The hearing on the summary judgment motions for the MetaBirkins trademark suit is scheduled for November 4, 2022. This lawsuit has captured significant attention since both brands and artists want to know how traditional intellectual property laws and, specifically, trademark laws work in the metaverse.
An artist, Mason Rothschild, has asserted that the First Amendment protects his artistic use of the infamously iconic trade dress of the Birkin handbag owned by Hermès. Rothschild has been selling NFTs of MetaBirkins, which are cartoonish pictures of imaginary Birkin bags. He claims to have the artistic and parodic intent of exploring how society is dominated by high-status goods. However, these MetaBirkins provide Rothschild more than just an avenue of artistic expression, as many MetaBirkins have been selling for tens of thousands of dollars—the price of actual Birkin bags.
This suit will hopefully provide more clarity on a question many NFT artists have been struggling with: to what extent does the First Amendment protect artistic expressions stored on the blockchain from the restrictions of trademark law?
If Hermès wins . . .
A victory for Hermès would be a victory for all brand owners. A Hermès win would strengthen brand owners’ right to control the use of their trademarks in the metaverse. Artists, however, would be left with only two main methods of utilizing trademarks in their NFT-linked art: (i) obtaining licenses from trademark owners to use their marks or (ii) take greater efforts to ensure that their artwork does not explicitly mislead as to the source of the work.
If it is determined that Rothschild is infringing Hermes’s BIRKIN mark and that the First Amendment does not protect Rothschild’s use of the mark, metaverse artists should consider doing the following to avoid falling victim to a trademark infringement suit:
- Create a title for their NFTs that does not include or reference a trademark that is not owned or licensed by the artist.
- Explicitly disclaim any connection with or endorsement by the owners of the trademarks used in the image or video linked to the NFT.
- Describe and advertise the NFT as deriving value from the artistic expression itself and not from the particular trademarks utilized.
- Avoid using trademarks in pictures or videos linked to NFTs, where the picture or video is of a good or service that is similar to the goods and services associated with the mark.
If Rothschild wins…
A win for Rothschild might give rise to more artistic experiments in the metaverse and provide artists more freedom to incorporate brands’ signature elements in their artwork in the metaverse.
Surely, such a big loss for a luxury brand to defend one of its most iconic products and strongest trademarks would clearly signal that the legal system acknowledges that NFTs have some artistic value and are not simply “commercial commodities” despite the fact that its creators financially benefit from selling them. Moreover, a Rothschild win would support the position that an NFT should not be distinguished from the digital or physical art object it is linked to and that they should be grouped and analyzed together as one “artistic experiment.”
This could have some major implications for brands that wish to start selling NFTs featuring their trademarks. If the court decides that the artist’s First Amendment rights are implicated, it will proceed with applying the Rogers test instead of the Polaroid factors. The Rogers test is an artist-friendly test because it balances the First Amendment interests with trademark protections. If the court grants the artist’s motion for summary judgment, brands would have to build much stronger cases proving the likelihood of consumer confusion and explicit misleading as to the source of the art. As a result, this outcome might make it more difficult for brands to launch and sell their own NFTs, especially if they see a luxury brand lose a case defending one of its strongest trademarks.
The outcome of the November 4th hearing will undoubtedly provide brands and artists with useful guidelines on how they can co-exist in the metaverse. This case and the Tarantino and Nike cases are groundbreaking cases on something that we might further refer to as “NFT laws.” Whether such laws will be similar to “traditional” IP laws remains a big question.