AI Generated Content and Copyright Ownership Rights in the U.S.

The emergence of accessible generative AI products has resurfaced the question of the degree of human creativity that is required for copyright protection. While the Copyright Office has a study underway, both the recent guidance from the Copyright Office and a recent case holding suggest that human creativity continues to be an integral requirement in securing copyright protection. Though the Copyright Office conducts a case-by-case analysis with a thorough review of the facts, without a human providing some modicum of creativity in the traditional elements of authorship, a work is not likely to be granted protection for the foreseeable future.

I. Background

A. Copyright Authorship Requires Originality

According to the Copyright Office, copyright is a “type of intellectual property that protects original works of authorship as soon as an author fixes the work in a tangible form of expression.” Notably, the protection of a copyright applies to a broad range of works, from traditional books to works of art such as photographs, poems, paintings, musical compositions, and the like.

Originality is actually a constitutional requirement because the power to enact copyright laws stems from the Copyright Clause (Article I, § 8, cl. 8). To qualify as an original work, the work must be created by a human author and include some degree of creativity. In other words, in order to secure copyright protection, the work at issue cannot simply be copied. There is no statutory definition of original works of authorship, but it is well-settled by the Supreme Court that the degree of creativity required for copyright protection includes some modicum of creativity. The Trademark Cases, 100 U.S. 82 (1879). The question of human authorship has been addressed with respect to celestial beings, monkeys, and gardens. In each case, courts declined to extend copyright protection because human authorship was lacking.

B. The Recent Popularization of Generative AI

Generative AI has become recently popularized due to the introduction of highly accessible tools such as ChatGPT and Midjourney. However, generative AI has a long history with roots tracing as far back as the 1950’s. While generative AI was in full motion back in the 90s, the computer power required was a barrier to providing mainstream solutions.

The continued strides in technological developments paved the way for the modern generative AI solutions that have flooded the market in the past couple of years. As a result, there are amply more works created using AI now than ever before. Users supply prompts, whether simple or complex, to the AI tool and receive an incredibly complex output, often differentiated from the baseline training data used to train the AI. Through these AI tools, users are generating writings, images, and the like. Thus, while generative AI is not new, the influx of created works leveraging AI through newly accessible mainstream tools is resurfacing the question of the degree of human creativity required for copyright protection.

II. Recent Developments

Human authorship was recently addressed in Thaler v. Perlmutter. At issue was whether the claimant’s copyright application was properly denied because the visual art in question was generated by AI.  Thaler v. Perlmutter, No. CV 22-1564 (BAH), 2023 WL 5333236, at *3 (D.D.C. Aug. 18, 2023). In holding that the application was properly denied, the court reiterated the long-standing notion that human authorship is a bedrock requirement for copyright protection. Id. Similarly, the Copyright Office canceled the copyright registration on a graphic novel that was developed by entering prompts into Midjourney because human authorship was lacking.

Equally important, in the first quarter of 2023, the U.S. Copyright Office provided guidance in response to the popularization of newly accessible AI tools. The Copyright Office reiterated authorship requires human input and that merely mechanical or machine-produced works devoid of human creativity are un-copyrightable material. Applicants must disclose the use of AI and provide a brief explanation of the humans’ involvement. The Copyright Office guidance indicates AI-generated content may be copyright protected if the work is in some way original and unique. However, if the traditional elements of authorship were generated by a machine, then the work lacks human authorship, and the Copyright Office will not register it. The Copyright Office conducts a case-by-case, specific inquiry, in which examiners are looking for works that demonstrate an original mental conception by a human being.

Lawmakers have called for the creation of a national commission to address whether changes are needed to existing law to address the evolving landscape of AI. With this Congressional focus on the implications of AI and innovation, it is likely an area of policy that will continue to develop. While the U.S. Patent and Trademark Office is requesting comments regarding AI ownership, the U.S. Copyright Office has launched an initiative to examine policies affecting AI. The Copyright Office has issued a Notice of Inquiry in the Federal Register, undertaking a study of policy issues raised by generative AI and existing copyright law. Furthermore, the Copyright Office has recently extended the comment period, allowing initial written comments from the public through October 30, 2023.

III. Conclusion

It’s important to remember that any proposed changes to existing copyright law will still be subject to the constitutional principle of originality under the Copyright Clause as a constitutional amendment is unlikely. Even with prospective changes on the horizon, originality will likely remain a threshold requirement in seeking copyright protection. Copyright protection is unlikely to be extended to a work generated by simple AI prompts. Accordingly, keeping humans in the driver’s seat on the traditional elements of authorship is likely the best course of action for copyright protection for the foreseeable future.

About the Author: Sarah Covington is an Associate in the Firm’s Intellectual Property practice group. She holds an MBA and previously served as Vice President of Revenue Cycle and as COO for a healthcare technology start-up focused on creating AI solutions. Ms. Covington has a particular interest in computer software coding, having led three teams to win at MIT hack-a-thons with AI-based health solutions. She has received awards for emerging AI solutions at the Health Data Palooza and National Policy Conference. In 2022, Ms. Covington received the Rising Star Award from the South Dakota Bar Association. 

