On February 8th, 2023, the jury in Hermès Int’l v. Rothschild, No. 1:22-cv-00384-JSR (S.D.N.Y Jan. 14, 2022) decided that Mason Rothschild’s artistic depiction of Hermès bags in the form of NFTs titled ‘MetaBirkins,’ had caused dilution and infringement of Hermès’ trademarks. This was a much-awaited decision, being one of the first NFT infringement cases to be tried before a jury and one that will likely set precedent for numerous other NFT cases. However, prior to the jury decision, Judge Jed Rakoff had denied cross-motions for summary judgment and entered an opinion on February 2nd, 2023 explaining the rationale behind this decision.
One of the major questions of law in Hermès was which test for infringement – Rogers v. Grimaldi (applicable to artistic works) or Gruner + Jahr (test for infringement based on likelihood to cause confusion) – should be applied. Hermès argued in their briefs that Gruner+Jahr would be appropriate here. I find that odd considering that the artwork is the NFT, and one cannot really separate one from the other, but I suspect that Hermès was trying to play it safe by pushing for general trademark infringement. It appears as though Hermès has recognized that should Rogers v. Grimaldi be applied, the verdict may not swing their way and are instead pinning the infringement and confusion as to source on the fact that the term ‘MetaBirkins’ dilutes their ‘Birkin’ and ‘Hermès’ trademarks, further that Rothschild is piggybacking off the goodwill and reputation amassed in the ‘Birkin’ mark. Rothschild, on the other hand, has (rightly) countered this argument stating that one of the few scenarios which would preclude the application of Rogers v. Grimaldi is if the NFTs led back to or were tied to a physically wearable Birkin, thereby referring to a ‘non-speech commercial product’ which is not the case here.
While Hermès’ strategy is certainly interesting, it backfires because it seems fairly obvious that what Rothschild is trying to market and sell through NFTs are his artistic representations of Hermès’ Birkin bags. The Rogers v. Grimaldi test as a whole favors artistic expression: the very prong of the test is whether the use of a trademark bears any artistic relevance to the underlying work. That said, the test also looks at whether such use is explicitly misleading as to source, which is where Rothschild lost out before a jury, presumably because of some incriminating statements submitted into evidence as to the intent behind the MetaBirkins. Rothschild’s briefs have been very tactfully drafted and have considered a multitude of angles, including reliance on Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003) to argue that “sponsorship of intangible creative content is not actionable under the Lanham Act” and the fact that the title ‘MetaBirkins’ is not misleading.
Also worth distinguishing is another hot NFT case, Nike v. StockX, where Nike filed a complaint against StockX for minting NFTs tied to physical Nike shoes and advertising those NFTs only using Nike shoes, thus causing consumer confusion and leading to infringement of Nike’s trademarks. While the bone of contention in both cases is largely the same, i.e., confusion as to source, indicating some sort of collaboration between the aforementioned and Nike and Hermès, respectively, when there is none, they are quite different. While in the Hermès case, the NFT is actually linked to an artwork/creative expression, in the Nike case, the NFT traces back to a vault where the actual Nike shoe is kept and can be redeemed by the owner of the NFT. This helps to differentiate from Hermès because the NFT goes back to an actual commercial product, which should preclude the application of Rogers v. Grimaldi. Compared to the Hermès case, the Nike case is much more straightforward.Even though the jury has ruled in favor of Hermès, it appears that Rothschild’s lawyers will be appealing this decision. It will be very interesting to see how Rothschild’s lawyers overcome this decision, especially as the jury did not grant Rothschild’s work protection under the First Amendment.