Traditional Intellectual Property Law Still Applies In The NFT World

• Jurisdiction: United States,Federal
• Law Firm: Baker Botts
• Subject Matter: Intellectual Property, Technology, Copyright, Trademark, Fin Tech
• Author: Ms Lucy Soyinka
• Published date: 10 April 2023

Brand owners can breathe a sigh of relief, perhaps. In Hermes Int'l v. Rothschild, Mason Rothschild's MetaBirkins NFTs were found to have violated Hermès trademark of its famous Birkin handbags.¹ An NFT, or Non-Fungible Token, is a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership.² NFTs can transform digital works of art and other collectibles into one-of-a-kind, verifiable assets that are easy to trade on the blockchain.³ Still developing case law suggests that trademark law will remain applicable in the world of NFTs, while balanced against first amendment principals on a case by case basis. Moreover, the Supreme Court's decision in the Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith case may provide a stronger understanding of copyright law and fair use principals that would also be relevant to NFTs.

Hermes Int'l v. Rothschild

Around December 2021, defendant Mason Rothschild created digital images of faux-fur-covered versions of the luxury Birkin handbags of plaintiffs HermèsInternational and Hermès of Paris, Inc.⁴ Rothschild titled these images MetaBirkins and sold them using NFTs.⁵Rothschild described the MetaBirkins as a tribute to Hermès' most famous handbag, the Birkin.⁶ Clearly not impressed with such a tribute, Hermèsfiled a complaint claiming trademark infringement, trademark dilution, and cybersquatting.⁷ Rothschild responded by arguing that he was entitled to First Amendment protection under Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989) because he used MetaBirkins as the title of the artwork and not as a source identifier of his products.⁸

The Rogers Test

In Rogers v. Grimaldi, famed actress Ginger Rogers sued movie producers and distributors of the film Ginger and Fred for violating section 43(a) of the Lanham Act, 15 U.S.C. ' 1125(a) (1982), by creating the false impression that the film was about her or that she sponsored, endorsed, or was otherwise involved in the film.⁹ The court held the use of Rogers' name in the title and film did not violate the Lanham Act because the use was an exercise in artistic expression and the title Ginger and Fred contained no explicit indication that Rogers endorsed the film or had a role in producing it.¹⁰ From this case, a First Amendment protection was born. To determine whether an artistic work should be afforded First Amendment protection, the Rogers two-prong test asks (1) whether the work has some artistic relevance to the underlying work and (2) whether the work is explicitly misleading as to the source of the content of the work.¹¹

Rothschild was not granted First Amendment protection and instead was found liable for trademark infringement. The jury in Hermes Int'l v. Rothschild found that the MetaBirkins constituted some form of artistic expression and that the MetaBirkins were intentionally designed to mislead consumers as to the...