Claim Construction Timing

A

A recent order, issued in the middle of a patent trial in Impinj, Inc. v. NXP USA, Inc., No. 4:19-cv-03161 (N.D. Cal.), serves as a reminder that a Markman hearing is not a litigant’s last opportunity to convince a court to construe patent claim terms.

Claim construction, the review and interpretation of a patent claim’s meaning, usually takes place fairly early in a patent case. Plaintiffs and defendants propose both terms to be construed and meanings that they would have the court ascribe to those terms. There is usually extensive briefing of the issues and a hearing held, a so-called Markman hearing, named after the case in which the Supreme Court held that the meaning of patent terms is for the judge, and not the jury, to decide: “the construction of a patent, including terms of art within its claim, is exclusively within the province of the court.”

The importance of claim construction in a patent case cannot be overstated. Cases are frequently won or lost depending on whether the court agrees with the meaning proposed by the patentee or that of the accused infringer. There may be no more important issues in any given patent case. Defendants typically want terms to be construed narrowly. Patentees, on the other hand, usually counter that a claim term should be construed more broadly—even that it should be afforded its plain or ordinary meaning, without specifying what that plain meaning is. In O2 Micro Int’l Ltd. v. Beyond Innovation Tech. Co., 521 F.3d 1351 (Fed. Cir. 2008), the Federal Circuit made clear that not only is the scope of claims within the province of the court, but the court also has an affirmative duty to resolve disputes over claim scope when they arise.

In Impinj, Inc. v. NXP, the issue of the meaning of the patent term “stage” arose during the trial of a patent directed to radio frequency identification tracking technology. Impinj had not proposed that “stage” be construed during the claim construction process. However, days into trial, Impinj requested that the term be construed because “NXP now argues, for the first time, that if its engineers happened to use the word ‘stage’ to refer to some collection of components in their schematics, and that collection is different from what the claims require a ‘stage’ to be, then NXP has avoided infringement.” Both parties argued that “stage” had its plain and ordinary meaning, but each had a different view of the dictates of plain meaning. Plaintiff Impinj proposed broad, in the court’s word, “flexible” construction: “a section or portion of the circuit.” Unsurprisingly, defendant NPX offered a more narrow construction, proposing that a “stage” is the “smallest unit of circuit components that” performs a particular function. While the court did not agree with the plaintiff’s very broad construction, it “agree[d] that ‘boxes’ on a schematic are not dispositive” and that there was “insufficient evidence to support the inclusion of the word ‘smallest.’”

Four days after “stage” was construed more broadly than the defendant had requested, the jury found the patent in question valid and infringed.

The case illustrates only one facet of the potential flexibility of courts regarding this central issue of the meaning of patent claims. Litigants should not assume that the traditional path is the only one. Do you think the construction of a single term or phrase could either dictate or obviate infringement and facilitate summary judgment? Consider asking the court to decide that single issue at the earliest stage of the case. Does your jurisdiction have patent local rules that limit the number of terms you can offer for construction to a number that is insufficient? Consider asking the court to expand those limits—but be prepared to articulate well the basis for your request and make clear that the parties dispute the meaning. And if it becomes clear—even on the eve of or during trial—that construction of an additional term is warranted, O2 Micro dictates that the court resolve the dispute. “When the parties raise an actual dispute regarding the proper scope of these claims, the court, not the jury, must resolve that dispute. . . . When the parties present a fundamental dispute regarding the scope of a claim term, it is the court’s duty to resolve it.” O2 Micro, 521 F.3d at 1360, 1362.

When it comes to the potentially case-dispositive issue of the meaning of patent terms, it may not be too early, too many, or too late.

About the Author: Lara Garner is a Partner in Gordon Rees Scully Mansukhani’s Intellectual Property practice group. Her practice focuses on intellectual property litigation, counseling for patents, copyrights, trademarks, and trade secrets, and a broad range of other matters, including contract, technology, and privacy issues. 

From Marvin Gaye to Led Zeppelin to Katy Perry – An Update on Recent Copyright Infringement Music Cases

General Copyright Basics

There are five exclusive rights in copyright that are usually at issue in a copyright infringement action: reproduction, preparing derivative works, distribution, public performance, and public display. In general, if a plaintiff can show that the defendant had access to the plaintiff’s work and that there is a substantial similarity between the infringed and infringing works, a presumption of copying arises, shifting the burden to the defendant to rebut the presumption or to show that the alleged infringing work was independently created.

Similar to other areas of copyright litigation, the Second Circuit and the Ninth Circuit dominate both music copyright litigation and issues involving “substantial similarity,” more than doubling the next closest circuit in the number of opinions and quadrupling most others.

The Second Circuit still applies the “ordinary observer” test, but there is also usually an analysis of the technical similarities which could involve expert testimony, even at the motion to dismiss stage. This usually involves an analysis of: (1) whether the protected elements are sufficiently “original”; (2) whether there is existing prior art that shows a lack of originality; and (3) a comparison between the songs at issue.

