First NFT trademark trial pits Hermès Against MetaBirkin Artist

by James · February 9, 2023

French luxury design house Hermès International SA’s upcoming trademark lawsuit against digital artist Mason Rothschild – the first of its kind – will test the limits of artistic expression and how non-fungible tokens are viewed in the eyes of decades-old intellectual property law.

Hermès will argue before a federal jury in Manhattan on Monday that Rothschild violated trademark law by creating and selling “MetaBirkin” NFTs, which show digital images of the famous Birkin bag.

But Rothschild will counter that the MetaBirkin NFTs are works of art, no different from Andy Warhol’s screen prints of Campbell’s soup cans, and therefore protected by the First Amendment. MetaBirkins shows the Birkin bag, which in real life can cost tens of thousands of dollars, covered in cartoonish, colorful fur instead of leather.

Rothschild said his 100 MetaBirkin NFTs, released in late 2021 at the Art Basel fair in Miami, provide commentary on the way society places artistic value on status symbols and highly prized goods.

“We’re at a point in terms of trademark law and First Amendment law and changes in technology that have all come together in an avalanche of cases over the last couple of years,” said Felicia Boyd, head of IP trademarks at Norton Rose Fulbright US LLP. “The legal teams on both sides are very capable, and they have cleared up the issues for long-term consideration.”

Digital artist Mason Rothschild’s creation of “MetaBirkin” non-fungible tokens sparked a trademark battle with Hermès International SA.

Source: Court documents

Rothschild is represented by Lex Lumina PLLC, a newly formed intellectual property law firm composed of a group of renowned IP scholars from Harvard University, New York University and the University of California Los Angeles.

Even if Rothschild wins in front of the jury, the fact that Hermès’ lawsuit made it all the way to trial may already be sending a signal to the NFT art community that incorporating trademarks into their work could land them in legal trouble.

“This question is very interesting because we really need to find out exactly what NFTs are,” said Gai Sher, senior counsel at Greenspoon Marder LLP. “Are they artistic expressions, or are they functional commercial products?”

Trademarks on NFTs

Hermès claimed in the lawsuit, filed a year ago in the US District Court for the Southern District of New York, that Rothschild’s use of the “MetaBirkin” name for his NFT project misappropriated the Birkin trademark.

Citing social media posts and press coverage, the complaint said consumers were misled into believing the NFTs were created or endorsed by Hermès, which is not the case.

Hermès accused Rothschild of harming the fashion brand’s ability to enter the NFT space, which has seen explosive growth since the start of the pandemic, although it has cooled in the past year as the crypto market crashed.

NFTs use blockchain technology to link images with a unique digital identifier and have become particularly popular among digital artists.

Rothschild could try to argue that consumers wouldn’t be confused because Hermès uses the trademark on a real-world bag while he uses it on a digital asset, but that probably won’t be enough, lawyers say.

Although Hermès does not currently sell NFTs, “the fashion industry has been one of the standard bearers in digital assets,” said Michelle Cooke, an IP attorney at Arent Fox Schiff LLP.

As other brands and fashion houses such as Louis Vuitton UK Ltd., Gucci and Nike Inc. begin to sell their own NFTs, a modern consumer is likely to think that a Birkin-branded NFT is being sold by Hermès.

Consumer confusion is a matter of “what’s going on in the overall industry, not just what a particular brand owner is doing or not doing,” Cooke said.

IP attorney Jessica Neer McDonald noted that many brands are beginning to expand their trademark registrations to include digital assets. “Many of these registrations, not surprisingly, are based on intent-to-use,” she said, meaning these brands have yet to sell NFTs.

Hermès Birkin bags on display during a preview of the upcoming Luxury Week at Christie’s on June 4, 2021 in New York City.

Photographer: Cindy Ord/Getty Images

Art or digital knockoff?

Throughout the case, Rothschild’s lawyers have continually pointed to the Rogers test, a balancing test for free speech and trademark rights, to argue that MetaBirkins is protected expression.

The test, first defined in the decision in the 1989 case Rogers v. Grimaldiallows artists to use a trademark in their work without permission as long as the use has a minimal level of artistic relevance and does not explicitly confuse consumers.

Rothschild filed a motion to dismiss last February, arguing that his NFTs passed the Rogers test. Anything short of an early termination would have a “chilling effect” on artists who want to depict or criticize brands but don’t have the money for a legal defense, said Harvard law professor Rebecca Tushnet, who represented him at a hearing last May.

Judge Jed S. Rakoff was not convinced. He determined that while the Rogers test probably applies to the case, he needed more factual information to evaluate it.

After the parties collected consumer surveys and testimony from art critics, they separately moved to be awarded a pretrial victory, but Rakoff again denied the motions late last year. As of Friday, the judge has not released a statement detailing his decision.

Determining whether an NFT project is protected art or a digital knockoff subject to trademark law is no easy job, according to Jeremy Goldman, co-chair of Frankfurt Kurnit Klein & Selz PC’s blockchain technology practice group.

“You can have a one-of-a-kind, oil-on-canvas painting sold in a gallery, and no one will treat it as a commodity or as a consumer product,” he said. “But if you take that same painting, and you put it on posters, and you sell 100 of them, it starts to look more like a commercial product.”

Hermès claimed in court documents that Rothschild’s actions, which included creating domain names and social media handles bearing the Birkin name, contributed to the consumer confusion.

Rothschild countered that the fact that he markets and sells his art does not mean that it is no longer art.

Rothschild’s art came in the form of NFTs, which are often traded on digital markets, and this could create a perception that he is selling digital assets “that just happen to have this art attached to them,” Goldman said.

“But then again, physical art is also traded in a market,” he said.

The US Supreme Court decided in November to hear a case that will define the limits of the Rogers test. In that case, Jack Daniel’s Properties Inc. sued dog toy maker VIP Products LLC for making a chew toy that has the distinctive shape of a Jack Daniel’s whiskey bottle and carries poo-related puns based on the product’s own labeling.

VIP Products and other prominent IP law scholars argue that the toy is a “humorous parody” that is protected under the Rogers test.

Regardless of the outcome of the trial, the Supreme Court’s guidance on the Rogers test will play a key role in any future appeals and new NFT cases, Boyd said.

Hermès is represented by Baker & Hostetler LLP. Rothschild is represented by Lex Lumina PLLC and Harris St. Laurent & Wechsler LLP.

The case is Hermes International v. Rothschild, SDNY, No. 1:22-cv-00384, jury trial set for 1/30/23.