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Hermès vs. MetaBirkins: the Lawsuit That May Change Trademark, Art, and NFTs Forever

Hermès vs. MetaBirkins

The year-long trademark battle between NFT artist Mason Rothschild and French luxury fashion house Hermès closed on Monday, and is awaiting a verdict by this week.

In December 2021, non-fungible token (NFT) artist Mason Rothschild released an NFT titled MetaBirkins, a collection of 100 unique furry digital handbags inspired by the French luxury fashion house’s signature Birkin handbag at Art Basel in Miami – one of the world’s premiere contemporary art fairs.

The Hermès Birkin bag is known to be notoriously expensive and difficult to get – making it a status symbol of sorts to prove that one’s up in elite society. Not anyone can just purchase a Birkin bag – a customer must develop a relationship with a Hermès sales rep, make continued purchases, and be able to demonstrate true appreciation and knowledge of the brand, making obtaining the bag a lifelong endeavour for many people.

Upon the release of MetaBirkins, Rothschild cites that the NFT collection was “inspired by the acceleration of fashion’s ‘fur-free’ initiatives and embrace of alternative textiles.” With each NFT having a starting price of 0.1 ETH – roughly $450 at the time of release – the Birkin dream may become true – although digitally – for a limited number of collectors.

After hearing the news of the project’s release, Hermès sent out a cease and desist letter to Rothschild on December 16, 2021. According to reports from Reuters, the MetaBirkins collection made over $1 million in sales by January 2022, right before many NFT marketplaces have delisted the collection on their sites in fear of being hit by legal repercussions.

Then, on January 14, 2022, Hermès sued Rothschild for trademark infringement for the fashion house’s iconic brand. 

Breaking down the Hermès vs. Metabirkins lawsuit

Hermès has historically made great efforts to preserve the Birkin brand of exclusivity: and this lawsuit is the latest of them yet. 

In filing the lawsuit, Hermès claimed that Rothschild was “stealing the goodwill in Hermès’ famous intellectual property to create and sell his own line of products,” which could create confusion among its consumer base.

Rothschild then argued that the claims by Hermès were “baseless”, where instead his intent was to “set a precedent” in visual art and NFTs.

“I am not creating or selling fake Birkin bags. I’ve made artworks that depict imaginary, fur-covered Birkin bags,” he wrote. “The fact that I sell the art using NFTs doesn’t change the fact that it’s art.”

The case for artistic expression

At the centre of Rothschild’s argument is his right to “create art based on [his] interpretations of the world around [him].” 

Citing a “fair use” case under the First Amendment in US law – the same defence that Andy Warhol’s Campbell Soup Cans falls under – Rothschild argues that he can use the same justification to continue promoting his MetaBirkins NFT collection.

In the case of the Campbell soup cans, it was concluded that the 32 prints featuring the common grocery item, although appearing identical, had the artist’s personal touch and expression, visible through slight variations between each print. Rothschild said that what he has done with his 100 MetaBirkin NFTs is not any different from what Warhol had done – as he is just selling the “expression” of the Birkin, not a product that is affiliated with, or is the real Birkin.

Rothschild argued that his work involving Birkins was a commentary on the “animal cruelty inherent in Hermès’ manufacture of its ultra-expensive leather handbags,” and thus protected the First Amendment. “These images, and the NFTs that authenticate them, are not handbags; they carry nothing but meaning,” his lawyers wrote in the filing.

But Hermès begs to differ – saying that Rothschild is “seeking to make his fortune by swapping out Hermès’ ‘real life’ protections for “virtual rights,” and is looking to capitalise on the already successful Birkin in order to bring profits to his own profit. 

After a few skirmishes for summary judgement and dismissal, the Hermès vs. Metabirkins suit was moved to trial at the District Court for the Southern District of New York on January 30, 2023.

The Hermès vs. Metabirkins trial

Over the week-long deliberations, the courtroom had assembled on Monday February 6th for closing arguments from both sides before the jury made any decisions.