Generally, the first prong of substantial similarity is an analysis of actual copying or “factual copying.” This is usually proven through circumstantial evidence such as access or the similarities between the works. The second prong generally involves a determination of whether the defendant has taken so much protectable material—sometimes called “actionable copying” or “improper appropriation”—as to constitute copyright infringement.

The “Blurred Lines” Case

One of the most controversial copyright cases in recent years was the “Blurred Lines” case involving members of Marvin Gaye’s family (who had inherited the copyrights in the musical compositions of “Got to Give It Up”).  After hearing the hit song “Blurred Lines” written and recorded by Pharrell Williams and Robin Thicke, the Gaye family made an infringement demand, but negotiations failed. Williams and Thicke filed a declaratory judgment action in California federal court seeking a declaration of “non-infringement.” The Gayes counterclaimed, alleging copyright infringement, and added Clifford Harris, Jr., the rapper known as T.I., as a third-party defendant, along with Interscope Records, who owned the sound recording.

After a jury trial, the jury found that Williams and Thicke had infringed the copyright, but Harris and Interscope were not liable. The jury awarded $7.3 million in actual damages and the infringer’s profits. Post-trial, the District Court overturned the jury’s verdict in favor of Harris and Interscope as inconsistent with the finding of liability and apportioned costs between the parties.

Ultimately, the District Court awarded the Gayes $3,188,527.50 in actual damages, $1,768,191.88 in infringer’s profits against Thicke, $347,630.96 in infringer’s profits against Williams (for a total of approximately $5.3 million), and a continuing 50% of future songwriting and publishing revenues. The District Court denied an award of attorneys’ fees. The Gayes appealed the order on attorneys’ fees.

The Thicke/Williams parties appealed the denial of their motions for summary judgment and a new trial, the damages award, and the overturning of the verdict in favor of Harris. Importantly, the Thicke/Williams parties failed to seek a judgment as a matter of law after the evidence was entered in the case and before jury deliberations.[1] The Ninth Circuit ultimately ruled they waived their right to challenge those issues on appeal.[2] Thicke and Williams focused their appeal by arguing that the District Court had erred in its application of the extrinsic test for substantial similarity.[3]

The extrinsic test is a two-part test used in the Ninth Circuit that focuses on the objective similarities of the works’ ideas and protectable expressions. This is usually done through expert testimony to identify whether certain portions of the music are unique enough to be entitled to protection. The second part of the test considers “intrinsic” similarity in which the factfinder undertakes a purely subjective evaluation of the total content and feel of the two works. This can also be part of the ordinary observer test in which analysis by an average lay witness would compare the two works.

Interestingly, the District Court had only allowed in evidence the deposit copy or sheet music for “Got to Give it Up.”[4]  However, the Gaye family was able to get in bits and pieces of the sound recording through expert testimony. The Ninth Circuit rejected this appeal on procedural grounds finding that a party may not appeal an order denying summary judgment after a full trial on the merits unless the issue is one of pure law.[5] On appeal, the Ninth Circuit refused to disturb or second guess the jury’s fact-finding. The Ninth Circuit found there were no errors with respect to allowing expert testimony and that the question of weighing expert evidence was left to the jury.[6] The Ninth Circuit did find an error with the reversal of the jury’s finding of no liability against Harris and Interscope. The appeal featured 212 amicus songwriters and many others on both sides.

In a strong dissent, U.S. Circuit Judge Jacqueline Nguyen argued that the majority had allowed the Gayes “to accomplish what no one has before: copyright a musical style.”[7] According to the dissent, the two songs were not objectively similar, and the similarities presented by the Gayes involved unprotectable elements, so the lack of substantial similarity meant that judgment should have been given as a matter of law. The dissent contended that, by refusing to engage in a de novo comparison of the works, the majority had established “a dangerous precedent that strikes a devastating blow to future musicians and composers everywhere.”[8]

Critics of the “Blurred Lines” case say that the verdict has implications that will thwart creativity. These critics believe that the two songs did not share the same pitches, or rhythms, and were not set to the same chords. They did not share the same melody or melodic phrases. The two songs didn’t even have a sequence of two chords played in the same order and did not share the same song structure or any lyrics.

The infringement was based on the copying of a “feel” or “groove” of the two works and amounts to infringement of an idea, that all musicians are “influenced” by other musicians, which is not copyrightable. They note there are a limited number of notes and chords available, so there are automatically going to be similarities in numerous songs, but that doesn’t make it an infringement.

Skidmore v. Led Zeppelin

Randy Wolfe (a.k.a. Randy California) was a guitarist for the rock band Spirit in the 1960s. Wolfe wrote the instrumental song “Taurus” on the group’s first album in 1967. Taurus is a two-and-a-half-minute instrumental guitar track on Spirit’s first album. A copyright was registered in the unpublished composition with a one-page deposit of the sheet music with the U.S. Copyright Office.

In 2014 Michael Skidmore, on behalf of the estate of Wolfe/California, claimed Led Zeppelin copied “Taurus” in “Stairway to Heaven.” In 2016, Zeppelin prevailed in district court, with the jury finding the two songs were not substantially similar. Skidmore appealed, claiming the court limited the jury’s determination by not allowing them to hear the two songs and only allowing the sheet music into evidence. The court had granted Led Zeppelin’s Motion to Exclude the sound recording for Taurus and all expert testimony regarding the sound recording.

In 2018, the Ninth Circuit ruled that the trial court should have allowed the jury to hear the songs and ordered a new appeal en banc. The en banc decision was issued in March 2020.

            A. The Inverse Ratio Rule

The inverse ratio rule was an important issue in the Skidmore v. Led Zeppelin case. The rule allowed courts to impose a lower showing of substantial similarity when a high degree of access was shown. In practice, the Ninth Circuit has wavered between using the rule as binding precedent and questioning the rule. Most other Circuits have long rejected the rule.

In Skidmore, the court stated the rule “defies logic, and creates uncertainty for the courts and the parties”[9] and further stated, “Although we are cautious in overruling precedent – as we should be – the constellation of problems and inconsistencies in the application of the inverse ratio rule prompts us to abrogate the rule. Access does not obviate the requirement that the plaintiff must demonstrate that the defendant actually copied the work.” [10] The court further went on to note that the current digital connectivity in the world dilutes the concept of access. However, it should be noted that the access seemed proven in the Skidmore case. Led Zeppelin performed at the same location as Spirit four times between 1968 and 1970 and covered Spirit’s song “Fresh Garbage.”[11]

            B. The Deposit Copy Defines the Scope of Copyright Protection

The Spirit song was copyrighted in 1967, prior to the copyright reform of the Copyright Act of 1976. Therefore, the Copyright Act of 1909 applied rather than the Copyright Act of 1976. Copyright law applied prior to the reform was under the Copyright Act of 1909, which extended only to the sheet music and not sound recordings. Sound recordings were first protected under US copyright law in 1972, for recordings made after Feb. 15, 1972.

The 1976 Copyright Act significantly altered the copyright standards, stating that public distribution of a sound recording qualifies as a published musical composition. In other words, instead of sheet music, composers might submit a recording as the deposit copy for a musical work. The problem, in this case, was that this legislation did not apply to compositions published before 1978, i.e., the effective date of the Act.

The language of the 1909 Act makes it clear that copyright protection for an unpublished work was obtained “by the deposit, with claim of copyright, of one complete copy of such work” for musical compositions. The court concluded that the dual requirement of applicants having to submit a deposit copy of their work and the deposit having to be a “complete copy” underscored the importance of the deposit itself, thus establishing the deposit as the metes and bounds of the copyright. This was the basis for concluding it was proper to not allow the songs to be played for the jury. However, it’s worth noting that the fact that deposit copies were limited to sheet music at the time, significantly limits the scope of protection.

Sheet music for compositions tends to be scant in detail for various reasons including that some composers don’t read sheet music or the high cost of transcription. This results in deposit copies for compositions, which may include only lyrics and essential elements of the song while leaving out musical components, or as the court referred to them, “further embellishments” that make for a musically richer sound as you would hear in a sound recording.

According to the Ninth Circuit, since the deposit copy “defines the four corners of the ‘Taurus’ copyright,” any of the further embellishments one would hear in a recording are immaterial and the district court properly denied Skidmore’s request to play the sound recording of “Taurus” in front of the jury or admit it into evidence.[12] 

Ed Sheeran  – “Let’s Get It On” Case

On July 11, 2017, the family of one of the writers of “Let’s Get It On,” filed a lawsuit in the Southern District of New York against Ed Sheeran, Atlantic Records, Sony/ATV Music Publishing, and Warner Music Group. The Skidmore case has been cited in numerous cases everywhere, including in Griffin v. Sheeran, a case that was pending in New York revolving around a claim that Ed Sheeran’s song “Thinking Out Loud” infringes upon Marvin Gaye and Ed Townsend’s song “Let’s Get It On.”

This case started trial in April 2023. The district court (citing Skidmore) held that the scope of protection for “Let’s Get it On” is “limited by the deposit copy” and “does not include other embellishments [on Gaye’s sound recording] … because they have not undergone the copyright process.” In its Order denying Defendants’ Motion for Summary Judgment, the Court declined to issue any opinion about whether the Second Circuit would concur with the Ninth Circuit’s Skidmore decision in finding that only the deposit copy or sheet music defines the scope of copyright protection. Plaintiffs argued that the composition that is embodied in the sound recording, which is a mechanical reproduction, is also protectable.

In the Sheeran case, the Defendants argued that a simple chord progression and a harmonic rhythm are not subject to copyright protection. The Defendants cited numerous instances of “prior art” which contained similar chord progressions (13 other similar songs that existed prior to “Let’s Get It On”). They claimed the chord progression is taught in elementary guitar teaching method books. They further claimed the Plaintiff could not claim monopoly over the use of such common musical elements.

