NFTs, Trademarks, And The First Amendment: A Primer On Hermès International v. Rothschild

• Jurisdiction: United States,Federal
• Law Firm: Pryor Cashman LLP
• Subject Matter: Intellectual Property, Technology, Trademark, Fin Tech
• Author: Ms Dyan Finguerra-DuCharme, Megan Noh and Mallory Chandler
• Published date: 01 February 2023

Today, a New York City jury will hear opening arguments in the Hermès International v. Rothschild trial, the conclusion of which could have precedential implications on what has become the fine line artists toe between artistic expression protected by the First Amendment and trademark rights enforced under the Lanham Act.

Specifically, a jury will be tasked with deciding whether NFTs representing "MetaBirkins," created by defendant Mason Rothschild, are considered artistic expression protected under the First Amendment, or if Rothschild's use of Hermès' BIRKIN and HERMÈS trademarks and trade dress crossed the line into infringement under the Lanham Act.

Here's what you need to know about the background of the case:

What Exactly Is an NFT?

An non-fungible token (NFT) is a cryptographic token representing a unique unit of data stored on a digital ledger called a blockchain. In the context of digital art collectables, the NFT functions as the digital receipt of the purchase of an associated item, i.e., the digital art. For digital art NFTs, the art itself is not typically stored within the NFT's underlying code, but rather may consist of a .jpeg or other digital file stored elsewhere online (including on a distributed file system and peer-to-peer network such as the InterPlanetary File System, or on a decentralized blockchain data-storage protocol such as Arweave). The NFT's code typically points to that separately stored asset, via a Uniform Resource Identifier (URI), and the NFT itself may contain other metadata referencing the art asset or other aspects of the NFT project, such as naming conventions applied to, or other sorting indices for visual attributes of, the assets.

Rothschild's Creation and Sale of MetaBirkins NFTs

In or around December 2021, Rothschild created "MetaBirkins," a collection of digital images depicting faux-fur-covered Birkin handbags. Rothschild then used NFTs to sell the MetaBirkins. The NFTs have sold on four different NFT platforms, and though the value of cryptocurrency continues to fluctuate, some of the NFTs in this collection have been sold for prices comparable to real-world, physical Birkin handbags.

There is no dispute that Rothschild is using Hermès' trademarks. The BIRKIN trademark is used as the name of the NFT token itself, in the source code used to create the NFT, in the slogan "NOT YOUR MOTHER'S BIRKIN" used to promote the digital art, in the domain name of the official MetaBirkins website (metabirkins.com), and on...