In recent months, the metaverse, a term that is meant to encompass a mixture of virtual reality and augmented reality, has increasingly become a conversation topic for companies and consumers. Companies have begun to invest in this space and have started staking out virtual property on platforms like Decentraland and The Sandbox. Lawsuits and trademark applications have also popped up alongside these investments. This recent legal activity indicates that the metaverse will be a critical area for companies to begin to learn about and monitor to ensure they are adequately protecting their intellectual property and avoiding risk.

In January 2022, designer Hermès sued an individual named Mason Rothschild in the Southern District of New York for his creation and sale of “Metabirkins,” which are non-fungible tokens (“NFTs”) that resemble fur-covered versions of Hermès’ iconic Birkin bag. Among other things, the complaint alleges that Rothschild has engaged in trademark and trade dress dilution and infringement by selling his NFTs, one of which has already sold for $40,000, just as one would by selling a counterfeit physical bag. Interestingly, Hermès’ complaint notes that the defendant’s activity is preempting Hermès from entering the NFT market itself. Continue Reading See You in the Metaverse: What Brands Need to Know

In the recent article, “Why Hermès’ MetaBirkins Lawsuit Has High Stakes for Brands and Creators”, featured in The Business of Fashion, Partner Preetha Chakrabarti expands upon her insights from the her previous blog posts on non-fungible tokens (“NFTs”) and the metaverse. Previously, Chakrabarti reported on how the designer, Hermès, sued an individual named Mason Rothschild in the Southern District of New York for his creation and sale of “Metabirkins,” which are NFTs that resembled fur-covered versions of Hermès’ iconic Birkin bag.

In this most recent article, she touches on the lingering legal questions regarding metaverse copyright regulations and how brands can protect their intellectual property in digital worlds. She states, “It definitely does signal that activity in the metaverse may very well be regulated similar to activity in the real world, in our physical universe.” This analysis is especially timely after the Supreme Court agreed to hear whether NFTs can qualify as artistic expression, scheduled in October.

Read more from The Business of Fashion here (subscription required).

Earlier this year, Hermès filed a trademark infringement suit against Los Angeles-based designer Mason Rothschild for creating and selling faux-fur digital renditions of the luxury Hermès Birkin handbags and using a collection of 100 NFTs, titled “MetaBirkins,” to authenticate the digital images.[1] In response, Rothschild filed a motion to dismiss Hermès’ trademark infringement claim under the Rogers test on the basis that the digital images of the Birkin bags are “art” and, therefore, receive First Amendment protection.[2] Hermès opposed, arguing that the Polaroid factors— instead of the Rogers test—should apply, to assess likelihood of confusion.[3] On May 18, 2022, the court denied Rothschild’s motion to dismiss, concluding that: (1) the Rogers test applies to the trademark infringement analysis of the “MetaBirkins” title, and (2) the Polaroid factors apply to the explicit misleadingness analysis.[4]

Continue Reading In the bag (for now): Hermès survives motion to dismiss in MetaBirkin NFT lawsuit

On February 23, join Crowell attorneys Preetha Chakrabarti and Suzanne Trivette and Gail Gottehrer of Gail Gottehrer LLC for “Lawyers in the Metaverse.” Hosted by the National Association of Women Lawyers’ Women in Intellectual Property & Tech Law affinity group of which Preetha and Gail are co-chairs, this timely webinar will help lawyers understand how the metaverse, avatars, and NFTs are relevant to their practices. Issues to be discussed include privacy, data security, and intellectual property related to these emerging technologies, as well as the current laws that might apply to them.

Click here to register.