In its order denying summary judgment, the court cited the Skidmore case.[13] The court held that analyzing just the sheet music or analyzing the actual sound recordings was not important for purposes of summary judgment, since under either view, there were enough similarities to survive summary judgment. The court stated “A jury might side with either view” and the question of infringement should be determined by trial rather than summarily.[14]

However, when addressing the other issue raised by Skidmore, the court sided with the Defendants. Defendants argued that two of the key elements (the drum pattern and bass guitar line) do not appear in the deposit copy. Plaintiffs countered this argument by stating that the recorded version is the true embodiment of the song. However, Judge Stanton sided with Defendants on the issue of whether the sound recordings can come into evidence during the trial, ruling that it could not. Judge Stanton stated the deposit copy was the sole definition of “Let’s Get It On.” He further stated the famous sound recording (by Marvin Gaye) may confuse the jury into thinking it represents what is protected by copyright. Judge Stanton concluded that the sound recording had additional elements that did not appear in the deposit copy.  Ultimately, after jury trial, the jury found in favor of Defendants, finding there was no copyright infringement, Sheeran did not copy the compositional elements or melody from “Let’s Get It On,” and that Sheeran independently created his song.

Katy Perry Dark Horse Copyright Case

The case was originally filed in 2014 by a Christian hip-hop artist known as Flame (Marcus Gray). The complaint alleged Katy Perry’s song copied a repeating instrumental figure, called an “ostinato.” The “Dark Horse” ostinato consists of a pattern of notes, represented as 3-3-3-3-2-2-1-5, while the “Joyful Noise” ostinato consists of two slightly different patterns, represented as 3-3-3-3-2-2-2-1 and 3-3-3-3-2-2-2-6. Both ostinatos also have a uniform rhythm, with each note of equal duration in time. (In case it is of interest to music lovers, the Ninth Circuit’s opinion has a more detailed than usual breakdown of musical compositions). A jury found the defendants liable and awarded $2.8 million in damages.

However, after the trial, U.S. District Judge Christina A. Snyder vacated the judgment and reasoned that the elements comprising the ostinatos are not, either individually or as a combination, copyrightable original expressions. Plaintiffs appealed. A three-judge panel from the Ninth Circuit affirmed the district court’s decision. The Ninth Circuit’s opinion focused on whether the “Joyful Noise” ostinato qualifies as an “original expression” – a statutory requirement for protection under U.S. Copyright law.[15]

Citing longstanding principles of copyright law, the Ninth Circuit noted there is a “famously low bar for originality.”[16] However, even this low threshold for copyrightability still “does require at least a modicum of creativity.”[17] The appellate court further stated that copyright protection does not extend to “common or trite musical elements, or commonplace elements that are firmly rooted in the genre’s tradition.”[18] Ultimately, the Ninth Circuit concluded that the two songs’ ostinatos, even if similar, result only from the use of commonplace, unoriginal principals, and thus could not form the basis of a copyright infringement claim. The Ninth Circuit held that the “Joyful Noise” ostinato was a “conventional arrangement of musical building blocks,” amounting to nothing more than an unoriginal “two-note snippet of a descending minor scale.”[19] And, given the limited number of expressive choices available to an eight-note sequence, the Ninth Circuit found that allowing such a copyright would amount to an “improper monopoly over two-note pitch sequences.”[20]

About the Author: Joshua D. Wilson is a Partner in the Firm’s Intellectual Property practice group, with a particular emphasis on the sports and entertainment industries. He has represented athletes, artists, songwriters, managers, agents, actors, bloggers, podcasters, influencers, producers, publishers, and record labels in both transactional and litigation matters.  He has been involved in some of the most high-profile and complex entertainment and intellectual property matters in the country with a focus on contract disputes, royalty disputes, management agreements, publishing issues, and copyright and trademark infringement matters, through trial and arbitration. 


[1] See Williams v. Gaye, 895 F.3d 1106, 1131 (9th Cir. 2018). 

[2] Id.

[3] Id. at 1121-22.

[4] Id. at 1116.

[5] Id. at 1122.

[6] Id. at 1126.

[7] Id. at 1138-1152. 

[8] Id. at 1138.

[9] Skidmore v. Led Zeppelin, 952 F.3d 1051, 1066 (9th Cir. 2020).

[10] Id. at 1069.

[11] Id. at 1057. 

[12] Id. at 1063-64. 

[13] Griffin v. Sheeran, 351 F.Supp.3d 492, 496 (S.D.N.Y. 2019).

[14] Id. at 500-01.

[15] Gray v. Perry, 2020 WL 1275221, at *5-7 (C.D. Cal. March 16, 2020).

[16] Gray v. Hudson, 28 F.4th 87, 97 (9th Cir. 2022).

[17] Id

[18] Id.

[19] Id. at 101-02.

[20] Id. at 101.

NFTs and Trademark Law – Protecting IP Rights in the Digital Space

For much of human history, we have defined ourselves by the things we wear. From trying to win the latest pair of Air Jordan shoes on the “drop” to high-end designer brands, what we choose to wear is often a form of self-expression. As blockchain technology and NFTs have become more widespread, fashion brands have sought to take advantage of this emerging technology by “beginning to create and offer digital replicas of their real-life products to put in digital fashion shows or otherwise use in the metaverse.”[1] As with many advancements with the internet, the emergence of NFTs has led to instances of cybersquatting and potential infringement of trademarks, but until February 8, 2023, no U.S. court had made any ruling to answer this question.

