A federal jury in New York has delivered a verdict in favor of the luxury fashion house Hermès in its lawsuit against artist Mason Rothschild, concluding that Rothschild’s non-fungible token (NFT) digital ‘MetaBirkins’ violated Hermès’ trademark rights in the name and appearance of its BIRKIN mark and Birkin handbag. The jury awarded Hermès $133,000 in damages for trademark infringement, dilution, and cybersquatting.
Rothschild created a series of 100 ‘MetaBirkins’ and sold over $1 million worth of NFTs. These ‘MetaBirkins’ each consisted of a unique token on a blockchain network associated with a digital artwork depicting a fur-covered Birkin handbag. Hermès filed a lawsuit against Rothschild for violating its trademark rights, claiming that Rothschild’s ‘MetaBirkins’ series was not purely artistic expression, but was instead primarily a commercial endeavor, especially because Rothschild encouraged his audience to promote and market his “MetaBirkins’ to increase their value in the digital marketplace. Rothschild argued that his NFTs were an artistic experiment protected by the First Amendment.
The US District Court for the Southern District of New York found that Rothschild did infringe on Hermès’ trademark rights, establishing a precedent that virtual goods and NFT products must respect the trademark rights of the brand owners offering those corresponding, real-world goods and products. Free speech principles ensured by the First Amendment will likely not apply where digital artists are primarily engaged in commercial activity, rather than creative expression. Hermès has affirmed that they have plans to create their own NFTs, plans echoed by many luxury brand owners. As prominent brands expand into virtual spaces with their own NFT goods, digital artists must be aware of the existence of and protections afforded by trademark rights that limit the use of brand elements for artistic and commercial purposes. Trademark owners must also be aware of and ready to enforce their trademark rights against infringing sellers of virtual goods for their own protection and the protection of their consumers.