here has long been a blurry line at the intersection of trademarks, rights of publicity, and the First Amendment. Throw in blockchains, NFTs, and high-fashion handbags, and you have a recipe for a final exam-worthy fact pattern perfect for law students versed in Web 3.0.
Enter the “MetaBirkins” case. In this recent headline-grabber, a “marketing consultant,” Mason Rothschild, “created digital images of faux-fur-covered versions” of Hermès’ famously expensive luxury Birkin handbags and sold them using NFTs. Rothschild sold these digital images he titled “MetaBirkins” on various NFT platforms for “prices comparable to real-world Birkin handbags” (which range in price from thousands to over a hundred thousand dollars). Hermès, as the trademark owner of the Hermès name and the Birkin trademarks and trade dress in the bags’ designs, took issue with Rothschild’s digital Birkin artwork, and sued for trademark infringement, trademark dilution, and cybersquatting. According to the complaint, consumers and major media outlets alike have mistakenly come to believe that there is a connection between Hermès and Rothschild’s MetaBirkins, particularly in light of Rothschild’s creation of social media and marketing channels using slogans like “#MetaBirkins GONNA MAKE IT,” “Not Your Mother’s Birkin,” and “#MINT A METABIRKIN HOLD A METABIRKIN.”
Rothschild moved to dismiss Hermès’ complaint, and on May 18, 2022, Judge Jed S. Rakoff of the U.S. District Court for the Southern District of New York denied Rothschild’s motion and allowed the lawsuit to proceed. The dispute over dismissal centered on the applicability of the First Amendment balancing test set forth in the seminal case of Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989), which allows for unlicensed uses of trademarks that are relevant to artistic expression when the uses are not explicitly misleading. The key to the pertinence of Rogers was whether, based on the facts before the court at the pleading phase, Rothschild was using the “MetaBirkins” word as a source indicator (i.e., a trademark, which would require analysis of numerous fact-sensitive elements) or as a means of artistic expression.
Judge Rakoff agreed with Rothschild that the Rogers test applied, a point Hermès vigorously disputed. The court explained that the Rogers test—which originated in the context of an action brought by Ginger Rogers over the use of her name in the title of the movie “Fred and Ginger”—has since been expanded by the Second Circuit beyond titles to be “generally applicable to Lanham Act claims against works of artistic expression.” The complaint itself acknowledged that there were artistic elements of the digital Birkin images sold through the NFTs and the court noted that “even if the commercial aspects of a work are intertwined with artistic content, the trademark-using speech must be treated as noncommercial” where source indicator-functions of the artwork’s title are “inextricably intertwined” with artistic functions of the work. In short, Rothschild’s MetaBirkin title, including his use of the title to advertise his works on social media, did not per se exclude him from the protection of the Rogers test.
However, the court held that at the pleading stage, it could not decide the merits of the Rogers test, i.e., whether and to what extent the title MetaBirkins was actually artistically relevant, or whether the use of the Birkin mark was explicitly misleading. The complaint, the court explained, could stand because it contained sufficient allegations that Rothschild meant the public to associate MetaBirkins with Hermès’ Birkin trademark such that its non-commercial artistic relevance was non-existent, or that even if it had artistic relevance, Rothschild’s use of the MetaBirkins mark was explicitly misleading to consumers, especially in light of Rothschild’s public statements and social media activity.
Indeed, Rothschild’s own statements in interviews and promotion of his MetaBirkin images were significant contributing factors to the survival of the complaint. According to the complaint, Rothschild had publicly described the MetaBirkins as “a tribute to [Hermès’] most famous handbag,” with its “mysterious waitlist, intimidating price tags, and extreme scarcity,” and in an interview, said his goal in depicting the “iconic” handbags was “as an experiment [to see] if I could create that same kind of illusion that [the Birkin bag] has in real life as a digital commodity.” He went on to elaborate that “there’s not much difference” between owning an NFT-based asset like a MetaBirkin and any other real-life high-end luxury item such as a car or handbag because it is similarly a “showing of  wealth or that kind of explanation of success,” and that “the difference between the two is  getting a little blurred now because we have this new outlet, which is the metaverse, to showcase … them in our virtual worlds, and even just show them online.”
While the court could not decide, at the pleading stage, whether Rothschild had solely commercial (rather than artistic) intentions in creating look-alike Birkin images and touting them as MetaBirkins, his own marketing and online commercial speech acted as a bulwark against dismissal of the complaint and serves as an example of how public statements, self-promotion, and advertising talk—especially online—is more significant and informative of intent than one might expect.
It remains to be seen how this decision will fit in with the recent expansion of the Rogers test beyond its original boundaries. Judge Rakoff pointed out that, in the Second Circuit, the Rogers test had already been expanded beyond the use of trademarks in mere titles, and as discussed here, Rogers has been taken even further to include the body of artistic works as well as promotional and revenue-generating “auxiliary” uses of the mark, such as for products associated with the work. This expansion came about in the Ninth Circuit’s opinion in Twentieth Century Fox Television v. Empire Distribution, Inc., 875 F.3d 1192 (9th Cir. 2017), a case surrounding the hit Fox television series Empire. The Fox case was decided at the summary judgment stage, so the record was far more developed and riper for a decision on the merits. Given the early stages of the MetaBirkins case, we will have to wait a while to find out what happens during and after discovery, but Judge Rakoff’s opinion did drop some possible hints. For instance, the court (and even Rothschild, himself), speculated that Rogers may not apply if Rothschild’s NFTs pointed to digital files of virtual Birkin bags that could be worn or otherwise used in the metaverse, as they would constitute non-speech commercial products. If Judge Rakoff ultimately issues such a decision and that decision is affirmed by the Second Circuit, such a ruling may end up in tension with Fox, which embraced the Rogers standard for ancillary commercial products sold in service of the main artistic work at issue. This could lead to a circuit split and may become ripe for a visit to the Supreme Court. Perhaps this case will represent the first trip by NFTs to the high court, but it certainly will not be the last.
Blockchain technology and NFTs are already confounding for many, but adding high-stakes First Amendment free speech issues and the nuances of a Lanham Act litigation is sure to make for complex but fascinating and cutting-edge litigation for years to come, not only in the world of high fashion and luxury brands, but across the spectrum of creative industries.