Hermès permanently blocks sales of MetaBirkin NFTs
Rothschild’s bid to overturn jury findings met with derision from New York judge | Designer is able to keep NFTs and smart contracts due to constitutional considerations.
Hermès has secured a permanent injunction against the designer who created the MetaBirkin non-fungible token (NFT).
New York federal court Judge Jed Rakoff delivered the latest ruling in the high profile case on June 23, following a jury's finding in February that Mason Rothschild had infringed the French fashion brand’s trademark rights covered in its luxury ‘Birkin’ handbags.
The landmark trial was the first to examine how NFTs should be treated according to existing legal doctrine.
After a nine-day trial, an eight-person civil jury unanimously found that Rothschild had purposely sought to confuse consumers into believing that his NFTs, labelled ‘MetaBirkins’, and his associated website, ‘metabirkins.com’, were affiliated with Hermès’ marks.
Last Friday’s opinion addressed the post-trial motions the parties filed following the jury’s verdict.
Hermès makes seven requests
Hermès applied for a permanent injunction, arguing that Rothschild “continues to promote the sale of the MetaBirkins NFTs “while also seeking to collect a royalty for these sales”.
His efforts, according to the luxury brand, include promoting the MetaBirkins NFTs on social media platforms and continuing to list the NFTs for sale on different marketplaces.
In response, the fashion house asked the court to order Rothschild to do the following seven things. First, to discontinue his use of the ‘Birkin’ marks and generally refrain from misleading the public about an association between his NFT project and Hermès.
Second, to transfer the metabirkins.com domain name and related social media accounts featuring the Birkin mark to Hermès. Third, to transfer any MetaBirkins NFTs in his possession, including the smart contracts associated with each NFT, to a cryptocurrency wallet designated by Hermès.
Fourth, to notify Hermès of any income received from the MetaBirkins NFTs and transfer that income to Hermès. Fifth, to notify anyone who purchased a MetaBirkins NFT of the relief described in the permanent injunction—assuming one is issued.
Sixth, to file a declaration confirming his compliance with the permanent injunction within 31 days of the court’s entry of its order. And seventh, to preserve documents that relate to this lawsuit.
Hermès prevailed on six counts—including, most crucially, the injunction request—after the judge opined that Hermès had proved that Rothschild’s ongoing conduct would inflict “irreparable injury on it, absent injunctive relief”.
In a highly critical summation, Rakoff said that the “defendant's entire scheme here was to defraud consumers into believing, by his use of variations on Hermès’ trademarks, that Hermès was endorsing his lucrative MetaBirkins NFTs”.
Rothschild keeps NFTs and smart contracts
Notably, however, the court declined to order that Rothschild transfer any MetaBirkins NFTs in his possession, including his smart contracts, to Hermès—in order to be destroyed.
Rakoff conceded that: “It is true that, where there is a significant and ongoing risk of irreparable harm to the plaintiff, courts have sometimes exercised their powers to ‘order that all [materials] in the possession of the defendant [that] bear[] the registered mark’ to be ‘delivered up and destroyed’.”
But he went on to say that, “several factors” make this remedy both “unnecessary and potentially unwise”.
“To begin with, the court has already enjoined the defendant and associated parties from further infringement, including the collection of any royalties from the NFTs that have already been purchased.
Adding that because MetaBirkins NFTs are “at least in some respects works of art”, the court, out “of an abundance of caution” would enter a narrower injunction “that would remedy continued consumer confusion while avoiding any potential constitutional problems”.
For his part, Rothschild had asked that the court rule in his favour, or alternatively, to order a new trial.
In a separate motion, he also requested leave to interview the foreperson of the jury and up to four other jurors in light of what he claimed to be “the substantial possibility that the jurors considered material, prejudicial, and erroneous information outside the record in reaching their verdict”.
No First Amendment shield
But Rakoff dismissed the first motion, which argued that his First Amendment rights would be violated by an injunction.
This argument, said the judge, was at odds both with the jury’s determination that Hermès proved that Rothschild had intentionally waived his First Amendment protection under the Rogers test and with Second Circuit case law.
“Nothing in the First Amendment insulates him from liability for such a scheme,” concluded the judge.
He was equally dismissive of Rothschild’s claims of Hermès’ “bad faith” and “unclean hands”, stating that they were unsupported by any “persuasive” evidence.
“For the most part, Rothschild’s ‘evidence’ of bad faith consists of minor misstatements by Hermès’ witnesses that were corrected soon after,” Rakoff noted.
The judge went on to say that Rothschild’s final motion is “perhaps his most frivolous”, contending that the court finds the defendant’s speculation about the meaning of a juror’s post-trial statements on a social media platform as “totally unpersuasive”.
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