On May 18, 2022, U.S. District Judge Jed Rakoff issued a written decision refusing to dismiss Hermes’ trademark infringement lawsuit against Los Angeles designer Mason Rothschild over Rothschild’s “MetaBirkins” non-fungible tokens (“NFT”). The case has been closely watched by trademark lawyers and NFT creators because it represents a familiar clash between federal trademark law and the constitutional right to free expression but in the novel context of NFTs.
Hermes’ Lawsuit
Without permission from Hermes, Rothschild created digital images of Hermes’ Birkin handbags. He sold the MetaBirkins images as NFTs. As of January 2022, total sales for the MetaBirkins NFT series exceeded $1.1 million. Hermes quickly filed suit in federal court against Rothschild alleging claims for trademark infringement, false designations of origin and false descriptions and representations, trademark dilution, and cybersquatting.
Rothschild’s Defense
Rothschild argued his MetaBirkins digital images – which depict the Hermes’ luxury handbags covered in fur – are works of art where the physical Birkin bag serves as the subject of an otherwise transformative digital expression. Commenting on the initial cease and desist letter he received from Hermes, Rothschild stated that, “MetaBirkins is a playful abstraction of an existing fashion-culture landmark. I reinterpreted the form, materiality and name of a known-cultural touchpoint.” The designer analogized to Andy Warhol’s famous artwork depicting Campbell’s Soup cans.
The Decision
Judge Rakoff agreed the court must determine whether the MetaBirkins are appropriately considered artistic expressions of the Hermes product. In his decision to deny Rothschild’s motion to dismiss the lawsuit, the court noted that Hermes sufficiently argued that Rothschild’s use of the “MetaBirkins” trademark explicitly misleads consumers into believing the project is authorized by, or otherwise affiliated with, Hermes. In reaching this decision, Judge Rakoff disagreed with Rothschild’s contention that a traditional trademark infringement analysis, and, in particular, application of the Polaroid factors to assess the likelihood of confusion, must be precluded in the context of artistic works.
The court held that trademark infringement can exist even as applied to artistic expression if the artistic expression was created to explicitly mislead consumers. In this case, the court is leaving open the question of whether Rothschild’s use of the “Birkin” trademark was intended as a source indicator for purposes of trading off on the brand reputation of Hermes’ Birkin handbags or, rather, as the title of a work of art to which protections of the first amendment of the U.S. Constitution should apply.
Takeaways
With new business applications emerging for companies entering the metaverse, launching NFTs, and investing in Web 3.0, the commercial potential of this technology is growing fast. As these spaces continue to develop, they will become an important part of marketing initiatives aimed at engaging and persuading consumers to purchase goods and services. The rights of brand owners to police metaverse and Web 3.0 remains subject to a number of important but unanswered questions.
The MetaBirkin case is an example of this innovation process in action and will be an important step in defining where lines are drawn to protect brands and first amendment rights. Are digital images of physical products transformative art or IP misappropriation? Who has the right to own what in a virtual world? To what extent is the U.S. Constitution’s first amendment right to free expression protected in the metaverse? Are these emerging technologies a natural zone of expansion where brands must seek trademark protection? The MetaBirkin case is one of several cases pending across the country that may help answer these questions and provide some guidance on best practices for protection, enforcement, and fair use of IP rights.
Finkel Law Group, with offices in San Francisco and Oakland, has extensive experience helping our clients navigate registration of their trademarks through the U.S. Trademark Office, licensing those trademarks for commercial gain, and enforcing trademark rights in federal court across California. When you need intelligent, insightful, conscientious and cost-effective legal counsel to assist you in understanding new laws that may affect your company’s intellectual property rights, please contact us at (415) 252-9600, (510) 344-6601, or info@finkellawgroup.com to speak with one of our attorneys about your matter.