Hermès sued Rothschild in January, alleging he infringed the trademarks of its famous Birkin luxury handbag by creating and selling MetaBirkins NFTs, which are bought and sold using blockchain technology. The NFTs represent digital images of the Birkin handbags, but covered in fur instead of leather.
Harvard Law School Professor Rebecca Tushnet, who represents Rothschild, argued that the term MetaBirkins is the title of a digital art project that provides commentary on the relationship between consumerism and the value of art, and is therefore protected by the First Amendment.
Hermès’ attorney Oren Warshavsky said Rothschild was using the MetaBirkins name as a mark identifying the source of a product, which has caused consumers to incorrectly believe the MetaBirkins NFTs are connected to Hermès.
The case is one of the first times a court has heard a dispute over how intellectual property law applies to NFTs. The new technology is at the core of other trademark and copyright lawsuits involving Nike Inc. and Quentin Tarantino.
Warshavsky said neither party had clearly established what an NFT is or what it represents, but Tushnet argued that the digital images created by Rothschild are the only works that matter.
Tushnet said the MetaBirkins NFTs are protected under the Second Circuit’s Rogers v. Grimaldi test. That 1989 ruling established that users of a trademark are shielded from infringement claims if their use is both an artistic expression and doesn’t explicitly mislead consumers.
Rogers set a high bar for what “explicitly misleads” means, establishing that a “slight risk” of consumer confusion is outweighed by “the danger of restricting artistic expression,” Rothschild’s motion to dismiss said.
“He creates images of Birkins that don’t exist,” Tushnet said. “He challenges us to say: What is luxury? Why do you value what you value?”
Judge Jed S. Rakoff of the U.S. District Court for the Southern District of New York questioned why dismissal was necessary, noting that the Rogers case was decided on summary judgment.
Tushnet said anything other than a dismissal will have a “chilling effect” on artists who want to depict famous brands but don’t have the money for a successful legal defense. She cited three other trademark cases that were decided on a motion to dismiss based on the Rogers test, which she said “provides all the necessary guidance here.”
Warshavsky said the Rogers test doesn’t apply because Rothschild engaged in a “course of conduct” that involved setting up an online storefront, webpage, and Twitter and Instagram handles with the MetaBirkins name for the purpose of selling digital goods.
The attorney cited an interview where Rothschild stated he wanted to replicate Birkin bags through NFTs. “It has nothing to do with commentary,” Warshavsky said.
And Rothschild couldn’t pass the Rogers test even if it applies, Warshavsky said, pointing to evidence of actual consumer confusion. He highlighted media stories and industry conferences where people assumed MetaBirkins were products sold by Hermès.
Tushnet said that the First Amendment allows artists to profit from their work through marketing, which Rothschild had done with his website and social media accounts. The Rogers test says that an expressive work, like the MetaBirkins NFTs, are different from ordinary consumer products, she said.
Rakoff said he would provide a “bottom line ruling” by Friday on Rothschild’s motion to dismiss. He said he won’t have time to write a full opinion, which will come later.
Hermès is represented by Baker & Hostetler LLP. Rothschild is also represented by Lex Lumina PLLC.
The case is Hermes Int’l v. Rothschild, S.D.N.Y., No. 1:22-cv-00384, oral argument 5/4/22.