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Court suspends NFT sales for Hermes trademark infringement

MetaBirkin NFTs
MetaBirkin NFTs

In a significant legal milestone, a recent ruling was delivered in the highly notable case involving renowned luxury retailer Hermès and artist Mason Rothschild. The court’s decision favored Hermès, issuing a permanent injunction against Rothschild’s sale of “MetaBirkin” NFTs. Following the jury’s findings, it was determined that these digital assets infringed upon Hermès’ trademark rights associated with their highly sought-after Birkin bags. Notably, these exquisite leather goods command prices in the tens of thousands of dollars per item.

US District Judge Jed Rakoff rendered a verdict stating that the injunction was imperative in order to avoid consumer confusion and safeguard Hermès from enduring irreparable harm. In his statement dated June 23rd, Rakoff clarified that the defendant’s primary intention was to deceive consumers by utilizing altered versions of Hermès’ trademarks, creating a false belief that Hermès endorsed the profitable MetaBirkins NFTs. According to Rakoff, the First Amendment does not provide any immunity to the defendant against liability for perpetrating such a fraudulent scheme.

Hermès initiated legal proceedings against Rothschild last year, which subsequently resulted in the ongoing conflict. The subject of dispute revolves around the artist’s creation of “MetaBirkins,” NFTs that feature images of Hermès’ bags adorned with vibrant fur.

Within this framework, the trial served as a noteworthy intersection between NFTs, intellectual property law, and the safeguarding of artistic expression under free speech provisions. In February 2023, the court ruled in favor of Hermès, ordering Rothschild to compensate them with $133,000 in damages. This decision established a precedent for the scope of US intellectual property rights concerning digital assets.

Hermès referred to Rothschild as a “digital speculator,” accusing the NFTs of being a “get rich quick” scheme that infringed upon its trademark for the “Birkin” and misleadingly implied the fashion house’s endorsement of the tokens.

In addition, Hermès demonstrated its engagement in the Web3 domain last year by submitting several trademark applications for the Metaverse, according to a September 2022 report. This action showcased a proactive approach towards the emerging digital landscape. Moreover, considering the recent court verdict regarding Mason Rothschild’s ‘MetaBirkin’ NFTs, it further emphasizes Hermès’ dedication to safeguarding its brand identity within this novel frontier.

Hermès additionally expressed apprehensions regarding the potential for customer confusion due to the resemblance between the URLs of the “MetaBirkin” NFTs and its own. Rothschild, known as Sonny Estival, defended his artistic creation by asserting that it offered a critique of purported animal cruelty in the leather goods industry. He argued that his use of trademarks in a contextually relevant manner was not intended to deceive consumers, and therefore should be safeguarded under the First Amendment of the Constitution.

Notwithstanding the jury’s decision, Hermès claimed in a filing submitted in March that Rothschild continued to promote his NFTs. In an effort to put an end to his actions and gain possession of any remaining tokens and post-trial profits, Hermès sought the court’s intervention.

In response to these requests, Rothschild countered that Hermès’ demands were disproportionate, especially considering that the case revolved around matters of artistic expression.

The court’s decision in favor of Hermès highlights the intricate convergence of digital assets and intellectual property law. The legal terrain surrounding NFTs continues to be contentious, and this particular case establishes a pivotal precedent. It will inevitably spark further discussions and considerations regarding the interplay between digital art and conventional trademarks and copyrights.

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