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Case Review: Hermès International v. Rothschild

May 7, 2024

By Harper Johnson

A legal dispute between the Los Angeles based artist known as Mason Rothschild, the creator of the MetaBirkin NFTs, and Hermès, the French company that has been manufacturing the physical Birkin handbag for almost 40 years, is ongoing despite a New York federal jury concluding that Rothschild violated Hermès’ trademark rights.^{^[1]} This June 23, 2023 holding was the long awaited outcome of the first ever NFT trademark case to go to trial and will have significant impacts on future NFT litigation.^{^[2]} However, on November 6, 2023, the artist appealed the case to the US Court of Appeals for the Second Circuit.^{^[3]}

Background and Facts of the Case

Hermès, a French luxury brand, created the Birkin bag after actress Jane Birkin met Hermès’ then-CEO Jean-Louis Dumas on a flight from Paris to London in 1984.^{^[4]} Since then, the Birkin has become an iconic bag in the fashion world, coveted by celebrities and handbag aficionados alike. According to Harper’s Bazaar, customers who want to buy a Birkin must have an extensive history of purchasing goods from the brand in order to even be offered the opportunity to purchase one of the hard-to-get bags. A basic leather Birkin retails for about $10,000, while those made from exotic leathers such as ostrich, lizard, or crocodile and limited edition releases can retail for over $200,000.^{^[5]}

Image: An Hermés Birkin bag. Source: Hermés complaint

During the NFT boom in November 2021, Mason Rothschild began creating and selling a collection of non-fungible tokens (“NFTs”) depicting Hermès Birkin handbags covered in colorful fur. The unique digital works ranged from a Birkin covered in the Grinch’s green fur to one depicting The Starry Night by Van Gogh, among other bright and colorful patterns. As reported elsewhere, Rothschild originally planned on creating 1,000 MetaBirkins, but only 100 were ever released.^{^[6]} Each MetaBirkin initially cost $450.^{^[7]} On the secondary market, the MetaBirkin NFTs were selling for between $13,000 and $65,000.^{^[8]} Rothschild estimated that he made about $125,000 from the NFTs, both from initial sales and royalties from secondary sales.^{^[9]} Rothschild initially sold the NFTs on the OpenSea platform before transitioning to Rarible, and promoted the collection through a MetaBirkin website (MetaBirkins.com) and social media accounts.^{^[10]}

On the MetaBirkins website, Rothschild claimed that the works were “inspired by the acceleration of fashion’s ‘fur free’ initiative and embrace of alternative textiles.”^{^[11]} Rothschild also posted a disclaimer on the site that read: “We are not affiliated, associated, authorized, endorsed by, or in any way officially connected with the HERMES, or any of its subsidiaries or its affiliates” and included a link to the Hermèss website.^{^[12]}

Image: A screenshot of the MetaBirkins Rarible Store. Source: Hermès’ complaint.

Legal Dispute

Hermès quickly jumped into action after the MetaBirkins were released. In December 2021, Hermès sent Rothschild and the OpenSea platform a cease and desist letter.^{^[13]} Rothschild responded by posting the letter on Instagram, saying he would not apologize for creating the art and that it was protected under the First Amendment.^{^[14]} However, after the cease and desist letter OpenSea removed the MetaBirkins from its platform. Rothschild reacted by moving the NFTs to a different marketplace, Rarible.^{^[15]}

In January 2022, the French luxury brand officially sued Rothschild for trademark infringement, dilution, and cybersquatting, filing their complaint in a New York federal court. In their complaint, Hermès labeled Rothschild a “digital speculator who is seeking to get rich quick” and asserted that the MetaBirkin brand “simply rips off Hermès’ famous Birkin trademark.”^{^[16]} The brand even took issue with the site’s disclaimer, asserting that it made matters worse by excessively using the Hermès name.^{^[17]} Hermès sought damages and an injunction against the artist.^{^[18]}

After the complaint was filed, Rothschild released a statement on Instagram maintaining that his work was protected by the First Amendment: “My lawyers… put it well when they said that the First Amendment gives me the right to make and sell art that depicts Birkin bags, just as it gave Andy Warhol the right to make and sell art depicting Campbell’s soup cans.”^{^[19]}

Image: A screenshot of Hermès trademark for BIRKIN. Source: USPTO

Rothschild moved to dismiss the complaint under the Second Circuit’s Rogers v. Grimaldi test. The Rogers test protects works from trademark claims if they contain some degree of “artistic expression,” unless the challenged use of the mark “has no artistic relevance to the underlying work” or “explicitly misleads as to the source of or the content of the work.”^{^[20]} The court found that the use of “MetaBirkins” may not be “artistically relevant” to the digital images and that, even if they were, the use of “MetaBirkins” may be explicitly misleading as to the source of Rothschild’s artwork.^{^[21]} The motion to dismiss was denied.

