Hermès Successfully Defends its Trademark in the Metaverse

How far does a trademark extend into the digital art world? French luxury fashion brand Hermès sought to answer this question in its precedent-setting case against artist Mason Rothschild, which concluded with a win for Hermès this week.

Lawsuit Background

Rothschild’s “MetaBirkins” are a series of non-fungible tokens (NFTs) that depict fur-covered purses intentionally resembling the iconic Hermès Birkin bag, which has “come to occupy a place of cultural importance as a symbol of wealth and exclusivity.”[1] Rothschild sold these NFTs to individual buyers on the blockchain for up to thousands of dollars each.[2]

On January 14, 2022, Hermès filed a lawsuit against Rothschild in the Southern District of New York for trademark infringement, false designation of origin, false descriptions and representations, and trademark dilution under the Lanham Act, cybersquatting under the Anti-Cybersquatting Consumer Act, and state law claims for common law trademark infringement, misappropriation, and unfair competition.[3] The complaint alleged that Rothschild used the name “MetaBirkins” to mislead consumers into believing that the NFTs are affiliated with the Hermès brand and has allowed the artist to profit off of Hermès’s goodwill.[4] Hermès filed an amended complaint on March 2, 2022, adding numerous examples of alleged consumer confusion by way of Instagram comments and media reports.[5]

On March 21, 2022, Rothschild filed a motion to dismiss the amended complaint, arguing that “because he used ‘MetaBirkins’ as the title of artwork ‒ the digital images of the fur-covered Birkin bags ‒ and not as a source identifier of his products, his use of Hermès’s mark is [] entitled to First Amendment protection”[6] under the test articulated in Rogers v. Grimaldi,[7] which allows for the unauthorized use of a trademark if such use is artistically relevant and does not explicitly mislead consumers. Judge Rakoff allowed the amended complaint to move forward, declining to resolve at the pleading stage whether Rothschild’s “MetaBirkins” “clear the admittedly low bar of artistic relevance.”[8] The court also found that Hermès sufficiently alleged that Rothschild’s use of the “MetaBirkins” mark is misleading and actionable under the Lanham Act.[9]

Denial of Summary Judgment

Both Rothschild and Hermès filed cross-motions for summary judgment, though trademark infringement claims are seldom resolved on summary judgment.[10] In an opinion issued on February 2, 2023, Judge Rakoff found that genuine issues of material fact remain with respect to both parties’ claims and denied the parties’ cross-motions in their entirety. In doing so, the court made several key findings.

First, the court concluded that the Rogers test, as opposed to the Gruner + Jahr test (which involves assessing claimed infringement of works intended primarily to serve a commercial purpose) applies to the alleged infringement of Hermès’s trademarks.[11] The court’s decision was in part driven by the nature of the “MetaBirkin” NFTs at issue.“ Individuals do not purchase NFTs to own a ‘digital deed’ divorced from any other asset: they buy them precisely so that they can exclusively own the content associated with the NFT[,]”[12] in this case, the digital image of one of Rothschild’s unique “MetaBirkins.” And while Hermès introduced evidence from which a reasonable juror could conclude that Rothschild’s endeavor was commercial rather than artistic in nature, the court found this evidence did not “bar application of the Rogers test. . . a court may not strip an artistic work of First Amendment protection merely because the artist seeks to market and sell his creative output.”[13]

Second, in applying the first factor of the Rogers test, “artistic relevance,” the court found that reasonable jurors could have differing opinions as to whether Rothschild’s “MetaBirkins” “stemmed from genuine artistic expression or, rather, from an unlawful intent to cash in on” Hermès’s iconic Birkin handbags.[14]

Finally, given the competing evidence presented, the court declined to engage in an assessment of the Polaroid factors, which courts look to when assessing the second prong of the Rogers test, whether the artistic work is “explicitly misleading.”[15] For example, Hermès presented survey evidence of 18.7% net confusion among potential NFT consumers as to Hermès’s association with the “MetaBirkins” project—a percentage which courts generally consider probative of confusion in the marketplace.[16] Hermès also pointed to evidence that social media users and the media were confused as to its role in the project.[17] Rothschild disputed the survey methods employed by Hermès and argued that social media posts cannot show actual confusion.[18] But the court found that these issues, and all others related to Hermès’s other claims against Rothschild, should be left for the jury to decide.[19]

Hermès Wins at Trial

On February 8, 2023, the jury returned a verdict in favor of Hermès, finding that the “MetaBirkins” are more like consumer products, which are bound by trademark laws, than art protected by the First Amendment.[20] In doing so, they agreed that Rothschild capitalized on Hermès’s goodwill for profit.[21]