Oren Warshavsky, a lawyer representing Hermès, says that the luxury fashion house was “trying two different cases,”: confusion for consumers as to who’s actually issuing the NFTs, and damage to the Birkin brand.

Recognising physical handbag from NFT handbag

Warshavsky made the case that the similarities between physical Birkins and MetaBirkin NFTs might mislead NFT collectors – as Rothschild’s MetaBirkin NFTs and Birkin Bags aren’t sold side-by-side. 

To combat, Rothschild’s defence brought in Dr. David Neal, managing partner and founder of Catalyst Behavioral Sciences, to analyse a survey conducted by Dr. Bruce Isaacson, a family medicine specialist, to test for the likelihood of confusion between Hermès’s Birkins, and Rothschild’s MetaBirkins.

Dr. Isaacson found that the likelihood of confusion was 18.7%, but under Dr. Neal’s analysis, the percentage changed to 9.3% – suggesting that it’s more unlikely that someone would confuse a MetaBirkin for a Hermès Birkin, and vice versa, than previously reported. 

Damage to the Birkin name?

Furthermore, Warshavsky argued that what Rothschild was doing with MetaBirkins was a case of brand dilution –  causing harm to the Birkin name trademark by people associating it less with the original brand.  

Meanwhile, other testimonies point out that Rothschild’s use of the trademarked name helped him with acquiring value for his MetaBirkins collection. Warshavsky cited Harvard Business School professor and investment firm a16z researcher Scott Kominers’ Friday testimony, which stated that the MetaBirkin NFT collection raked in major profits before it minted due to its use of the Birkin name.

“Metabirkins sold at the amount they did because of the Birkin name,” said Warshavsky. “People spent that money because of the name MetaBirkin, regardless of which NFT they were getting.

A verdict from the jury is expected to come within this week.

What can come from the Hermès vs. Metabirkins trial?

The verdict from Hermes International v. Rothschild will prove to be important in setting what is grounds for NFT art, and what is considered copyright infringement. As the case conjoins trademarks, NFTs, and First Amendment rights, many creators are keeping watch on what the jury would conclude.

“This Hermès v Metabirkins case is one of the first and arguably the most prominent lawsuits to ever focus on trademarks and NFTs and whether trademark rights extend to the digital sphere,” Gai Sher, senior counsel at Greenspoon Marder LLP. “This case could very well set a legal precedent not only for trademarks in the context of NFTs, but for all digital assets as they relate to fair use and free speech.”

The trial will also set a precedent for how the courts will take trademark infringement claims in the case of NFTs – and whether they’ll call it consumer confusion, or artistic expression.

In last week’s Hermès vs. Metabirkins trial, Rothschild put forth the notion that his NFTs were “part of an experiment” to  ask what defines value in the luxury world. “Is it the image or the actual product?” he asked of the nine-person jury.

At this point in time, we’d only hope that the courts would analyse what’s presented under the Rogers v. Grimaldi standard, a test that is a leading standard for trademark infringement from  1989 to this day.

Under Rogers, using a trademark in an artistic work can be taken legal action from if the trademark:

  1. Has no “artistic relevance” to the underlying work; or
  1. Explicitly misleads as to the source or content of the work

“The Rogers Test states that an artist can use a trademark in connection with an expressive work if the trademark is artistically relevant to the product and doesn’t explicitly mislead consumers as to the sponsorship, endorsement or other connection to the brand,” said Sher.

“Hermes argues that although Rothschild’s NFT bags don’t have real-world utility, many luxury brands are entering the digital space and creating digital assets of their own which creates consumer confusion.”

Rothschild’s NFTs also don’t have any added utility, and are not virtual wearables in the metaverse – making them “non-speech, commercial and arguably functional products that just now happen to be in virtual form,” according to Sher.

We’ll be entering an era where creative expression in NFTs may drastically change, especially in the context of wearable NFTs, and how existing brands can determine what can be used and not used in Web3 and the metaverse. It’s only a matter of time to see how far the courts will take how IP law can be applied to NFTs, as what’s deemed to be original is now seemingly in the court’s hands.

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