Judge Jed Rakoff of the Southern District of New York also denied both parties’ summary judgment motions, ruling that genuine disputes of fact existed as to whether the NFTs were artistic works and whether they explicitly misled consumers.^{^[22]} He also determined that the Rogers test should be used, as opposed to the Gruner + Jahr test which generally applies to trademark infringement cases where no artistic work is involved.^{^[23]}

The case went to trial. At trial, Rothschild argued that his MetaBirkins were artworks commenting on how people value status and luxury goods, as well as the animal cruelty involved in leather good production.^{^[24]} On the other hand, Hermès focused on how Rothschild’s actions would impair its ability to enter the metaverse space itself and that consumers would be confused as to the source of the MetaBirkin NFTs.^{^[25]} The brand introduced evidence of actual consumer confusion, including an independent study and reports which linked the project to the brand.^{^[26]}

Decision

In February 2023, following a several day trial and deliberations, a federal jury unanimously determined that Rothschild had infringed on Hermès’ trademark rights and was guilty of cybersquatting.^{^[27]} In doing so, the jurors found that the NFTs were not protected speech under the First Amendment.^{^[28]} The jury awarded the brand $133,000 in total damages.^{^[29]} The damages consisted of $110,000 of estimated profits from Rothschild’s NFT sales and $23,000 for cybersquatting for registering the metabirkins.com domain.^{^[30]}

Rothschild published a post-verdict statement which stated:

“A multibillion-dollar luxury fashion house who says they ‘care’ about art and artists but feel they have the right to choose what art IS and who IS an artist. Not because of what they create but because their CV doesn’t scream artist with a pedigree from a world-class art school. That’s what happened today.

A broken justice system that doesn’t allow an art expert to speak on art but allows economists to speak on it. That’s what happened today.

What happened today was wrong. What happened today will continue to happen if we don’t continue to fight. This is far from over.”^{^[31]}

A few months later, in June 2023, Judge Rakoff followed up the jury’s decision by issuing a permanent injunction blocking Rothschild from promoting and profiting from the MetaBirkin NFTs.^{^[32]} In the opinion, Judge Rakoff also denied Rothschild’s motion for a judgment as a matter of law and dismissed Rothschild’s request for a retrial. Judge Rakoff noted that Rothschild would have been entitled to First Amendment protection if the jury had found even a modest semblance of artistic expression in his work but instead, “in effect, the jury found that Rothschild was simply a swindler.”^{^[33]}

Appeal

Immediately after the judge’s decision, Rothschild notified the District Court that he would appeal the outcome of his case. In November 2023, Rothschild filed an opening brief arguing that the court erred in denying his dismissal and summary judgment requests.^{^[34]} The brief also argued that the court’s jury instructions were contrary to Rogers and prejudicial to Rothschild, and that the court abused its discretion in decisions regarding expert testimony.^{^[35]} First, that testimony from writer, art historian and Warhol expert Dr. Blake Gopnik should have been included and that testimony from economics expert Dr. Scott Kominers should have been excluded.^{^[36]}

Following the filing of the opening brief, a coalition led by art collective MSCHF filed an amicus brief in support of Rothschild.^{^[37]} The coalition includes CTHDRL, a digital design and experience studio, artists Alfred Steiner and Jack Butcher, and the free-speech advocacy group Author’s Alliance. The amicus brief focuses on the importance of the case for artists and freedom of expression, framing the February ruling as a threat to the First Amendment.^{^[38]} Specifically, the coalition seeks the court’s clarification that an artist’s intent to sell or otherwise commercialize their art does not impact the balancing test between trademark owners’ rights and artists’ rights.^{^[39]}

In an interesting comparison, the brief notes that Hermès itself took the name of actress Jane Birkin for the bag they designed and sell, which generates around $100 million in sales each year.^{^[40]} “As Hermès used Jane Birkin’s name to amplify its own brand’s expressive function, [Mason] Rothschild seeks to do the same as he references the status of a luxury Hermès handbag in his artwork to comment on and critique Hermès’s brand and mark.”^{^[41]}

Conclusion

The ultimate outcome of this case will offer guidance to brands and artists seeking to enter the metaverse by outlining the contours of trademark protection in a digital context. However, as this was the first case of its kind to go to trial, the courts are likely to continue refining and clarifying their positions in this developing field. As discussed in the above-mentioned amicus brief, the court’s decision in Hermès may also affect artists’ First Amendment rights beyond the digital context and help clarify the Supreme Court’s decision in Jack Daniels Props. v. VIP Prods. LLC.

