Hermes v. Rothschild Sparks NFTs and Trademark Matters



The French fashion house defends its trademark rights in relation to the artist’s NFT coinage

In January 2022, fashion house Hermès filed a lawsuit in New York federal court against California artist Mason Rothschild for use of the name and design on his BIRKIN bag. Unlike the typical recipient of a BIRKIN handbag infringement claim, such as a counterfeit producer or competing handbag designer, Rothschild’s allegedly infringing works cannot be held, opened or used. The case, Hermès International, et al. v. Mason Rothschild, represents one of multiple recent feuds between the fashion house and the creator of non-fungible tokens (“NFTs”) attempting to implement one brand’s trademarks into a new digital frontier: the metaverse. The Rothschild NFT works in the present case, referred to as “MetaBirkins”, represent a series of 100 NFT images featuring the iconic BIRKIN bag design covered in a variety of colorful leathers.

In its lawsuit, Hermès claims that Rothschild’s MetaBirkins infringe and dilute its federally registered BIRKIN trademarks, as well as its trade dress rights in the form of a BIRKIN bag. At the heart of its argument, Hermès focuses on the fact that MetaBirkins are marketed in a manner similar to the valuable “real life” products they represent. MetaBirkins are marketed and offered for sale as if they were the real thing, while incorporating and exploiting the famous BIRKIN trademarks in connection therewith. Hermès claims that MetaBirkins “falsely create the impression that products sold by [Rothschild] are authorized, sponsored or approved by Hermès when, in fact, they are not”. In an attempt to present the case as a classic example of trademark infringement, Hermès conceptualizes MetaBirkin NFTs as valuable assets that can be traded and sold in the same way as the actual BIRKIN bag.

In response to the complaint, Rothschild filed a motion to dismiss on February 9, 2022 with the intent that the case be dismissed in its entirety as a matter of law. As an integral part of his argument, Rothschild claims that the MetaBirkins are works of art that provide comment “on the animal cruelty inherent in Hermès’ manufacturing of its ultra-expensive leather bags.” The motion to dismiss goes on to reiterate that NFTs “are not bags” and that they “have nothing but meaning.” Of course, Rothschild’s argument takes the position that his MetaBirkins are not marketable assets in the first instance (as Hermès sees them), but Rothschild speech, art, and expression, all of which are protected by the First. Amendment. To support this argument, Rothschild draws on the precedent set in Rogers v. Grimaldi, which allows the use of trademarks in artistic works as long as the trademarks have no artistic relevance or openly create a false appellation of origin. Rothschild also cites Dastar Corp. v. Twentieth Century Fox Film Corp., which holds that only tangible physical property is actionable under the Lanham Act. Of course, given the rapidly evolving and amorphous nature of NFTs, it is not clear whether the Dastar case applies to the present facts or whether it is distinguishable.

Leaning on freedom of speech and artistic expression, Rothschild has now put forward a counter position to Hermès for the court to consider, namely whether the highly commercial nature of NFT works is closer to works of art and speech or commercial goods.

Nike and Stock X clash over sales of NFTs displaying Nike trademarks

Athletics giant Nike filed a lawsuit against online sneaker marketplace StockX on February 3, 2022 alleging trademark infringement and dilution in response to recent sneaker marketplace NFT venture. Like many cases of integration of NFTs into companies that trade in tangible goods, StockX’s use of NFTs is marketed as a utility to its members. Specifically, the new NFT initiative is intended to allow customers to purchase a shoe through an authenticated NFT, which evidences such ownership without the need to physically own and store the shoe. Shoes subject to NFT are said to be “stored in [StockX’s] New high security vaults with temperature control inside the StockX facilities”. Customers, who use the StockX platform more like an exchange (treating sneakers as stock rather than apparel), are likely to use the new service to buy and sell (or “flip”) shoes at a faster rate. In StockX’s words, “You take possession of the NFT immediately after the transaction is complete, which means it’s the fastest way to invest. And with no shipping costs and market-leading low seller fees at a fraction of the cost, there is less of a hurdle to profitability.”

Despite the apparent usefulness of StockX’s NFT integration, Nike identified in its complaint that this functionality is not yet live and may otherwise be flawed. According to Nike, StockX has not activated the redemption process for NFT owners, meaning that purchasing an NFT shoe today would not entitle the owner to the physical shoe it purportedly represents. Separately, Nike points to what it calls “shady terms” that allow StockX to unilaterally redeem an NFT for an “experiential component,” which would deprive the owner of the NFT of owning the corresponding shoe. These inconsistencies could support the idea that StockX’s NFT business is predominantly focused on selling NFT sneakers as another collectible asset, and not as a functional extension of its platform.

This is the narrative that Nike has established to support its argument that StockX’s NFT practices are misappropriating Nike’s trademarks in an effort to monetize the goodwill of the NIKE brand. In addition to this point, Nike emphasized that in October 2021 it filed for NIKE trademarks for use in connection with “Digital Sneaker NFTs”, products that it claims are in direct conflict with StockX NFTs and therefore therefore, Nike’s exclusive right to pursue. If StockX’s NFT program is found to be inconsistent with its stated business function, Nike is likely to focus on this fact and exercise its rights to the NIKE brand. Although StockX has yet to file a response, their approach is expected to emphasize the usefulness of their NFT initiative as a natural extension of the First Sale Doctrine, which gives them the right to resell authentic Nike products and to use related Nike trademarks. in relation to marketing. and sale of said goods.