It is just over a year since Hermès filed a New York trademark infringement lawsuit against Mason Rothschild, who created the MetaBirkins NFT collection featuring images of handbags in the style of Birkin bags. The jury found in favor of Hermès on all counts. It concluded that the legally protected right to artistic expression did not override the creator’s liability for infringement on intellectual property (IP).
The verdict included trademark infringement, trademark dilution and cybersquatting. It awarded Hermès $110,000 for the trademark aspect and $23,000 for cybersquatting.
Was the NFT protected by artistic expression? No.
The NFT world was waiting for a conclusion regarding artistic expression. From the start, Rothschild, whose real name is Sonny Estival, said that the U.S. Constitution’s First Amendment gave him the right to sell “art that depicts Birkin bags.” He likened it to Andy Warhol’s paintings of Campbell’s soup.
Regarding his First Amendment rights, the judge’s instructions to the jury said that it was undisputed that there was some artistic expression in the handbag designs, at least in some respects. But to decide whether this would reduce Rothschild’s liability, the jury had to consider whether the “use of the Birkin mark was not just likely to confuse potential consumers but was intentionally designed to mislead potential consumers into believing that Hermes was associated with Mr. Rothschild’s MetaBirkins project. In other words, if Hermes proves that Mr. Rothschild actually intended to confuse potential customers, he has waived any First Amendment protection.” It seems the jury believed there was intent.
As we noted when the lawsuit was first filed, we were not entirely convinced about the confusion issue. MetaBirkins declared it was not associated with Hermès from the start. And the value of the MetaBirkins NFTs seemed decidedly low if people believed it was associated with such a high end brand. The initial drop of 100 bags yielded $32,200 compared to $5.65 million for nine NFTs released by Dolce & Gabbana.
The trademark infringement
Turning to the trademark issue, the jury was instructed to take into account several factors in their deliberations:
- The strength of the Birkin trademark
- The degree of similarity between the name and visual appearance of the NFTs to the mark
- Whether Hermès and MetaBirkins NFTs would compete for consumers
- Evidence or not of consumer confusion
- How much attention would a consumer need to give avoid confusion
- Whether Rothschild acted in bad faith
- Plans by Hermès to introduce its own NFTs.
During the trial, Hermès confirmed that it intends to drop its own NFTs.
The point about competing for consumers is perhaps fundamentally different from Warhol’s paintings.
A paragraph from the judge’s instructions to the jury was a pointer that Rothschild was on the back foot.
It stated, “Hermès asserts trademark infringement, trademark dilution, and cybersquatting as to the ‘Birkin’ mark, which is a federally registered trademark described at Plaintiffs’ Exhibits 5 and 6 and that covers both the word ‘Birkin’ and the handbag’s distinct visual appearance.”
“In this case, it is undisputed that Mr. Rothschild marketed certain NFTs under the heading ‘MetaBirkins’ and that these NFTs were associated with digital images of fur-covered Birkin bags. Collectively, these NFTs and their associated images are here referred to as ‘MetaBirkins NFTs’.”
The ruling is likely to be important not just for NFTs but also for the metaverse.