Sources:

Eileen Kinsella, Art Collective MSCHF Signs Onto Amicus Brief Championing Satirical NFTs as a Free Speech Issue, Artnet (2023), available at https://news.artnet.com/art-world/metabirkin-mason-rothschild-case-appeal-2394283; John Woolley, MetaBirkin NFT Artist Appeals After Hermès Trademark Case Loss, Bloomberg Law (2023), available at https://www.bloomberglaw.com/bloomberglawnews/litigation/X34JGDMS000000?bna_news_filter=litigation#jcite. ↑
Woolley, supra note 1. ↑
Kinsella, supra note 1. ↑
Lindsey Weiss, Everything About the Birkin Hermès Bag, Sotheby’s (2023), available at https://www.sothebys.com/en/articles/everything-about-the-birkin-hermes-bag. ↑
Id. ↑
Zachary Small, Hermès Wins MetaBirkins Lawsuit; Jurors Not Convinced NFTs Are Art, New York Times (2023), available at https://www.nytimes.com/2023/02/08/arts/hermes-metabirkins-lawsuit-verdict.html. ↑
Id. ↑
Taylor Dafoe, Hermès Is Suing a Digital Artist for Selling Unauthorized Birkin Bag NFTs in the Metaverse for as Much as Six Figures, Artnet (2022), available at https://news.artnet.com/art-world/hermes-metabirkins-2063954 ↑
Small, supra note 6. ↑
Dafoe, supra note 8; Mikaela Keegan et al., MetaBirkins Post-Trial Ruling Clarifies Line Between Trademark Infringement and Free Expression and Grants Broad Injunctive Relief, JD Supra (2023), available at https://www.jdsupra.com/legalnews/metabirkins-post-trial-ruling-clarifies-4534594/. ↑
Dafoe, supra note 8. ↑
Id. ↑
Id. ↑
Id; Mario Abad, Hermès Wins MetaBirkins Lawsuit, Paper Magazine (2023), available at https://www.papermag.com/hermes-metabirkins-lawsuit#rebelltitem3. ↑
Stuart D. Levi et al., Jury Finds That ‘MetaBirkin’ NFTs Infringed Hermès’ Trademark Rights, Skadden (2023), available at https://www.skadden.com/insights/publications/2023/02/jury-finds-that-metabirkin-nfts-infringed-hermes-trademark-rights. ↑
Complaint at 1, Hermès Int’l v. Rothschild, No. 1:22-CV-00384-JSR (S.D.N.Y. May 18, 2022). ↑
Id. at 20. ↑
Id. ↑
Dafoe, supra note 8. ↑
Rogers v. Grimaldi, 875 F.3d 994, 999 (2d Cir. 1989). ↑
Preetha Chakrabarti et al., In the Bag (For Now): Hermès Survives Motion to Dismiss in MetaBirkin NFT Lawsuit, Crowell (2022), available at https://www.crowell.com/en/insights/client-alerts/in-the-bag-for-now-herm-s-survives-motion-to-dismiss-in-metabirkin-nft-lawsuit-daDu7DDqAMrxZQ9DW5DdsD. ↑
Keegan et al., supra note 10. ↑
Levi et al., supra note 15. ↑
Woolley, supra note 1; Keegan et al., supra note 10. ↑
Keegan et al., supra note 10. ↑
Levi et al., supra note 15. ↑
Keegan et al., supra note 10. ↑
Eileen Kinsella, Hermès Wins Its Lawsuit Against the Digital Artist Who Made ‘MetaBirkins,’ Setting a Precedent for NFT Copyright Cases, Artnet (2023), available at https://news.artnet.com/art-world/hermes-wins-lawsuit-against-digital-artisr-2252270. ↑
Id. ↑
Katherine M. Basile, et al. N(ot) F(or) T(hird parties): Jury Decides in Favor of Hermès in MetaBirkin NFT Case, ReedSmith (2023), available at https://www.reedsmith.com/en/perspectives/2023/02/jury-decides-in-favor-of-hermes-in-metabirkin-nft-case. ↑
Kinsella, supra note 30. ↑
Richard Whiddington, A U.S. Judge Permanently Banned Digital Artist Mason Rothschild From Selling His ‘MetaBirkin’ NFTs, Handing a Win to Hermès, Artnet (2023), available at https://news.artnet.com/art-world/mason-rothschild-hermes-metabirkin-banned-in-us-2328232. ↑
Opinion and Order, Hermès Int’l v. Rothschild, No. 1:22-CV-00384-JSR (S.D.N.Y. June 23, 2023). ↑
Brief for Defendant-Appellant, Hermès Int’l v. Rothschild, No. 1:22-CV-00384-JSR (S.D.N.Y. Nov. 6, 2023). ↑
Id. ↑
Id. ↑
Kinsella, supra note 1. ↑
Kinsella, supra note 1. ↑
Amicus Brief for Appellant at 4, Hermès Int’l v. Rothschild, No. 1:22-CV-00384-JSR (S.D.N.Y. Nov. 13, 2023). ↑
Id; Small, supra note 6. ↑
Amicus Brief for Appellant, supra note 39 at 8. ↑

Disclaimer: This article is for educational purposes only and is not meant to provide legal advice. Readers should not construe or rely on any comment or statement in this article as legal advice. For legal advice, readers should seek a consultation with an attorney.