Overview of the Dispute

In December 2021, Mason Rothschild created a series of non-fungible tokens (NFTs) titled “MetaBirkins.”[2] These NFTs depicted an image of a faux-fur-covered bag that resembles the world famous Hermès Birkin bag. Rothschild described his NFTs as “a tribute to Hermès’ most famous handbag, the Birkin, one of the of most exclusive, well-made luxury accessories.”[3] Rothschild told Yahoo Finance “for me, there’s nothing more iconic than the Hermès Birkin bag… I wanted to see as an experiment if I could create the same kind of illusion that it has in real life as a digital commodity.”[4] Rothschild created and sold 100 NFTs, some selling for tens of thousands of dollars.[5]

On January 14, 2022, Hermès International filed a complaint in the U.S. District Court for the Southern District of New York against Rothschild for trademark infringement, trademark dilution, and cybersquatting.[6] In March 2022, Rothschild moved to dismiss Hermès’ amended complaint for failure to state a claim upon which relief can be granted under the Federal Rules of Civil Procedure.[7]

In determining whether the NFTs infringed on the Hermès trademarks, the court agreed with Rothschild that the test outlined in Rogers v. Grimaldi[8], under which the First Amendment protects artistically expressive use of a trademark (and is thus not infringement) should be applied as opposed to the Gruner + Jahr[9] test for which Hermès advocated.[10] Rothschild argued that his NFTs satisfied both prongs of the two part Rogers test because: the use of the trademark (1) had some artistic relevance and (2) was not explicitly misleading in serving as a source identifier of the NFTs.[11]

On this initial motion to dismiss based on the artistic relevance prong of the Rogers test, the court found that Hermès’ complaint contained “sufficient allegations that Rothschild entirely intended to associate the ‘MetaBirkins’ mark with the popularity and goodwill of Hermès’ Birkin mark, rather than intending an artistic association.”[12] Regarding the explicit misleadingness prong, the court found that, similar to the artistic association prong, Hermès’ complaint contained sufficient allegations of explicit misleadingness for the court to deny the motion to dismiss the trademark infringement claims against Rothschild.[13] As for the other claims of trademark dilution and cybersquatting, the court held that they rose and fell with Rothschild’s First Amendment defense of the infringement claims and so denied the motion to dismiss on similar grounds.[14]

Both Hermès and Rothschild filed cross-motions for summary judgment, which were denied on December 30, 2022.[15] In ruling on these cross-motions, the court again used the Rogers test to evaluate the claims of trademark infringement.[16] In explaining the Rogers test, the court said that, consistent with holdings from other district courts, “as long as the plaintiff’s trademark is used to further plausibly expressive purposes, and not to mislead consumers about the origin of a product or suggest that the plaintiff endorsed or is affiliated with it, the First Amendment protects that use.” Id. The court reasoned that Rothschild’s MetaBirkins could be seen as constituting a form of artistic expression, and for that reason, the Rogers test was proper.[17]

The court first analyzed the case using the “artistic relevance” factor from the Rogers test. This is a bar easily met, as “it is met ‘unless the [use of the mark] has no artistic relevance to the underlying work whatsoever.”[18] However, when a trademark is used purely to exploit its public value, the relevance prong will not be met.[19] Because it was not clear as a matter of law that the mark was used for exploitative purposes, the court denied both parties’ summary judgment motions on this issue.[20]      

Next, the court analyzed the case under the “explicitly misleading” prong.[21] A work will be explicitly misleading when it leads the public to believe that the work was the creation or authorized work of the trademark holder.[22] Courts use the factors for likelihood of confusion under Polaroid[23]  to make the determination as to whether the work was explicitly misleading.[24] The court again denied the cross-motions for summary judgment on this issue, concluding that the Polaroid factors are fact intensive, and there were genuine issues of material fact.[25]

After both parties’ motions for summary judgment were denied, the case went to trial before a jury. On February 8, 2023, a nine-person jury returned the first-ever verdict in a trial involving the intersection of NFTs and trademark rights.[26] The jury found in favor of Hermès, finding Rothschild liable for trademark infringement, trademark dilution, and cybersquatting.[27] The jury also determined that the First Amendment did not protect the MetaBirkin NFTs.[28]

On March 13, 2023, Rothschild filed a motion for judgment as a matter of law or new trial.[29] In this motion, Rothschild claims that the district court judge gave the jury improper instructions, which resulted in the findings against him.[30] It is expected that, should this motion be denied, Rothschild will appeal his case.

Implications

As with many landmark cases, the question for most people is how this decision affects them. While a victory for Hermès, many questions remain unanswered when it comes to intellectual property rights in the virtual space. One takeaway is that the same intellectual property rules that govern goods in the physical world exist in the metaverse.[31] And many companies, particularly the more well-known brands, have applied for or obtained trademark registrations of their names in classes of goods that include those in the virtual world, like NFTs.[32]


[1] Hermès Int’l v. Rotchschild, 603 F.Supp.3d 98, 101 (S.D.N.Y. 2022).

[2] Id.

[3] Id.

[4] Id.

[5] Tori Lathan, Yahoo Finance, Hermès Won Its Case Against an Artist Who Sold NFTs of Its Iconic Birkin Bags, https: //www.yahoo.com/now/herm-won-case-against-artist-233000462.html (Last visited Mar. 23, 2023).

[6] Hermès Int’l v. Rotchschild, 603 F.Supp.3d 98, 101 (2023).

[7] Id. at 100.

[8] 875 F.2d 994 (2d Cir. 1989).

[9] 991 F.2d 1072 (2d Cir. 1993).

[10] 603 F.Supp.3d at 103.

[11] Id.

[12] Id. at 105.

[13] Id. at 106.

[14] Id.

[15] Hermes Int’l v. Rothschild, No. 22-CV-384 (JSR), 2023 WL 1458126, at *1 (S.D.N.Y. Feb 2, 2023).

[16] Id. at *4.

[17] Id.

[18] Id. at *7.

[19] Id. at *8.

[20] Id.

[21] Id.

[22] Id. at *9.

[23] Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961).

[24] Id.

[25] Id.

[26] Isaiah Poritz, Bloomberg Law,  Hermès Defeats MetaBirkins in the First NFT Trademark Trial,  https://news.bloomberglaw.com/ip-law/hermes-gets-win-over-metabirkins-in-first-nft-trademark-trial (last visited Mar. 30, 2023).

[27] Id.

[28] Id.

[29] Isaiah Portiz, Bloomberg Law, MetaBirkin NFT Artist Seeks New Judgment After Loss to Hermès, https://news.bloomberglaw.com/ip-law/metabirkin-nft-artist-seeks-new-judgment-after-loss-to-hermes?context=search&index=1 (Last visited Mar. 23, 2023).

[30] Id.

[31] Andrew Comer, Bloomberg Law, How the Hermès NFT Case Will Impact Expression and Enterprise, https:// news.bloomberglaw.com/us-law-week/how-the-hermes-nft-case-will-impact-expression-and-enterprise?context=search&index=8 (Last visited Mar. 23, 2023).

[32] Id.

A Generic.com Term is Not Per Se Generic

Author: Julia Whitelock

A generic term combined with a non-source-identifying term is just a generic term, right?  In United States Patent and Trademark Office v. Booking.com B.V., Case No. 19-46, 2020 U.S. LEXIS 3517, 591 U.S. ___ (June 30, 2020), the U.S. Supreme Court rejected a sweeping rule that the combination of a generic word with “.com” is automatically generic and, therefore, unregistrable per se.

Procedural History

Booking.com, a digital travel company that provides travel-related services under the brand “Booking.com,” filed applications to register the mark “Booking.com.”  A USPTO examining attorney and the Trademark Trial and Appeal Board (“TTAB”) concluded that the term “Booking.com” was generic for the services offered and denied registration.  According to the Trademark Manual of Examining Procedure (“TMEP”) (Oct. 2018), “[portions of the uniform resource locator (‘URL’), including the beginning, (‘http://www.’) and the top-level Internet domain name (“TLD”) (e.g., “.com,” “.org,” “.edu,”) indicate an address on the World Wide Web, and therefore generally serve no source-indicating function.”  TMEP § 1209.03(m).  Because “.com” “generally indicate[s] the type of entity using a given domain name, and therefore serves no source-indicating function, their addition to an otherwise unregistrable mark typically cannot render it registrable.”  Id.  TTAB found that “booking” was a generic term for “making travel reservations” and “.com” only served to identify a commercial website.  It therefore concluded that “Booking.com” is unregistrable because it is generic or, in the alternative, descriptive and lacking secondary meaning.

The U.S. District Court for the Eastern District of Virginia and the U.S. Court of Appeals for the Fourth Circuit disagreed with the PTO.  Generic terms are the “common name of a product or service itself.”  Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 464 (4th Cir. 1996).  The District Court, relying on Booking.com’s new evidence of consumer perception, concluded that the compound term “Booking.com,” as opposed to “Booking,” is not generic.  Instead, consumer perception evidence indicated that “Booking.com” is descriptive and had acquired secondary meaning as to hotel-reservation services.  The USPTO appealed only the District Court’s ruling on genericness.  The Fourth Circuit affirmed the District Court’s determination that “Booking.com” is not generic, finding no error in its assessment of consumer perception and rejecting the USPTO’s contention that combining a generic term with “.com” is “necessarily generic.”  The Fourth Circuit applied the three-step test for genericness: “(1) identify the class of product or service to which use of the mark is relevant; (2) identify the relevant consuming public; and (3) determine whether the primary significance of the mark to the relevant public is as an indication of the nature of the class of the product or services to which the mark relates, which suggests that it is generic, or an indication of the source or brand, which suggests that it is not generic.”  Booking.com B.V. v. United States Patent and Trademark Office, 915 F.3d 171, 180 (4th Cir. 2019) (citing Glover v. Ampak, Inc., 74 F.3d 57, 59 (4th Cir. 1996)).

