A Manhattan federal jury awarded Hermès International SA $133,000 in damages after determining that digital artist Mason Rothschild’s sale of the “MetaBirkin” NFTs violated Hermès’ rights to the “Birkin” trademark. The case was the first of its kind to examine NFTs through the lens of intellectual property law and could have a significant impact on future NFT cases. The 100 MetaBirkin NFTs, which depict Hermès’ Birkin handbag covered in colorful, cartoonish fur, were found to be more like consumer products subject to strict trademark laws. Rothschild, however, believes that the verdict was wrong and that the fight is far from over.
Throughout the trial, Rothschild defended his “MetaBirkin” NFTs as works of art protected by the First Amendment, drawing parallels to Andy Warhol’s famous Campbell’s soup cans. He characterized the NFT project as an “artistic experiment” that examined society’s value placed on status symbols. Rothschild sold the NFTs for around $450 each initially, but their resale value skyrocketed to tens of thousands of dollars. A blockchain expert testified that Rothschild made around 55.2 Ethereum tokens, worth about $87,700 today.
Rothschild’s claim for more artistic liberty hit a roadblock when District Judge Jed S. Rakoff prohibited renowned art critic Blake Gopnik from providing their expert opinion to the jury. Gopnik, who wrote the 2020 biography “Warhol,” could have established a connection between the MetaBirkins and Warhol’s art.
In response to the verdict, Rothschild criticized Hermès, calling them a “multibillion dollar luxury fashion house,” for claiming to care about artists but also claiming the right to define what art is and who is an artist. Hermès and Rothschild disputed the survey results conducted by Hermès’ expert witness, which showed a net confusion rate of 18.7% amongst prospective NFT buyers. Meanwhile, Rothschild’s specialist witness argued that the poll misclassified participants, leading to a decreased net confusion rate of 9.3%.
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Balancing Trademark and Speech
In January, Hermès filed a lawsuit after observing that some media outlets mistakenly identified the MetaBirkins as a project endorsed by the company. Hermès claimed that, although it does not currently sell NFTs, the MetaBirkins hindered its efforts to enter the NFT market and argued that if it wants to bring its bag into the virtual world, the MetaBirkins will always be a reference.
At the trial, Hermès’ lawyers presented a large number of text messages as proof for Rothschild’s intention to create the same level of exclusivity and demand for their popular handbags. In Rothschild’s letters, he spoke of “pumping” and “schilling” stocks, as well as looking for large investors called “whales.”
To protect their interests, Rothschild engaged the services of Lex Lumina PLLC’s IP specialists who defended its case using the established “Rogers” legal test that has been around for several decades. Rogers v. Grimaldi (1989) established a standard that allows artists to use trademarked elements in their works if they are inspired by it and do not lead the public to believe something deceptive. This interpretation of the law permits creators to use trademark without formal permission, as long as a minimal level of artistic relevance is met.
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During his closing statement, Millsaps argued that Hermès did not fulfill the rigorous requirements of the First Amendment. Rothschild tried to have the case dismissed based on the Rogers Test but Judge Rakoff felt that more information was required to assess it. Following their collection of survey data & expert testimony, Judge Rakoff again refused the pre-trial victories of both parties in late 2022.
During closing arguments, Harris of Harris St. Laurent & Wechsler LLP stated that Hermès was unfairly targeting a small, independent artist who had made himself an artist without receiving any special treatment.
