16 February 2023
French luxury brand Hermès has prevailed in a significant US court case after a year-long trade mark battle. Mason Rothchild’s ‘MetaBirkin’ non-fungible tokens (NFTs) were found to violate Hermès’ trade marks for its renowned Birkin bag, making Rothschild liable for trade mark infringement, trade mark dilution, and cybersquatting.
The trial is one of its kind, in which we see the interplay of intellectual property law, fashion and technology. It has also set an important precedent on what may be considered artistic expression and how NFTs are viewed in the eyes of intellectual property law.
Introduced in 1984 and named after the actress Jane Birkin, the Hermès Birkin bag quickly became iconic and is one of the most sought-after items in the fashion world. It is undeniable that the Birkin bag, manufactured in France with precise and distinctive craftsmanship, has evolved into a symbol of status and luxury and is known for its exclusivity. For the opportunity to own a Birkinbag, customers must have a purchase history with the brand and may often wait months or years to be offered one.
Hermès owns trade mark rights in the Hermès and Birkin marks and trade dress rights in the Birkin bag design.
In 2021, Rothschild began selling MetaBirkin NFTs which portray reworked Birkin bags made of fur with vibrant colours and designs, rather than the conventional leather of the genuine Hermès bag and priced equivalently to a real Birkin bag.
Rothschild claimed that his MetaBirkin NFT project was an “artistic experiment” which provided commentary on Hermès’ manufacturing and examined society’s fixation on status symbols and luxury bags.
Upon discovery of MetaBirkin, the luxury brand filed a lawsuit in January 2022.
Hermès contended that Rothschild had capitalised on its goodwill; the NFTs were only bought because of the Birkin name which led consumers to assume the goods were formally affiliated with the brand and endorsed by Hermès themselves. Hermès contends that Rothschild not only used its Birkin mark without authorisation but also benefited openly from doing so by selling and reselling NFTs.
Rothschild relied on a fair use defence as per the First Amendment of the U.S. constitution and claimed that the NFTs are an act of artistic expression rather than trying to pass the artwork off as being associated with Hermès, drawing parallels with Andy Warhol’s paintings of Campbell’s soup cans.
Rothschild also relied on the ‘Rogers’ legal test. The criteria, which was first established in the Rogers v Grimaldi case from 1989, permits artists to use a trade mark without obtaining permission so long as it satisfies a basic requirement of artistic relevance and does not deliberately mislead consumers.
Although Hermès does not yet sell NFTs, unlike some of its peers in the luxury fashion world, the company’s global general counsel Nicolas Martin has commented there are plans to break into the metaverse, but this has been hindered by Rothschild as there will always be a reference to MetaBirkin.
The jury ruled in favour of Hermès, finding that Rothschild’s unauthorised versions of the Birkin bag constituted trade mark infringement, trade mark dilution, and cybersquatting as Rothschild used the MetaBirkins.com domain name, which the court determined was confusingly similar to that already of the luxury fashion house, awarding Hermès $133,000 in damages.
The jury also found that because of Rothschild’s unauthorised use of the bag as an NFT, this was not an artistic expression as it was explicitly misleading to consumers and therefore not a protected form of speech under the First Amendment of the U.S. constitution. The jury found that the ‘MetaBirkin’ was more akin to consumer goods, which are subject to trade mark regulations, than free speech-protected works of art, and that Rothschild did this to profit from Hermès’ goodwill.
This trial marks a win for IP protection for luxury brands in general, but perhaps the law lags behind innovation. While this case is the first to explore what constitutes “artistic expression” in the context of NFTs and IP, it is very fact specific and there is still much to consider regarding the legal issues presented by this new digital form of expression. It is the first of many judgements we can expect to see as the technology and ecosystem around NFTs continue to evolve and courts are required to provide more guidance on what constitutes infringement in the trade mark world and metaverse.
There is also some guidance on how intellectual property law is applied to digital assets and NFTs for artists and those working in this space, particularly in light of ongoing legal disputes such as Nike v StockX.
Questions do remain unanswered, and it may not be all over for Rothschild as there could be a possible appeal.
A trade mark dispute between Jack Daniels and VIP Products, around a dog chew toy resembling the Jack Daniels bottle, will be heard by the US Supreme Court. Although this case involves parody and trade mark law rather than NFTs, it could serve as a precedent for the conflict between freedom of expression and commerce, which will contribute to expanding the initial parameters set here in Hermès v Rothschild and help continue to define the scope of trade mark law in the digital age.
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