The Supreme Court’s Ruling Reaffirms the Primary Significance Test for Analyzing Genericness

The Supreme Court affirmed the Fourth Circuit, concluding that “Booking.com” is not generic.  The Court held, “[w]hether any given ‘generic.com’ term is generic…depends on whether consumers in fact perceive that term as the name of a class or, instead, as a term capable of distinguishing among members of the class.”  2020 U.S. LEXIS 3517, *16.  The Supreme Court’s ruling rejected the USPTO’s assertion of a blanket rule that deemed all “generic.com” terms as generic.

The Booking.com Court’s holding does not materially change the test for genericness as announced in Kellogg Co. v. Nat’l Biscuit Co., 305 U.S. 111, 118, 83 L. Ed. 73, 59 S. Ct. 109 (1938).  In Kellogg, the Supreme Court stated that the owner of the mark “must show that the primary significance of the term in the minds of the consuming public is not the product but the producer.”  Id.  In Booking.com, the Supreme Court held that the owner of the mark must show that “consumers in fact perceive that term…as a term capable of distinguishing among members of the class.”  Accordingly, the Booking.com opinion reinforces the primary significance test in determining whether a mark is generic or descriptive in the context of a generic.com term.  To do so, the Court necessarily had to reject the USPTO’s position that a generic term combined with a generic corporate designation (in this case “.com”) is basically per se an unregistrable generic term.    

In Goodyear’s India Rubber Glove Mfg. Co. v. Goodyear Rubber Co., the Court held that “Goodyear Rubber Company” was not “capable of exclusive appropriation.”  128 U.S. 598, 602, 32 L. Ed. 535, 9 S. Ct. 166 (1889).  “Goodyear Rubber” was a class of goods and the combination of a generic term with “Company” “only indicates that parties have formed an association or partnership to deal in such goods.”  Id.  In Booking.com, however, unlike a generic term combined with “company,” a generic term combined with “.com” refers to a specific entity due to the exclusivity of domain name ownership.  2020 U.S. LEXIS 3517, *14.  Therefore, “consumers could understand a given ‘generic.com’ term to describe the corresponding website or to identify the website’s proprietor.”  Id. *15.  The Booking.com Court clarified Goodyear’s principles, in conjunction with the subsequent enactment of the Lanham Act, as “A compound of generic elements is generic if the combination yields no additional meaning to consumers capable of distinguishing the goods or services.”  Id. *15-16.  However, “[a] ‘generic.com’ term might also convey to consumers a source-identifying characteristic: an association with a particular website.”  Booking.com, 2020 U.S. LEXIS 3517, *14.  The point is that a court must look at consumer perception to determine whether the combined “generic.com” term identifies a class of goods or a particular producer. 

Impact

The decision may increase the cost of trademark prosecution.  The ruling seemingly opens the gates for an onslaught of generic.com applications.  However, applicants will need to show consumer perception that the generic.com term identifies a brand, not a class of goods.  The Booking.com Court provided a non-exhaustive list of support for consumer perception of a term’s meaning, to include: “consumer surveys, but also dictionaries, usage by consumers and competitors, and any other source of evidence bearing on how consumers perceive a term’s meaning.”  2020 U.S. LEXIS 3517, *16 n.6.  Compiling such evidence may be costly to trademark applicants seeking to register facially generic terms.

The decision may create a path for federal registration for other combination generic terms and non-source-identifying terms.  The Booking.com Court’s holding specifically identifies the factual circumstances for which to apply its rule – when analyzing whether a “generic.com” term is generic.  However, the analysis could likely be extended to other generic terms that lack a source-identifying term (such as other TLDs like “.org” or “.net”, or # or HASHTAG).

While a generic.com mark may be registrable (assuming proof of the mark’s primary significance as source to consumers), Booking.com does not alter the tenets of trademark law – likelihood of confusion and fair use.  “[E]ven where some consumer confusion exists, the doctrine known as classic fair use, [4 McCarthy] § 11:45, protects from liability anyone who uses a descriptive term, ‘fairly and in good faith’ and ‘otherwise than as a mark,’ merely to describe her own goods.”  2020 U.S. LEXIS 3517, *18 (citing 15 U.S.C. §1115(b)(4); KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 122-23, 125 S. Ct. 542, 160 L. Ed. 2d 440 (2004)).   

However, the decision may ultimately increase the instance of trademark bullying.  Even though a generic.com mark is registrable, as the Court explains and Booking.com concedes, the mark is a weak descriptive mark with a more difficult path to showing likelihood of confusion.  First, Booking.com concedes that “Booking.com” is a weak mark and as a descriptive mark, it is “harder…to show a likelihood of confusion.”  2020 U.S. LEXIS 3517, *18 (quoting Tr. of Oral Arg. 42-43, 66).  Second, Booking.com accepts that close variations of “Booking.com” are unlikely to infringe.  Id.  And finally, the federal trademark registration of “Booking.com” “would not prevent competitors from using the word ‘booking’ to describe their own services.”  Id.  However, it is conceivable that a generic.com trademark owner could and would use its federal registration to scare users of the generic term into ceasing use for fear of a costly, protracted legal battle.

About the author: Julia Whitelock is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property and Commercial Litigation Practice Groups.  Her practice focuses on litigating matters involving trademarks, copyrights, trade secrets, commercial disputes, and consumer claims, and advertising & e-commerce law.