• Latest News & Articles

Metabirkins: Are NFTs art for art’s sake?

In the District Court of New York, an unusual dispute has recently unfolded involving Intellectual Property, Art, Crypto-currency and Fashion. French fashion house Hermes challenged Mason Rothschild, an L-A based “interdisciplinary designer”,¹ concerning his Non-fungible Tokens (NFTs) called “MetaBirkin” - a series of digital images featuring furry renditions of Hermes’ coveted and exclusive Birkin handbag. Hermes has made numerous allegations against Rothschild, claiming that he has misappropriated Hermes’ trade marks as well as infringed trade dress rights in the Birkin handbag design.² The case is one of a few contemporary decisions which have begun considering the implications of new digital technologies such as NFTs through an Intellectual Property lens, involving the likes of Nike³ and Quentin Tarintino.⁴

NFTs, or “non-fungible tokens” are units of data stored on a blockchain that are created to transfer ownership of either physical things or digital media.⁵ Rothschild’s artistic collection, “MetaBirkin” is said to serve not only as a social commentary against consumerism but what the artist himself described as an “experiment”; “For me, there’s nothing more iconic than the Herm[e]s Birkin bag. And I wanted to see as an experiment if I could create that same kind of illusion that it has in real life as a digital commodity”.⁶ The Birkin bag itself is worth tens of thousands of dollars and is characterized for its “mysterious waitlist, intimidating price tags, and extreme scarcity”.⁷ Rothschild has successfully sold his NFT homages for prices comparable to real-world Birkin handbags.⁸ Many fashion houses are looking into entering the market of digital goods, for example, Balenciaga’s recent fall 2021 collection was released in their online video game Afterworld: The Age of Tomorrow.⁹ It comes as no surprise, therefore, that Hermes is disgruntled with Rothschild’s project.

In response to Hermes’ primary allegation of trade mark infringement amongst other causes of action, Rothschild applied for a motion to dismiss Hermes’ claims which was denied. Hermes’ primary allegation was of trade mark infringement. Rothschild argued that the trade mark infringement claim fails under the Rogers v Grimaldi test, which deems that an artistic work that uses a trade mark as part of the title of the work, and not a source identifier of origin, is entitled to First Amendment (freedom of expression) protection.¹⁰ Rothschild argued that the marketing and sales of his “MetaBirkins” NFTS do not constitute copyright or trade mark infringement under Rogers, because he used the “MetaBirkins” trade mark in non-commercial speech, and that use of the trade mark had artistic relevance and did not explicitly mislead as to the source or content of the work. Hermes attempted to distinguish the Rogers test on the basis that Rothschild has used the “MetaBirkins” mark as a source identifier on social media, to promote and advertise the NFTS, as a URL, and to identify a website.¹¹ However, the court did not consider this proved why Rogers should not apply here.¹²

Hermes, in an attempt to circumvent the Rogers test, raised a further argument on the grounds of the Polaroid factors as discussed in Twin Peaks Prods. Inc, v. Publ’ns Int’l Ltd. 996 F.2d 1366, 1379-80.  The argument was that Rogers involves a two-prong inquiry, the second step of which is a determination as to whether the likelihood of confusion as a result of use of the mark is sufficiently compelling to outweigh the public interest in free expression.¹³ Hermes had submitted in evidence, examples of actual consumers mistakenly believing that there was a connection with or endorsement of “MetaBirkin” by Hermes.¹⁴

At this stage, the Court has not made any determinations in respect of whether any of Hermes’ other allegations, which extend as far as trade mark dilution and cybersquatting, should apply on the facts and the case is ongoing. However, they found that there were enough grounds to refuse the Rothschild motion to dismiss.

Interestingly, no questions were raised by Hermes or the Court as to whether an NFT was a piece of art capable of copyright protection in itself.

Considering this case in a New Zealand context is interesting, as there is not an equivalent to the Rogers test that allows for trade mark use in an artistic context.

In terms of trade marks, Hermes currently has protection of their trade mark BIRKIN for leather goods and cheque books in New Zealand. Whether this registration would be infringed by use of “MetaBirkin” for the NFT will depend not only on whether the Court finds "MetaBirkin" similar to BIRKEN but whether "MetaBirkin" is used as a trade mark for goods similar to those for which the BIRKIN trade mark is registered.

The New Zealand Trade Marks Act 2002 provides for the protection of well-known trade marks that are registered in New Zealand and this provision may bridge the gap between the goods as the allegedly infringing goods do not need to be the same or similar to the registered goods if the use of the infringing sign “takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the mark”¹⁵.

The 3D shape of a handbag may be registrable as a trade mark if found to be distinctive.  Whether any such registration would be infringed by a NFT would be considered in the same light as a word mark registration.

A handbag is also potentially eligible for protection under the Designs Act 1953.  A design in New Zealand is defined as the new or original features of shape, configuration, pattern or ornament applied to an article by any industrial process or means.

The question of whether a NFT infringes the copyright if a registered design will depend upon whether the Courts find the NFT to be an “article” under the Designs Act¹⁶.   As the designs legislation dates back to the 1950s the definition of “article” - any article of manufacture - may not be robust enough to capture electronic files such as NFTs. 

Although the MetaBirkin dispute has yet to add any concrete developments in the area of intellectual property, it will be interesting to see what direction it does take, as this may influence future decisions involving how New Zealand treats digital assets in the metaverse.

 July 2022

---

Footnotes: