Faux or Faux Pas? The Case of the MetaBirkin

Alyssa GarciaNews & Insights

By Alyssa R. Garcia

In a novel intellectual property case, longtime luxury fashion house Hermès has brought a trademark infringement action against the creator of NFTs depicting faux-fur Hermès Birkin handbags.[1] The allure of an Hermès Birkin handbag arises not only from its design and leather craftsmanship, but also from how difficult it is to obtain. The Birkin can neither be bought directly from Hermès’ website, nor from a walk-in visit to an Hermès store.[2] Rather, customers are placed on a waiting list for the opportunity to purchase a Birkin bag at a cost of at least $10,000.[3] The handbag’s scarcity has helped produce a thriving secondary market, prompting observers to call the luxury good “a better investment than gold.”[4] The Birkin’s iconic and elusive reputation is what inspired artist Mason Rothschild to design a line of “MetaBirkin” nonfungible tokens (NFTs).[5] The digital designs reimagined the bag’s traditional look by covering the NFT bags with colorful fur. Rothschild successfully recreated the exclusivity of the real-life bags in his digital artwork: the line of 100 NFTs sold for over $1 million.[6]

Despite putting a disclaimer on his website dissociating the NFTs from the French design house, Rothschild used “www.MetaBirkin.com” and “Metabirkins” as his domain name and social media handles, respectively.[7] Shortly after the collection’s launch, Hermès filed a trademark infringement lawsuit against Rothschild in the U.S. District Court for the Southern District of New York. Rothschild moved to dismiss the lawsuit, arguing that MetaBirkins were protected as artistic works under the test set forth by the Second Circuit in Rogers v. Grimaldi.[8] There, in an attempt to balance the Lanham Act with First Amendment protections, the court decided that there was no infringement where usage was both “artistically relevant” and did not explicitly mislead consumers.[9] 

Rothschild contended that the MetaBirkins were digital art (merely with “Birkin” in the title) and therefore were expressive works protected by the First Amendment, as opposed to commodities lacking First Amendment protection.[10] He further argued that none of the information on the MetaBirkins website, including the disclaimer reading, “[w]e are not affiliated, associated, authorized, endorsed by, or in any way officially connected with the HERMES [sic], or any of its subsidiaries or its affiliates,”[11] was explicitly misleading.[12] Hermès countered that this disclaimer was only added after a cease and desist letter was sent, and even then, courts have held that disclaimers are ineffective.[13] 

Rothschild’s arguments ultimately did not convince the court and his motion to dismiss was denied.[14] The court first found that Rothschild was selling digital images of handbags, not actual wearable accessories, and therefore, the Rogers test should be applied in order to “balanc[e] the First Amendment concerns with Lanham Act protection . . . .”[15] The court added that, “because NFTs are simply code pointing to where a digital image is located and authenticating the image,” using that code to track future sales of the NFT did not by itself make the NFT a commodity.[16] In applying the Rogers test, the court found that Hermès’ amended complaint sufficiently alleged that MetaBirkins had a commercial association with Hermès’ “Birkin” trademark, given Rothschild’s statement that MetaBirkins were “a tribute to Herm[è]s’ most famous handbag, the Birkin . . . .”[17]

The court further determined that Hermès sufficiently alleged that use of the MetaBirkin mark was explicitly misleading through consideration of the Polaroid factors, which analyze the strength and similarity of two marks as well as other indicators of actual confusion to determine whether consumers were misled.[18] Some of the factors that the court found relevant to this case included “the strength of the Birkin mark, evidence of actual confusion, and [Rothschild’s] bad faith in adopting the mark.”[19] The court concluded, again largely based on Rothschild’s statements about why he chose the title “MetaBirkins” for his artwork, that there were sufficient facts pointing to a likelihood of confusion that the amended complaint should survive dismissal.[20]

The treatment of NFTs in this case will have significant precedential impact on this area of law. The policy implications of treating NFTs less like art and more like commodities may inhibit artistic behavior, such that creators produce NFTs for the sake of selling them rather than for the purpose of creating art itself. Such a decision would also offer much greater protection to brands with regard to digital media because any representation of trademarked items in NFTs would merit protection under trademark statutes.

