Trademarks in the Metaverse: Blurring the Line Between Art and Reality

Traditionally (or IRL), trademark law protects against consumer confusion in the marketplace. However, courts have generally found that in the context of art, the public interest in free expression outweighs the public interest in preventing consumer confusion. Under the two-pronged “Rogers test,” an artist has a First Amendment defense against a claim of trademark infringement so long as the artist’s use of the mark (1) has at least some minimal artistic relevance to the underlying work and (2) is not explicitly misleading about the source or content of the underlying work. This test is meant to protect robust artistic expression and to prevent courts from engaging in artistic analysis.

The Rogers test arose in the context of an allegedly infringing film title (Ginger Rogers filed suit for trademark infringement when acclaimed director, Federico Fellini, used her name in the title of the film “Ginger and Fred”). However, courts have applied the test broadly in trademark disputes involving a range of artistic works, including films, television shows, music, books, magazines, paintings, photographs, websites, and more. Notably, several courts, including the Ninth Circuit, have applied the Rogers test to protect the use of trademarks in video games. Should the same test apply to allegedly infringing artistic expression in the metaverse?

While there doesn’t seem to be a settled definition for what exactly the metaverse is, this “squishy concept” involves some combination of virtual reality, augmented reality, and 3D-computing to create a virtual environment that both mimics and enhances the real world. As hype builds around the coming of the metaverse, there has been an uptick in virtual goods trademark applications as companies seek to protect their brands in this unchartered territory. There are many unanswered legal questions anticipating the arrival of this new “world,” particularly involving intellectual property rights.

The metaverse is unquestionably an expressive medium replete with creativity, but will courts find that digital artists in the metaverse have the same right to use protected marks as artists in other, more familiar artistic contexts?

The metaverse is unquestionably an expressive medium replete with creativity, but will courts find that digital artists in the metaverse have the same right to use protected marks as artists in other, more familiar artistic contexts? An upcoming lawsuit brought by the French fashion giant, Hermès, may shed light on how courts will approach the impending conflict between trademark law and art in the metaverse. In 2021, digital artist, Mason Rothschild, created a series of non-fungible tokens (NFTs) featuring fuzzy images of Hermès’s celebrated Birkin bags, which Rothschild calls “MetaBirkins.” One of these images, titled “Baby Birkin,” featuring a Birkin bag with a developing fetus inside, sold for $23,500 (more than the price of an actual Birkin bag).

Hermès responded by sending Rothschild a cease-and-desist letter. When the artist refused to yield (citing his First Amendment rights in an Instagram response), Hermès filed a complaint earlier this year with the Southern District of New York alleging trademark infringement and dilution. Hermès claims that Rothschild is using the Birkin brand to mislead the public into believing that Hermès has authorized or produced the MetaBirkin NFTs. Interestingly, Hermès chose to file suit within the Second Circuit, where the Rogerstest originated.

Rothschild has clearly talked to his lawyers and is prepared to assert a First Amendment defense. In another Instagram post following Hermès’s complaint, Rothschild claims that “the First Amendment gives [him] the right to make and sell art that depicts Birkin bags, just as it gave Andy Warhol the right to make and sell art depicting Campbell’s soup cans” and that he has the right to use the Birkin trademark “to comment artistically on those bags and on the Birkin brand.” Rothschild further asserts that the fact that he makes money from his NFTs is irrelevant and doesn’t change the fact that his work is art.

In its amended complaint filed at the beginning of the month, Hermès downplays the artistic nature of Rothschild’s work and instead focuses on the “great financial success” the artist has already achieved as well as the fact that consumers and media outlets have already been confused into believing that Hermès (not Rothschild) was responsible for the MetaBirkin NFTs. While Hermès acknowledges that an NFT does involve some level of artistic expression, it is clearly taking aim at the second prong of the Rogers test—whether the allegedly infringing work is explicitly misleading. Hermès notes that “the title of ‘artist’ does not confer a license to use an equivalent to the famous [Birkin] trademark in a manner calculated to explicitly mislead consumers and undermine the ability of that mark to identify Hermès as the unique source of [the] goods.”

As evidence that Rothschild used the Birkin mark in order to explicitly mislead consumers, Hermès points to statements on the artist’s website (including at the point of sale) that the MetaBirkin NFTs are “a tribute” to the famous Birkin bags. However, under the second prong of the Rogers test, in order for a work to be explicitly misleading, a court must find that the artist made some kind of affirmative, explicit statement that the plaintiff sponsored or endorsed the work. Rothschild’s claims that his NFTs are a tribute to the Birkin brand doesn’t seem to meet this standard. Whether, and how, courts translate the Rogers test to claims of trademark infringement in the metaverse will inform brands about how to best protect their intellectual property and will inform artists about how to best express themselves within legal limits. Maybe courts will find that the metaverse, like a video game, is a work of artistic expression where artists’ rights deserve heightened protection. Perhaps the metaverse will be treated more like a marketplace, where preventing consumer confusion is paramount. Or maybe courts will find that a new test is needed to balance trademark protection and creative expression in this new, uncharted realm.

Allysan Scatterday

Allysan Scatterday is a second-year law student at the UNC School of Law. She graduated from the College of Charleston with a B.S. in Biology in 2012 and the Johns Hopkins University with an M.P.H. in 2016. Outside of law school, Allysan enjoys competing in triathlons, knitting a lot of scarves, and taking her two dogs on hikes around the Triangle.