Hermès takes pride in its exclusivity, and in turn, the process of creating its products is considered an art form. So, when artist Mason Rothschild began selling furry versions of Hermès’s bags called “MetaBirkins” as non-fungible tokens (NFTs)—Hermès quickly accused Rothschild of being “a digital speculator” who sought “to get rich quick” by capitalizing on the very substantial goodwill of Hermès’s Birkin trademarks. Specifically, Hermès alleged that Rothschild’s unauthorized versions of Hermès iconic Birkin bags, which sold for more than one million dollars, violated Hermès’s intellectual property rights and were likely to confuse consumers.
In defense, Rothschild likened his MetaBirkins to Andy Warhol’s silkscreen prints of Campbell’s soup cans. He said his depictions of the bags were an “absurdist comment on the excesses of the fashion world.” At a jury trial in February, he argued that the MetaBirkins passed a legal standard known as the Rogers test, which balances trademark and free speech rights, and argued that he had a constitutional right to produce and market purported “transformative art” even if it imitates trademarked products.
The New York jury agreed with Hermès and found that Rothschild’s MetaBirkins were likely to confuse consumers and awarded Hermès $133,000 in damages for trademark infringement, dilution, and a violation called “cybersquatting,” which involves registering or using a brand’s trademark in bad faith. The jury found that Rothchild’s use of the Birkin’s likenesses did not constitute a protected form of speech. Even though the jury agreed that Rothschild’s use of the Hermès trademark was improper, Rothschild continued to market and promote his MetaBirkins through social media and his website https://metabirkins.com.
Hermès Files for a Permanent Injunction
About four weeks after the verdict, Hermès filed a motion for a permanent injunction against Rothschild and asked a federal judge in New York to permanently stop Rothschild from using the MetaBirkins or similar Birkin names to promote products or NFTs. It also demanded that Rothschild transfer ownership of the MetaBirkins smart contract, domain name, and social media accounts to Hermès. The proposed order said Rothschild should identify to Hermès any royalties or income from the NFTs since the start of the trial and transfer the money to Hermès.
Following the jury verdict, questions remained regarding the fate of the existing MetaBirkin NFTs. Hermès cannot simply eliminate all existing MetaBirkin NFTs from the blockchain, but if the injunction is granted, it could claim ownership of those still in Rothschild’s possession.
Real-World Trademark Rights in the Virtual World
For good reason, this was a highly watched case—it served as the first to revolve around alleged infringement and dilution of “real-world” trademark rights in the virtual world. This decision was crucial to brands because many are eager to get into the Metaverse, where a whole new world of monetization awaits.
For now, it appears that existing trademark laws are enough to protect brand owners’ rights as to NFTs. Have no fear; your $400,000 purse will still be worth $400,000.