Another downside of such a decision for NFT creators would be that targeting violators of trademark infringement encourages the creation of black market NFTs. Because NFTs are a part of the blockchain, they cannot be merely deleted. Once established on the blockchain, the digital footprints will remain throughout the life of the NFT, and for the NFT to be removed, it must be “burned,” meaning that the record of sale (and not the image itself) is transferred to an inaccessible wallet.[21] Due to these hurdles, a trademark holder will have a difficult time getting infringing NFTs officially removed, and in doing so may actually make the prohibited NFT more valuable, which further incentivizes illegal behaviors.

Hermès has now moved for summary judgment on its trademark infringement claim.[22] Having defeated Rothschild’s motion to dismiss, the question for the court will now be whether there is any dispute of material fact that the MetaBirkins resulted in a substantial likelihood of confusion among consumers as to whether the NFTs were in fact associated with the fashion house.[23] The outcome of this case will be one that sets the tone for future NFT litigation as it relates to intellectual property rights. As NFTs, cryptocurrency, and blockchain technologies become more widely recognized, there is a greater need to protect and prevent exploitation of intellectual property in the virtual space. This case is certain to be a benchmark for the future of intellectual property law.

[1] Hermès’ Amended Complaint also includes allegations of false designation of origin, trademark dilution, cybersquatting, injury to business reputation, misappropriation, and unfair competition. however, because the order on Rothschild’s motion to dismiss discussed here only analyzes the trademark infringement claims, Hermès’ other claims are not detailed herein.

[2] Dale Arden Chong, Buying an Hermès Bag Can Be Tricky – Here’s What an Expert Says You Should Know, Who What Wear (Apr. 29, 2022), https://www.whowhatwear.com/how-to-buy-an-hermes-bag.

[3] Id.

[4] Tara John, Why the Hermès Birkin Bag is a Better Investment Than Gold, Time (Jan. 15, 2016) https://time.com/4182246/hermes-birkin-bag-investment-gold/.

[5] NFT Artist: What is the ‘Metabirkin’ NFT Project?, Yahoo! Finance, https://news.yahoo.com/nft-artist-metabirkin-nft-project-140000781.html (last visited Nov. 6, 2022).

[6] Felicia J. Boyd, Abida Chaudri, Jamie Brazier, Hermès Challenge of “MetaBirkin” NFT Foretells Future Trademark Litigation Trends, IP Watchdog (June 30, 2022 7:15 AM), https://ipwatchdog.com/2022/06/30/hermes-challenge-metabirkin-nfts-foretells-future-trademark-litigation-trends/id=149916/.

[7] Id.

[8] Def.’s Mot. to Dismiss at 4-5, Case No. 1:22-cv-00384-JSR, ECF No. 27 (March 21, 2022).

[9] Rogers v. Grimaldi, 875 F.2d 994, 1000 (2d Cir. 1989).

[10] Def.’s Mot. to Dismiss at 19-20, Case No. 1:22-cv-00384-JSR, ECF No. 27 (March 21, 2022).

[11] Metabirkins by Mason Rothschild, https://metabirkins.com/ (last visited Nov. 6, 2022).

[12] Def.’s. Mot. to Dismiss at 15-16, Case No. 1:22-cv-00384-JSR, ECF No. 27 (March 21, 2022).

[13] Pl.’s Opp’n to Mot. to Dismiss at 14, Case No. 1:22-cv-00384-JSR, ECF No. 31 (April 4, 2022).

[14] Order on Def.’s Mot. to Dismiss, Case No. 1:22-cv-00384-JSR, ECF No. 50 at 11 (May 18, 2022).

[15] Id.

[16] Id. at 12.

[17] Id. at 14.

[18] Id. at 16-17 (citing Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492, 495 (2d Cir. 1961).

[19] Id. at 16.

[20] Id. at 18.

[21] Maya Ernest, The Hermès and Metabirkins Lawsuit Could Set Legal Precedents for NFTs, Input (July 28, 2022) https://www.inputmag.com/style/hermes-metabirkin-nft-lawsuit-legal-precendent-potential.

[22] Hermès Pushes for Summary Judgment in Metabirkins Lawsuit, The Fashion Law (Oct. 11, 2022), https://www.thefashionlaw.com/hermes-pushes-for-summary-judgment-in-lawsuit-over-metabirkins-nfts/.

[23] Id.