Hermès Int'l v. Rothschild, 22-cv-00384 (S.D.N.Y. 2022)

Summary

Hermès is a Parisian fashion brand famous for its Birkin handbags that retail for $10,000 (or more), and have even higher prices on the secondary market. Rothschild is an artist who released an NFT series of “MetaBirkins” that look like Hermès bags, but with fur. Here's an example (taken from Hermès' complaint):

The NFTs sold for prices comparable to actual Birkin bags on the secondary market, although they were originally minted for a fraction of that price.

Hermès sued for:

• Trademark Infringement (15 USC § 1114);

• False Descriptions and Representations (15 USC § 1125(a));

• Federal Trademark Dilution (15 USC § 1125(c));

• Cybersquatting Under the Anti-Cybersquatting Consumer Protection Act (15 USC § 1125(d));

• Injury to Business Reputation and Dilution (New York General Business Law § 360-1)

• Common Law Trademark Infringement

• Misappropriation and Unfair Competition (Under New York Common Law)

The relief Hermès seeks through these claims is to prevent Rothschild from selling or profiting from the NFTs in any way, and to disgorge the profits he has already earned to Hermès. But it also seeks relief that would be unique to the NFT context by seeking to have the court order Rothschild:

• "to transfer control of the smart contract which minted the METABIRKINS NFTs to Hermès or to a non-functional address on the Ethereum blockchain."

• "to modify the smart contract which minted the METABIRKINS NFTs to no longer point to the images currently associated with the METABIRKINS NFTs;" and

• "to burn the METABIRKINS NFTs in [his] possession custody or control."

The case thus raises novel issues on both the extent to which NFT artists (and others) may create derivative works on the blockchain and what remedies trademark owners may have against those individuals.

Posture

Rothschild moved to dismiss Hermès's complaint, arguing that the NFTs were artistic expression protected by the First Amendment. The court refused. The court agreed with Rothschild that the correct legal test to apply is Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). That test protects artistic works from suits under the Lanham Act based on their titles, due to First Amendment considerations, if (1) the title of a work has minimal artistic relevance, and (2) is not explicitly misleading as to "the source or the content of the work." Id. at 999.

The Hermès court concluded the complaint sufficiently alleged facts to state a claim for relief – that is, that the title "MetaBirkin" had no artistic relevance, or that if it did, the title was explicitly misleading – and thus declined to dismiss the complaint. The court pointed to the following facts in reaching that conclusion:

• Rothschild described NFTs as a tribute to Hermès;

• using slogans like “Not your mother’s Birkin” to market them;

• consumers expressing actual confusion about a collaboration with Hermès; and

• the magazines Elle, L’Officiel, and the New York Post mistakenly reporting a partnership with Hermès.

Thus the parties will move into discovery to develop the facts to argue whether, based on a fully developed record, the title MetaBirkin for the NFTs has artistic relevance to the underlying art, and if it does, if the title was nonetheless explicitly misleading. Hermès International v. Rothschild, 22-cv-00384 (S.D.N.Y. May 18, 2022)

For NFT creators watching the case, the court also notably concluded: “using NFTs to authenticate an image and allow for traceable subsequent resale and transfer does not make the image a commodity without First Amendment protection anymore than selling numbered copies of physical paintings would make the paintings commodities…." Id. at *11.

Shortly after the court's order, Rothschild moved to certify an interlocutory appeal, which Hermès opposed. The court denied the motion, and the parties proceeded through discovery. They filed competing motions for summary judgment, which were argued on November 18, 2022. The court has not ruled on the motions yet. A jury trial is scheduled to begin January 30, 2023.

Docket

Full court docket is available through PACER, which is most easily accessed through Court Listener.

Authors

This article was drafted by @Lawtoshi.