An artist’s nonfungible tokens of Hermès’ iconic Birkin bags violated the luxury fashion house’s trademark rights, a federal jury found on Wednesday.
In one of the first trials examining the exploitation of digital assets, the case asked whether Mason Rothschild’s NFTs are more akin to commercial goods or artistic appropriations shielded by the First Amendment.
Jurors agreed with Hermès that Rothschild’s NFTs are commercial products subject to intellectual property laws that bar the sale of imitations and awarded the company $133,000 in damages. They also found that the digital assets aren’t protected speech.
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The verdict could have a chilling effect on NFT creators and artists looking to sell works riffing on goods shielded by trademarks. It was delivered as other fashion brands, including Gucci, Louis Vuitton and Nike, prepare to launch their own NFT offerings and reinforces intellectual property protections for their anticipated digital goods. (Nike last year sued online marketplace StockX over NFTs featuring Nike shoes in an ongoing fight similar to this one.)
“There’s a concern about speech being stifled,” says Jessica Neer McDonald, a trademark lawyer unaffiliated with the case. “There should be extra care now in how artists name their projects and the type of symbols used in images.”
The decision provides guidance, she added, to an industry that’s operated “a little bit like the wild, wild West.”
In a post on Twitter, Rothschild said it was “wrong” that Hermès’ has the “right to choose what art is and who is an artist.” He added, “What happened today will continue to happen if we don’t continue to fight. This is far from over.”
Rothschild’s NFTs are digital images that depict Hermès’ coveted Birkin bag, regarded as a symbol of luxury and quality, in elaborate designs. One featured an animation with a fetus on a transparent version of the bag, which sold for $23,500 and resold for $47,000. In 2021, he launched a line of a hundred NFTs featuring bags dressed in fur instead of leather. They were sold under the “Metabirkins” trademark. A flood of copycats from other artists followed.
Hermès sued in January, claiming trademark infringement and dilution, cybersquatting and unfair competition, among other claims.
The verdict turned on whether Rothschild’s NFTs misled consumers and if they are a form of artistic expression.
During the trial, Hermès claimed that MetaBirkins fooled consumers into buying unaffiliated virtual products. The company stressed that people only bought the NFTs because they were connected to its brand, pointing to statements from Rothschild that people don’t “realize how much you can get away with in art by saying ‘in the style of.'”
“Although a digital image connected to an NFT may reflect some artistic creativity, just as a t-shirt or a greeting card may reflect some artistic creativity, the title of ‘artist’ does not confer a license to use an equivalent to the famous Birkin trademark in a manner calculated to mislead consumers and undermine the ability of that mark to identify Hermès as the unique source of goods sold under the Birkin mark,” reads the complaint. “Defendant’s ruse must not be sanctioned: He is stealing the goodwill in Hermès’ famous intellectual property to create and sell his own line of products.”
In addition to arguing that his work didn’t mislead people, Rothschild’s defense revolved around the contention that his NFTs are art that falls under the First Amendment’s free speech protections. His lawyers stressed that the work is a metaphor for consumerism.
While the six-figure award is a relatively modest sum given the going rate of Birkins on the secondary market, the figure represents $110,000 in returned net profits in connection with the trademark claims and $23,000 in statutory damages for cybersquatting — and it sends a message to NFT creators.
Fashion brands are already learning from Hermès’ missteps. Louis Vuitton on Friday filed a trademark application for design marks covering digital content, including NFTs. Hermès had only filed a trademark encompassing physical designs.
Courts continue to explore the appropriate standards to analyze fair use. The Supreme Court has agreed to hear a trademark dispute brought by Jack Daniels against VIP Products, which sells a toy that closely resembles the whiskey maker’s signature black label bottle. In March, the justices considered a copyright battle over a series of paintings by Andy Warhol that relied on existing photos of Prince as a template to decide whether the meaning of art can be considered to determine if it’s a new and distinct piece protected under copyright law. The case tests the reach of the fair use defense to copyright infringement and how courts should evaluate if works based on older versions are meaningfully transformative enough to qualify as a different piece.
Hermès didn’t immediately respond to a request for comment.
