No.”  In the Flos case (CJEU Jan. 27, Flos SpA v Semeraro Casa e Famiglia SpA, C-168/09), the Court of Justice held that, although unprotected under Italian copyright law, the work in dispute was entitled to protection under EU copyright law regardless of which jurisdiction is the base of its designer.

Ironically, the single standard in examining eligibility for copyright protection has given rise to the double protection of fashion design works – by copyright law and design law – because if a work satisfies the EU requirements for copyright protection, the protection is granted regardless of its use as protectible a fashion design.  However, double protection means that there are two statutory tools available; for copyright purposes, the work is still subject to the three-step test for protection.  That test emerged by treaty (known commonly by the acronym TRIPS) permits restrictive measures: 

  • in certain special cases,
  • that do not conflict with the normal exploitation of the work; and
  • that do not unreasonably prejudice the legitimate interests of the author/rights holder.

In a way, that test is similar to the concept of fair use in the United States in that it gives leeway for a judge to decide what counts as a legitimate use of a copyrighted work in the absence of explicit permission.  For a minority of French academics, a European law of fair use can be inferred from the test.  However, the EU is not ready to do so at this time.[4]  The Court of Justice is apparently trying to avoid the effects of liberal and often unpredictable interpretations of copyright exceptions such as the fair use exception has seen in the United States.

Nonetheless, the Court of Justice did get some inspiration from the American fair use doctrine in the Nintendo case (CJEU Spt. 27 2017, Nintendo Co. Ltd v BigBen Interactive GmbH and BigBen Interactive SA, Joined Cases C-24/16 and C-25/16). There, the court defined the concept of “citation,” stating that Big Ben (a video game accessory seller) was merely “citing” Nintendo’s work in order to explain how to use its products on a video game console.  The court therefore concluded that Big Ben’s use of a protected graphic design owned by Nintendo in order to explain or demonstrate the use of its accessories with Nintendo products was a legitimate, non-commercial use and did not constitute copyright or design law infringement, even without prior authorization from Nintendo.  

It is clear that the Court got this idea from the fair use and fair dealing concepts of US law.  Although the EU does not formally recognize a broad judge-made exception to copyright and design law protection, the Court of Justice was still willing to create an exception in order to tidy up its own law.

What that potentially means is that, when considering protection of designs in Europe, start your analysis at the EU level and work down from there to the individual national legal systems that may be involved.  And, as with so much of design law worldwide, be prepared to expect the unexpected.

[1] The EU was formerly known as the European Community

[2] Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs

[3] Directive 2001/29/EC of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, also known as the InfoSoc Directive.

[4] F. Pollaud-Dulian, The dragon and the white whale : three steps test and fair use, in Intellectual Property in Common law and civil law, Elgar publishing 2013, p. 158