Judgment obtained in the MetaBirkin NFT case

A long-awaited ruling was handed down this week regarding trademark infringement in the non-fungible tokens (NFT) market. Hermès International SA sued digital artist Mason Rothschild for alleged trademark infringement of the popular Birkin brand in Rothschild’s popular “MetaBirkin” NFT collection. In a victory for brands, the jury determined that MetaBirkins did in fact infringe on Hermès’ trademarks.

As a refresher, NFTs are unique digital identifiers that cannot be copied, substituted or subdivided. NFTs are recorded in a type of digital ledger called a blockchain, and they can be sold and traded. While NFTs have varied uses and properties, they are popularly used as digital artwork and auctioned as collectibles. For more information on what NFTs are and why we should care about them, click here to listen to the latest episode of Vory’s IP Podcast.

In this case, Rothschild minted a collection of NFTs titled MetaBirkins. The NFTs each featured a unique image of a Birkin bag (one of Hermès’ most popular products) made of faux fur in a variety of colors and graphics. Some MetaBirkins featured images of the faux fur, including the Mona Lisa and a Bob Ross painting. You can see MetaBirkins on Rothschild’s website: www.metabirkins.com

Hermès sued Rothschild in the US District Court for the Southern District of New York, alleging illegal use of the HERMÈS trademark, the BIRKIN trademark and the BIRKIN trade dress. The brand argued that Rothschild’s unauthorized use of its intellectual property would undoubtedly cause consumer confusion. Recently, many fashion houses have released officially licensed NFTs, including Louis Vuitton, Gucci, Givenchy and Burberry. Hermès argued that consumers were therefore likely to believe that Rothschild’s project was sanctioned by or otherwise associated with the Hermès brand.

Rothschild argued that the NFT collection was a work of art, and therefore under the test established in Rogers v. Grimaldi, his use of the BIRKIN name was protected by the First Amendment and did not qualify as trademark infringement. The Rogers test dictates that artists may use trademarks in the titles of works of art as long as (1) the title has some artistic relevance to the underlying work, and (2) the title is not explicitly misleading as to the source of the content of the work.

On February 8, 2023, a verdict was issued by the federal jury in Manhattan, finding Rothschild liable for trademark infringement and ordering him to pay Hermès $110,000 in revenue generated by the NFT sale as well as $23,000 for cybersquatting. The case was the first for a court judgment on trademarks in the NFT, as previous cases have largely been settled out of court. Many label owners and artists have been closely following the outcome of the case for precedential guidance.

One question that this case seems to have answered is whether NFTs as commodities are legally related to their real-world counterparts. Trademark infringement occurs when the same or a confusingly similar trademark is used in commerce in connection with the same or legally related goods or services, so that consumers may be confused as to the source of the goods. For example, consumers who encounter a clothing store and a shoe store operating under the same name may mistakenly assume that the businesses are owned by the same company because the goods sold are legally related. Things get a little scarier when dealing with “well-known” brands such as Hermès or Nike, where the burden of proving the goods’ kinship is reduced by a trademark dilution requirement. However, the question still stands for non-famous brands. Many brands are now filing trademark applications that anticipate future use or claim current use of NFTs.

When Rothschild minted its MetaBirkins, the BIRKIN registration only covered goods of leather or imitation leather, namely handbags. So, are digital handbags legally related to physical handbags? In other words, are consumers likely to associate the digital goods with the same source that produces the physical goods? According to this court, they are, at least to the extent that the mark is known. For the avoidance of doubt, Hermès filed a trademark application in August 2022 that claims a long list of digital virtual goods, including digital collectibles and NFTs. The application has not yet undergone processing by the USPTO.

While this case is a victory for brand owners, many issues surrounding trademarks and the metaverse remain to be resolved. In addition, it is highly likely that the case will be appealed. We hope to see further clarification regarding the intellectual property implications arising from the continued minting and sale of NFTs from both the courts and the ongoing discussions at the USPTO and Copyright Office.

If you have any questions about your brand’s intellectual property rights, including related to NFTs, contact a Vorys intellectual property attorney.