Hermes v Rothschild: trademarks in the metaverse

Yes, a trademark registered for physical goods can be enforced against unauthorised use in a virtual environment, even where the owner does not sell virtual goods yet. That is the practical result of Hermes International v Mason Rothschild, Case 1:22-cv-00384-JSR, decided in the Southern District of New York on 8 February 2023.

Rothschild sold NFTs linked to digital images of fur-covered handbags under the name MetaBirkins, at prices comparable to physical Birkin bags. Hermes succeeded on trademark infringement, trade dress, cybersquatting and unfair competition, and was awarded $133,000.

Why did Hermes win when it sold no virtual goods?

Because the court accepted that the collection interfered with Hermes' own plans to enter that market and traded on the reputation of the Birkin.

This is the part that matters to brand owners. Not being in the metaverse is not a defence for the person who got there first using your name.

What is the Rogers test, and why did it not save Rothschild?

Rogers v Grimaldi, 875 F.2d 994 (2d Cir. 1989), protects the use of a trademark in a work of artistic expression, unless the use has no artistic relevance at all, or explicitly misleads as to the source of the work.

Rothschild argued the NFTs were art. The court let the argument run and Hermes still won, because the evidence showed actual confusion about whether Hermes was involved: the @METABIRKINS accounts on Twitter and Instagram, and slogans like "#NotYourMothersBirkin". Artistic framing does not protect a use that misleads people about who is behind it.

Does owning the NFT mean owning the image?

Rothschild argued that MetaBirkins named the tokens, not the images they pointed at, so selling tokens conveyed no rights in the name.

The court disagreed. From a buyer's point of view there was no separation between the token and the picture, so the name covered both.

That distinction still matters practically. Who controls the image, who controls the token and who controls the smart contract can decide whether a brand owner can actually stop the infringement or only chase the person who minted it.

What it means in Europe

This is a United States decision and does not bind EUIPO or any EU court. The reasoning is still useful, because the underlying question is the same one EU examiners now face when classifying virtual goods and NFTs.

Two points travel:

• The case turned on a mark with a strong reputation. A reputation is easier to protect than an ordinary registration, in the EU as much as in the US.
• If you expect to trade in virtual goods, register for them. Relying on a physical-goods registration to reach into a virtual market works better in argument than in practice, and it is far more expensive than filing the right classes at the outset.

If your brand is being used on virtual goods you did not authorise, or you are about to launch into that market, tell us what has happened.