Anyone with a passing interest in fashion will know how challenging – and expensive – it is to get hold of a Hermès Birkin handbag. The fashionistas among us will also know of the increasing value of NFTs. Put those two things in the hands of Mason Rothschild, the 28-year-old Los Angeles-based artist, and you get MetaBirkins NFTs, a series of images which depict the Hermès’ iconic Birkin handbags entirely covered in colourful faux fur.

You would be forgiven for not knowing that MetaBirkins NFTs are in no way associated with Hermès (even though these MetaBirkins are selling for around the same price as the actual Hermès Birkin bags).

Unsurprisingly, Rothschild is now being sued by Hermès, in what is said to be the trial of the year for luxury fashion and NFTs. The trial began in late January and for many is playing out as a real-life David vs Goliath battle.

The facts

In or around December 2021, Rothschild created a collection of NFTs called MetaBirkins. Each MetaBirkin depicted an image of a faux fur-covered Birkin handbag. The NFTs were sold for prices comparable to actual Birkin handbags. For Rothschild, it was a “tribute” to Hermès most famous offering and one of “the most exclusive, well-made luxury accessories”.

The parties’ arguments are clear. Rothschild refers to the First Amendment to the US Constitution and claims that NFTs are a “protected form of art”. He believes he should be allowed to “create art based on [his] interpretations of the world around [him]”. Hermès claims that Rothschild has improperly used the Birkin trade mark and confused consumers into believing that the MetaBirkins NFTs emanate or originate from Hermès or that Hermès has approved, sponsored or otherwise associated itself with the MetaBirkins.

The case to date

16 December 2022: Hermès notifies Rothschild and one of the NFT platforms on which the MetaBirkin NFTs were being sold, OpenSea, of the “blatant violation of Hermès intellectual property by his use of the METABIRKINS trade mark”. Rothschild ignores this notice.

14 January 2022: Hermès files a lawsuit against Rothschild in a New York federal court. Hermès alleges common law trade mark infringement, false designations of origin, false descriptions and representations, trade mark dilution, cybersquatting and injury to business reputation and dilution under New York General Business Law.

9 February 2022: Rothschild files a motion to dismiss, predicated on a first amendment argument.

2 March 2022: Hermès files an amended suit, reinforcing the allegations in its 14 January complaint with examples of alleged consumer confusion.

21 March 2022: Rothschild files a motion to dismiss the amended complaint. Rothschild claims that the MetaBirkins meet the “low threshold of minimal artistic relevance” set out in US case law includes “nothing explicitly misleading”. Rothschild claims that the MetaBirkins “are not handbags” and “carry nothing but meaning”, that is, they provide commentary “on the animal cruelty inherent in Hermès’ manufacture of its ultra-expensive leather handbags”.

4 April 2022: Hermès files opposition to Rothschild’s motion to dismiss. Hermès claims that Rothschild’s use of “MetaBirkin in connection with the sale of NFTs at issue is not “artistic expression”. Rothschild is using “MetaBirkin,” according to Hermès, as an indication of origin and therefore as a trade mark; specifically, Rothschild uses “MetaBirkin” “to identify a product line and to promote a business enterprise”: all of which is “the essence of trade mark use.”

5 May 2022: The court denies Rothschild’s motion to dismiss. Hermès’ amended complaint contains sufficient factual allegations that Rothschild’s use of the trade mark is not artistically relevant and that the use is explicitly misleading as to source, sponsorship or affiliation. These factual allegations cannot be resolved at the motion stage.

6 June 2022: Rothschild looks to appeal.

24 June 2022: Hermès files to opposition to Rothschild’s appeal.

28 September 2022: Hermès files notice of motion for summary judgment.

28 September 2022. Rothschild files notion of motion for summary judgment.

5 October 2022: The court refuses to certify Rothschild’s motion to appeal.

30 November 2022: Jury trial date set for January 30, 2023.

30 December 2022: The court denies the parties’ motions for summary judgment.

23 January 2023: The parties lodged their respective motions in limine and in support, looking to get the court to exclude an array of proposed evidence, from the fast-approaching trial.

30 January 2023: Trial commences.

The implications

Fashion brands are beginning to create and offer digital replicas of their real-life products to put in digital fashion shows or otherwise use in the metaverse. In fact, group general counsel for Hermès, Nicolas Martin, has confirmed, during the trial, Hermès’ plans to operate in the metaverse/make use of NFTs, albeit he was reluctant to cite specific plans.

There has been a rush for luxury brands to registers for digital goods in during the past two years, including the likes of Prada and Gucci. While there was a slight downwards trend in applications made towards the end of 2022, perhaps due to the slump in the crypto and NFT market, digital goods and the metaverse remains a pivotal part of luxury brand strategy in 2023.

Brands like Hermès are, however, being pipped to the post, as the MetaBirkins case undoubtedly demonstrates. Third parties are creating (also referred to as “minting”) NFTs from existing trade marks without obtaining prior authorisation from the owner of the trade marks involved, which may (emphasis added) constitute, amongst others, trade mark infringement, trade mark dilution, etc.

That said, few courts have had to position themselves on the application of trade mark law to NFTs. The MetaBirkins case is likely to provide much awaited guidance in this area. What is the scope of trade mark protection and trade mark law in the digital age?

While the trial is underway in the US, and will be decided therefore in accordance with US federal and state laws, how the judges decide the relevant points of law will, without doubt, be of use to judges here in the UK and luxury brands faced with similar conundrums.