On December 2021, defendant Mason Rothschild created digital images of fur-covered versions of the luxury Birkin handbags, produced by plaintiff Hermès. Rothschild titled these images “MetaBirkins” and sold them using NFTs. In response, Hermès filed a complaint claiming trademark infringement, trademark dilution, and cybersquatting (see our previous article HERE).
Rothschild responded with a motion to dismiss Hermès’ trademark infringement claim, based on the applicability of the Rogers test, on the basis that the digital images of the MetaBirkin bags should be considered as pieces of art and, therefore, receive First Amendment protection. Hermès opposed, arguing that the Polaroid factors – instead of the Rogers test – should apply, in order to asses likelihood of confusion.
On 18 May, 2022, Judge Rakoff of the Southern District Court of New York released a long-form Memorandum Order, which follows the Court’s bottom-line order of May 5th, 2022, denying Rothschild’s motion to dismiss and allowing Hermès’ case to proceed (the full order is available HERE).
The Court addresses Rothschild’s arguments that Hermes’s trademark infringement claims fail as a matter of law based on Rogers, and concludes that such a test applies, at least in part, to the analysis of Rothschild’s uses of “MetaBirkins”. However, since Hermès raised sufficient allegations of explicit misleadingness (also as a function of likelihood of confusion under the Polaroid factors), the Court denied the motion to dismiss.
The reason is basically that Hermès sufficiently alleged that “Rothschild entirely intended to associate the “MetaBirkins” mark with the popularity and goodwill of Hermes’s Birkin mark, rather than intending an artistic association”, and “that Rothschild’s use of the “MetaBirkins” mark is explicitly misleading … under the Polaroid factors — particularly as to the strength of the Birkin mark, evidence of actual confusion, and the junior user’s bad faith in adopting the mark”.
A part from the decision in itself, it could be useful to just mention a few statements by the Court, which are significant to understand the issues related to the use of NFT technology in this field of the law.
First, it is worth to note how the order defines NFTs, as “units of data stored on a blockchain that are created to transfer ownership of either physical things or digital media”, which “can function as investments that can store value and increase value over time”.
Then, on the application of Rogers, the Court affirms that Rothschild’s use of NFTs to authenticate the images has no impact, in itself, on the application of Rogers: “because NFTs are simply code pointing to where a digital image is located and authenticating the image, using NFTs to authenticate an image and allow for traceable subsequent resale and transfer does not make the image a commodity without First Amendment protection any more than selling numbered copies of physical paintings would make the paintings commodities for purposes of Rogers”.
The use of NFTs could have made a difference, in the opinion of the Court, if the complaint contained “sufficient factual allegations that Rothschild uses, or will in the immediate foreseeable future use, the mark to sell non-speech commercial products, i.e., virtually wearable Birkin bags”; which was not the case.
So far, the “MetaBirkins” case has showed us that digital images considered works of art may be entitled to the exemption related to the freedom of expression and the use of NFT for authentication would be irrelevant in order to establish trademark infringement. But NFTs applied to a digital garment, for sale purposes, may not be entitled to the same protection.
