By: Olivia Kreegel

These days, conversations about the metaverse and NFTs seem to dominate the landscape – and it’s not just the ‘finance bros’ leading the discussion. When luxury fashion house Hermès International stepped into the courtroom to ban a “MetaBirkin,” the imbalance between technological advancements and traditional legal frameworks became evident.[1]

In December of 2021, Mason Rothschild began creating digital replicas of Birkin handbags, which he dubbed ‘MetaBirkins’.[2] Five months later, he started selling these creations as non-fungible tokens (“NFTs”).[3] NFTs are blockchain-based tokens that can be linked to digital works of art and other files, enabling the electronic transfer and verification of ownership for digital assets.[4] Each NFT that Rothschild sold represented a digital deed for sole ownership of a MetaBirkin.[5] Alongside these digital creations, Rothschild established social media accounts and marketing channels, using the word ‘MetaBirkin’ in each username or URL.[6] As a result, Hermès sued Rothschild for trademark infringement, trademark dilution, and cybersquatting.[7]

In June of 2023, this case went to trial, becoming the first trademark trial involving NFTs.[8] Given its unprecedented nature, the Court weighed two approaches to assessing trademark infringement: the Rogers[9] test and the Gruner + Jahr[10] test.[11] Ultimately, the Court applied the Rogers test as they determined that the MetaBirkins could be classified as artistic expression.[12] Under the Rogers test, the plaintiff must prove that either “(1) the use of its trademark in an expressive work was not “artistically relevant” to the underlying work or (2) the trademark is used to “explicitly mislead” the public as to the source or content of the underlying work”.[13] If the plaintiff proves one of these two standards, then the artistic expression loses its protection under the First Amendment.[14] Even if the alleged infringing mark satisfies the “artistic relevance” prong, it will fail the test if it was chosen purely to cause consumer confusion and to exploit the mark’s popularity and goodwill.[15] This second prong evaluates whether the defendant’s use of the mark is explicitly misleading by applying the Polaroid[16] factors.[17] The Court ultimately held Rothschild liable for trademark infringement, trademark dilution, and cybersquatting, finding that he intentionally sought to confuse consumers into believing his MetaBirkins were affiliated with Hermès.[18]

However, in June of 2023, the Supreme Court heard Jack Daniel’s Props.[19] and held that the Rogers test is not appropriate when the “accused infringer had used a trademark to designate the source of its own goods. . . used a trademark as a trademark.”[20] The Court in Hermès acknowledged that this fact pattern aligns with Rothschild’s actions, casting doubt on their own approach and analysis of the case.[21] Rothschild has since appealed the decision of the case, and until a higher court hears the appeal, courts are stuck in limbo deciding which approach to apply to trademark cases involving NFTs. This future decision will be pivotal as it will establish a precedent for future cases and likely serve as a cautionary example to artists and creators: freeriding off recognizable trademarks, even in digital contexts, may result in legal consequences.

[1] See generally Hermès Int’l v. Rothschild, 678 F. Supp. 3d 475, 483–84 (S.D.N.Y. 2023) (discussing how the recent decision in Jack Daniel’s Props., Inc. v. VIP Prod. LLC, 599 U.S. 140 (2023) raises concerns regarding the appropriate legal framework for NFT trademark infringement cases).

[2] Hermès Int’l v. Rothschild, 603 F. Supp. 3d 98, 100 (S.D.N.Y. 2022).

[3] Id.

[4] See Andrew C. Michaels, Confusion in Trademarked NFTs, Stan. J. of Blockchain L. & Pol’y (Jan. 2, 2024), https://stanford-jblp.pubpub.org/pub/confusion-trademarked-nfts/release/1; see also Robyn Conti & Michael Adams, What Is An NFT? Non-Fungible Tokens Explained, Forbes (May 10, 2024, 3:41 PM), https://www.forbes.com/advisor/investing/cryptocurrency/nft-non-fungible-token/.

[5] Hermès Int’l v. Rothschild, 654 F. Supp. 3d 268, 273–74 (S.D.N.Y. 2023).

[6] Hermès, 603 F. Supp. 3d at 101.

[7] Id. at 100.

[8] See John Woolley, MetaBirkin NFT Artist Appeals After Hermès Trademark Case Loss, Bloomberg Law (July 24, 2023, 5:36 PM), https://www.bloomberglaw.com/bloomberglawnews/litigation/X34JGDMS000000?bna_news_filter=litigation#jcite; see also Harper Johnson, Case Review: Hermes International v. Rothschild, Center for art L. (May 7, 2024), https://itsartlaw.org/2024/05/07/case-review-hermes-v-rothschild/#post-64652.

[9] See Hermès, 654 F. Supp. 3d at 275; see generally Rogers v. Grimaldi, 875 F.2d 994, 1000 (2d Cir. 1989) (explaining how this speech-protective approach applies to works of artistic expression alleged to be infringing on a trademark).

[10] See Hermès, 654 F. Supp. 3d at 275; see generally Gruner + Jahr USA Pub. v. Meredith Corp., 991 F.2d 1072, 1074 (2d Cir. 1993) (emphasizing the significance of this test for commercial works and the approach of assessing whether the use of a mark similar to the plaintiff’s trademark caused consumer confusion).

[11] See Hermès, 603 F. Supp. 3d at 103; see also Hermès, 654 F. Supp. 3d at 277.

[12] See Hermès, 603 F. Supp. 3d at 103; see also Hermès, 654 F. Supp. 3d at 277.

[13] Hermès, 654 F. Supp. 3d at 280.

[14] Id.

[15] See Twin Peaks Prods. Inc. v. Publications Int’l, Ltd., 996 F.2d 1366, 1379 (2d Cir. 1993).

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

[17] See generally Hermès, 654 F. Supp. 3d at 281 (outlining the factors: (1) strength of Hermès’ mark, with a stronger mark being entitled to more protection; (2) the similarity between Hermès’ “Birkin” mark and the “MetaBirkins” mark; (3) whether the public exhibited actual confusion about Hermès’ affiliation with Rothschild’s MetaBirkins collection; (4) the likelihood that Hermès will “bridge the gap” by moving into the NFT space; (5) the competitive proximity of the products in the marketplace; (6) whether Rothschild exhibited bad faith in using Hermès’ mark; (7) the respective quality of the MetaBirkin and Birkin marks; and (8) the sophistication of the relevant consumers).

[18] Hermès Int’l v. Rothschild, 678 F. Supp. 3d 475, 481 (S.D.N.Y. 2023).

[19] See generally Jack Daniel’s Props. v. VIP Prods. LLC, 599 U.S. 140 (2023).

[20] Id. at 145.

[21] Hermès, 678 F. Supp. 3d at 483-84.