During the trial, Hermès’s attorneys presented dozens of text messages evidencing this intent. Rothschild had messaged that he wanted to “create the same exclusivity and demand for the famous handbag,” and was “sitting on a goldmine.”[22] His attorneys argued that “[i]t is perfectly legal for artists to make money from their art,” and that, “[t]rademark rights are limited by the First Amendment.”[23] Rothschild’s key expert on this kind of profitable but legal “business art,” New York art critic Blake Gopnik, was excluded from the trial after Hermès argued that his expertise in art history isn’t based on reliable data or a clear methodology.[24]

The jury awarded Hermès $133,000 in total damages for trademark infringement and cybersquatting, comprised of $110,000 for Rothschild’s profits and resale commissions and $23,000 for cybersquatting.[25]

What’s Next?

It remains to be seen whether Rothschild will file an appeal. And while the jury verdict is a big win for Hermès, companies should consider taking affirmative steps to protect their trademarks in the digital world, including:

• Expanding trademark enforcement activities to NFT marketplaces;
• Extending watch monitoring services to classes in which trademark applications for NFT-related goods and services are commonly being filed;
• Taking legal action swiftly—the Hermès case can now serve as a guidepost for companies that want to enforce their trademark rights in federal court; and
• If a company is intending to enter the NFT space in the near future, applying to register trademarks for the relevant goods or services with the United States Patent and Trademark Office should be considered.

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

[2] Id. at *2; Lauren Golangco, Tatler, Mad About MetaBirkins: What Is the MetaBirkin and Why Is It Rocking the Fashion World? https://www.tatlerasia.com/power-purpose/technology/what-is-the-metabirkin-metaverse (last visited Feb. 3, 2023).

[3] Hermes International et al. v. Rothschild, U.S. District Court Southern District of New York, Case No. 1:22-cv-00384-JSR, ECF No. 1.

[4] Id. at ¶¶ 5, 122, 133, 161.

[5] Id. at 112-121.

[6] Hermes Int’l v. Rothschild, 603 F. Supp. 3d 98, 103 (S.D.N.Y. 2022)

[7] 875 F.2d 994 (2d Cir. 1989).

[8] Hermes Int’l, 603 F. Supp. 3d at 105.

[9] Id.

[10] Estee Lauder, Inc. v. Airs Int’l, Inc., No. 94 CIV. 8231 (DC), 1995 WL 699771, at *1 (S.D.N.Y. Nov. 22, 1995) (“In general, questions regarding the likelihood of confusion are factual in nature. Summary judgment is appropriate only ‘if the court is satisfied that the products or marks are so dissimilar that no question of fact is presented.’”) (citing Universal City Studios, Inc. v. Nintendo Co., 746 F.2d 112, 116 (2d Cir. 1984)).

[11] Hermes Int’l, 2023 WL 1458126, at *3-7.

[12] Id. at *5.

[13] Id. at *7.

[14] Id. at *8.

[15] Id. at *8-9.

[16] Empresa Cubana del Tabaco v. Culbro Corp., 70 U.S.P.Q.2d 1650 (S.D.N.Y.2004), rev’d on other grounds, 399 F.3d 462 (2d Cir. 2005) (confusion rate of 15%–21% indicates a likelihood of confusion); Energybrands, Inc. v. Beverage Marketing USA, Inc., No. 02 CIV. 3227(JSR), 2002 WL 826814 (S.D.N.Y. May 1, 2002) (17% net confusion supports evidence of likelihood of confusion).

[17] Hermes Int’l, at *9.

[18] Id.

[19] Id. at *9-10.

[20] Isaiah Poritz, Bloomberg Law, Hermès Gets Win Over MetaBirkins in First NFT Trademark Trial, https://www.bloomberglaw.com/bloomberglawnews/ip-law/BNA%20000001860846d4f7aba67a7e63420000?bna_news_filter=ip-law (last visited Feb. 8, 2023).

[21] Id.

[22] Id.

[23] Id.

[24] Isaiah Poritz, Bloomberg Law, Andy Warhol Art Expert Excluded From Hermès-MetaBirkin NFT Trial, https://news.bloomberglaw.com/ip-law/andy-warhol-art-expert-excluded-from-hermes-metabirkin-nft-trial (last visited Feb. 8, 2023).

[25] Pete Brush, Law360, ‘MetaBirkin’ NFT Maker Held Liable In Key TM Trial, https://www.law360.com/ip/articles/1572690?nl_pk=4c38749e-5f7e-4281-bc5c-fb8f61f1a811 (last visited Feb. 8, 2023).