You may have heard it, the famous Hermès house, creator of the iconic Birkin handbag line, has taken issue with an NFT Metabirkins collection, which it considers to be an infringement of its trademark.

The digital feud

This collection, available in 100 copies on OpenSea (the largest NFT platform in terms of transaction volume — 13.25 billion dollars), is the work of the artist Mason Rothschild, whose initiative was to reinterpret the form, materiality and name of a well-known cultural element. The problem? There is no relationship between the American artist and Hermès, let alone any permission granted to the latter.

On the left, a genuine birkin bag by Hermès. On the right, its digital double by Mason Rotschild.

“Hermès has not authorised or consented to the marketing or creation of our Birkin bag by Mason Rothschild in the metaverse. […] These NFTs infringe on Hermès’s intellectual property rights and trademark rights and are an example of fake Hermès products in the metaverse,” the luxury brand said in a statement to the Financial Times.

Basically, this unauthorised use raises two issues.

Firstly, there is a significant risk for Hermès that the public will be confused that the Metabirkins are official Hermès products when they are not. Secondly, the sale of these Metabirkins has already generated more than $800,000 in less than a month, a significant loss of revenue for Hermès if they were to enter the lucrative NFT market. Moreover, without legal proceedings, Hermès will not receive any revenue from the exploitation of its bag.

Presumably outraged to discover that he could not make a fortune using the work of others, Mason Rothschild reacted on Instagram on 23 December:

Source: MetaBirkin’s Instagram account.

Pending the outcome of this dispute, OpenSea has already removed all MetaBirkin from its platform. Ironically, the American artist has complained about the increasing appearance of fake MetaBirkin on other NFT platforms.

The bigger picture: how trademarks application work

To submit a trademark application to enter the trademark register, one must imperatively specify the goods and/or services for which the trademark is to be protected. This system of classification grants protection for the areas registered and allows coexistence for brands of the same name in different class.

Of course, a brand could think that applying for all classes might allow its protection to be unlimited. In theory, it could, yes. However, most systems in the world prevent such abusive registration by solely admitting protection in class in which trademark is actually used at the time of the submission. Moreover, in the absence of use for the selected classes for a certain period of time after registration, most countries will simply cancel the protection.

The concept of opportunistic trademark registration

As Hermes and other luxury brands carry on their pursuit of happiness in the Metaverse, opportunistic players hustle their way to get there first, speculating on a first-come, first-served principle to win the intellectual property rush in the metaverse.

Nike, for instance, although not the only brand, has recently filed trademark applications in a number of goods/services in connection to the development of the brand in the metaverse, including “downloadable virtual goods” (in Class 9), “retail store services featuring virtual goods” (Class 35), and “entertainment services, namely, providing on-line, non-downloadable virtual footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories for use in virtual environments” (Class 41). Likewise, Ralph Lauren filed an application for items including store services featuring virtual clothing and accessories for use in online virtual worlds (Class 35 also), and online, non-downloable virtual clothing and accessories for use in virtual environments (Class 41, again).

Unfortunately, Hermes did not follow such careful initiative.

Unsplash

Does that mean that anyone could just become luxurious-brands trademark owners in the metaverse then?

No, of course not! (At least if you are not a smaller brand but we will focus on that matter in another article.)

In a way, brands are still protected by a doctrine that has developed in the legal world called “the zone of expansion”.

This concept is pretty straightforward and stems from the simple fact that new technologies usually outpace law. Poor law therefore needs some kind of safeguard in an ever-changing world —the zone of expansion- which is basically the right to extend a trademark’s prior rights into a new category, because of the obvious and natural extension of such use of the trademark.

In application of this principle, if a business has successfully registered its trademark for hoodies and t-shirts, the owner of that business will most likely stop a third party from using the trademark on jackets.

And here is the million bitcoin question, will this zone of expansion apply from physical brands to digital goods in the Metaverse?

And this is the hard question the judge will have to answer in the Hermes v. MetaBirkin case. One point is for sure, his/her decision is likely to have a big impact on the nascent legal sphere of litigation in the metaverse.

This article is part of my blog — Dotlaw — a simple digest reporting the latest news revolving around the world of tech and the law. (in French😬)

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