In the evolving landscape of metaverse, digital art and intellectual property, few cases have sparked as much debate as the legal battle between luxury fashion house Hermès and digital artist Mason Rothschild. At the heart of this high-stakes conflict are Rothschild’s “MetaBirkins” NFTs—digital artworks depicting the iconic Birkin bag, reimagined in virtual spaces. The case of Hermes Int’l v. Rothschild marks a pivotal moment in the intersection of intellectual property law and the rapidly evolving digital art world, particularly regarding non-fungible tokens (NFTs).
The dispute arose when Hermes International, the luxury fashion house renowned for its iconic Birkin handbags, took legal action against Mason Rothschild, a digital artist who created and sold NFTs titled “MetaBirkins”. These digital artworks, which featured virtual handbags resembling Hermes’ Birkin bags, were presented as a form of commentary on the fashion industry and were sold for significant sums on various NFT marketplaces.
The Birkin was unveiled in the year 1984, by Hermès, the prestigious French luxury brand. The Birkin has since become a quintessential symbol of high fashion, embodying both exclusivity and elite status. Revered by celebrities and handbag connoisseurs alike, the Birkin is celebrated for its craftsmanship and prestige. According to Harper’s Bazaar, securing a Birkin often requires a significant history of purchases from Hermès, as only the most loyal customers are offered the chance to buy these coveted bags. While a standard leather Birkin is priced around $10,000, those crafted from exotic leathers such as ostrich, lizard, or crocodile, as well as limited edition versions, can surpass $200,000. The Birkin’s stature and goodwill reflect its enduring appeal and its status as a pinnacle of luxury and exclusivity.
Facts Of The Case
In November 2021, amid the NFT surge, Mason Rothschild (“Defendant”) began creating and selling a series of non-fungible tokens (“NFTs”) featuring the Hermès Birkin bag, reimagined with vibrant, colorful fur. The NFTs showcased imaginative variations, such as a Birkin covered in the Grinch’s green fur and another inspired by Van Gogh’s The Starry Night, among other striking designs. Although the Defendant initially planned to release 1,000 MetaBirkins, he ultimately launched only 100 of these distinctive NFTs. Each MetaBirkin was initially priced at $450, however, in the secondary market, they were trading for between $13,000 and $65,000. Rothschild, the Defendant estimated earnings of approximately $125,000 from these NFTs, including both initial sales and royalties from subsequent transactions. The Defendant sold his NFTs on various NFT platforms including, OpenSea, Rarible, and further promoted the collection via a MetaBirkin website, and through social media marketing channels.
Legal Issues
The case presented several key legal issues:
a) Trademark Infringement: Whether Rothschild’s “MetaBirkins” NFTs unlawfully infringed on Hermes’ trademark by creating a likelihood of consumer confusion regarding the source or sponsorship of the digital artworks.
b) Trademark Dilution: Whether Rothschild’s use of the Birkin name diluted the distinctiveness of Hermes’ trademark, potentially harming the luxury brand’s reputation.
c) First Amendment Defense: Whether Rothschild’s creation and sale of “MetaBirkins” NFTs were protected under the First Amendment as a form of artistic expression, which could outweigh the trademark protections afforded to Hermes.
Arguments
In January 2022, Hermès (“Plaintiff”) filed a lawsuit after discovering the Defendant’s MetaBirkin project. The Plaintiff contended that the Defendant had capitalized on its renowned reputation and goodwill, claiming that the NFTs were bought primarily because of the Birkin name, which led consumers to wrongly believe that they were officially affiliated with or endorsed by Hermès, the Plaintiff. The Plaintiff further alleged that the Defendant not only used its Birkin trademark without authorization but also profited from it through the sale and resale of these NFTs.
The Defendant however, attempted to justify his project under the fair use doctrine of the First Amendment, asserting that the NFTs were a form of artistic expression and not intended to misrepresent an affiliation with the Plaintiff. The Defendant further drew a parallel to Andy Warhol’s Campbell’s Soup Can paintings which are widely recognized as transformative art rather than deceptive. He also stated that his NFTs were created as a tribute to the Plaintiff’s most exclusive and famous bag, the Birkin.
Furthermore, the Defendant invoked the ‘Rogers’ legal test, established in the 1989 case, Rogers v. Grimaldi. The Rogers test permits the use of trademarks in artistic works provided that such use has an artistic relevance and does not intentionally mislead consumers about the nature or source of the work.
Decision
The Manhattan Jury, unanimously ruled in favor of the Plaintiff, determining that the Defendant’s unauthorized MetaBirkin NFTs constituted trademark infringement, trademark dilution, and cybersquatting. The ruling established that the First Amendment did not protect Rothschild’s use of the ‘Birkin’ name and design in this context. The decision emphasized that while artistic expression is important, it cannot be used as a shield for commercial activities that infringe upon established trademark rights, especially when there is a significant likelihood of consumer confusion. The Jury expressly found that his NFTs and the associated domain- MetaBirkins.com were confusingly similar to the Plaintiff’s trademark. Thereby, the Jury awarded the Plaintiff $133,000 in damages.
The ruling established that the First Amendment did not protect Rothschild’s use of the “Birkin” name and design in this context. The decision emphasized that while artistic expression is important, it cannot be used as a shield for commercial activities that infringe upon established trademark rights, especially when there is a significant likelihood of consumer confusion.
It was also held that the Defendant’s use of the Birkin bag as an NFT did not qualify as protected artistic expression under the First Amendment, as it was deemed misleading to consumers. The MetaBirkin was more akin to consumer goods subject to trademark laws rather than protected art, and that the Defendant’s intent was to benefit from the Plaintiff’s goodwill by drawing an association between the NFTs and the famous Birkin.
The Plaintiff further, after the Jury’s verdict, secured a permanent injunction on the Defendant’s sales of the Metabirkins. The Manhattan federal court held that the permanent ban was justified to further prevent the Defendant from continuing to market and sell the Metabirkins to prevent irreparable harm to the Plaintiff.
Impact
This trial not only represents a significant milestone in the protection of intellectual property for luxury brands, but also highlights the lag between legal frameworks and technological advancements. This case is likely to be the first of many as NFT technology and its ecosystem continue to evolve, necessitating the need for further judicial clarification on trademark infringement in both traditional and virtual contexts. Additionally, it provides valuable insights into how intellectual property law applies to digital assets and NFTs, particularly for artists and industry professionals amidst ongoing legal disputes such as Nike v. StockX.
Conclusion
While questions remain about the application of intellectual property law in the metaverse, Hermès v. Rothschild represents a critical moment in this intersection. The case is the first major legal analysis of NFTs as artistic expression, and it underscores the complexities of applying traditional trademark principles to emerging digital technologies. The decision highlights the challenge of balancing creative freedom with the need to protect established brands. As such, the case will likely be a foundational reference point for understanding the rights of artists and the limits of trademark protection in the digital age.
Even though the various issues remain unresolved in terms of the protection and use and of intellectual property in the metaverse, this case represented a pivotal point in the said intersection. As the first major analysis of NFTs as a form of artistic expression, the decision highlights the complexities of applying traditional trademark principles to emerging digital technologies. The Jury’s verdict and subsequently, the Court’s decision, while specific to the facts of the matter, underscores the challenge of weighing creative freedom with the protection of established brands/trademarks.
For the aforesaid reasons, the Hermès v. Rothschild case will likely be a foundational reference point for understanding the rights of artists and the limits of trademark protection in the digital age.
Authors: Shalini Bajpai, Ambika Chaudhary & Ridhi Rajani