Trademark Rights in the Metaverse

By Esther Hwang

            The virtual world’s demand for NFTs (non-fungible tokens) related to luxury brands has been increasing. In November, two third-parties filed trademark applications to utilize Gucci and Prada logos in the metaverse. [1] Furthermore, it has become a common occurrence for creators on virtual platforms like Roblox to sell NFTs representing brands like Louis Vuitton, Prada, and Chanel.[2] Recently, Hermès filed trademark infringement claims against Mason Rothschild, a marketing strategist and entrepreneur who created digital images titled the “Baby Birkin” and “MetaBirkins.” [3] Rothschild sold the NFT linked to the “Baby Birkin” for $23,500 and continued to sell “MetaBirkins” on four different NFT platforms. [4] 

            For a trademark infringement claim, courts first consider whether a digital image at issue is an art or a commercial good and service. [5] If the image is an art, then the court applies the Rogers test, which relies on the First Amendment. [6] If the image is a good or service, the court applies the two-prong test of Gruner + Jahr, which focuses on the protectability of the mark and the Polaroid factors to determine consumer confusion. [7] In Rothschild, the two tests were in conflict. Although Rothchild’s digital images of the Birkin handbags were intertwined with artistic expression, the Court concluded that Hermès’s amended complaint included sufficient allegations of explicit misleadingness under the Polaroid factors.[8] Therefore, the Court denied Rothchild’s motion to dismiss the trademark infringement claims. [9]

        Although the Lanham Act protects both registered and unregistered trademarks against infringement, courts usually consider a registered mark as a strong indicator to the protectability of the mark.[10] Therefore, under the first prong of the Gruner + Jahr test, the Court found protectability of the mark for Hermès, which “owns trademark rights in the Hermes and Birkin marks as well as trade dress rights in the Birkin handbag design.” [11]

        Next, in analyzing consumer confusion, courts consider the following Polaroid factors: “(1) the strength of the plaintiff’s mark; (2) the similarity of the marks; (3) the competitive proximity of the products in the marketplace; (4) the likelihood that the senior user will “bridge the gap” by moving into the junior user’s product market; (5) evidence of actual confusion; (6) the junior user’s bad faith in adopting the mark; (7) the respective quality of the products; and (8) the sophistication of the consumers in the relevant market.” [12] Since the objective of the Polaroid factors is to balance the public interest between avoiding consumer confusion and free expression, courts do not apply each factor. [13] Instead, the totality of circumstances and the distinct facts of each case determine which Polaroid factors are significant.[14]

        In Rothschild, the Court decided that three Polaroid factors pointed to explicit misleadingness for consumers, which were the strength of the Birkin mark, evidence of actual confusion, and Rothchild’s bad faith in adopting the Birkin mark. [15] First, although Hermès’s trademark registration already supported the strength of the Birkin mark, the unique standing of the Birkin bag in the luxury fashion industry and the one hundred-thousand-dollar value of the Birkin mark further supported the first Polaroid factor. [16] Second, not only consumers, but also mainstream magazines like Elle and L’Officiel and the New York Post believed that Rothchild’s “MetaBirkins” collection was affiliated with Hermès, suggesting actual confusion. [17] Lastly, Rothchild’s use of the “MetaBirkins” mark to promote the NFTs and his statements of “wanting to create the same kind of illusion that a [Birkin] has in real life” indicated Rothchild’s bad faith intent to mislead consumers as to the source of his images. [18]

        With a shift to a consumer market of virtual goods and virtual spaces, brands like Ralph Lauren, DKNY, and Nike have filed trademark applications with the U.S. Patent and Trademark Office for virtual clothing and accessories.[19] Following the Hermès NFT case, brands are starting to question what images they actually own in the metaverse and whether trademark protections in the physical world are transferable to the virtual world.[20]

[1] Maghan McDowell, How to Trademark the Metaverse, Vogue Bus. Tech. (Jan. 11, 2022),

[2] Id.

[3] Hermès Int’l v. Rothschild, No. 22-cv-384 (JSR), 2022 U.S. Dist. LEXIS 89799, at *3-4 (S.D.N.Y. 2022) (order denying motion to dismiss).

[4] Id. at *4.

[5] Id. at *8.

[6] Rogers v. Grimaldi, 875 F.2d 994, 1002 (2d Cir. 1989).

[7] Gruner + Jahr USA Pub.. v. Meredith Corp., 991 F.2d 1072, 1075 (2d Cir. 1993).

[8] Rothschild, 2022 U.S. Dist. LEXIS 89799, at *7.

[9] Id. at *9.

[10] UMG Recordings, Inc. v. OpenDeal Inc., 2022 U.S. Dist. LEXIS 117998, at *6 (S.D.N.Y. 2022).

[11] Rothschild, 2022 U.S. Dist. LEXIS 89799, at *2.

[12] Id. at *16.

[13] Id. at *15.

[14] Id.

[15] Id.

[16] See id. at *15-16.

[17] Id. at *6.

[18] Id. at *13-*14.

[19] McDowell, supra note 2.

[20] Cassandre Coyer, New Tech, Same Laws? Navigating Trademark Protection in the Metaverse, 268 N.Y.L.J. 5 (2022).