8 February 2023TrademarksMuireann Bolger, Tom Phillips and Sarah Speight

MetaBirkins creator loses to Hermès in landmark NFT case

Jury rules self-proclaimed artist’s creations not protected by free speech | Victory for IP owners applies real-world trademark law to the virtual environment | 'This is far from over' says Mason Rothschild.

Luxury brand Hermès has prevailed against designer Mason Rothschild in a landmark case concerning non-fungible tokens (NFTs) that is likely to have a significant impact on trademark owners.

The US District Court for the Southern District of New York delivered its decision today, Wednesday, February 8, holding that the designer was liable for trademark infringement for his 'MetaBirkins' NFTs.

Lead counsel representing Rothschild, Rhett Millsaps of Lex Lumia, said in response to the verdict: "Great day for big brands. Terrible day for artists and the First Amendment."

The eagerly anticipated trial was the first to examine how NFTs should be treated according to existing intellectual property legal doctrine.

Rothschild had argued that he was protected under the First Amendment and by the Rogers v Grimaldi case.

In 1989, that case established the "Rogers test" for protecting uses of trademarks that involve intellectual freedom issues.

No protection under First Amendment

The nine-person jury ruled that Rothschild’s NFTs aren’t protected speech under the First Amendment and awarded Hermès $133,000 in damages.

In a statement, Rothschild said the ruling was the result of a "broken justice system".

“Take nine people off the street right now and ask them to tell you what art is but the kicker is whatever they say will now become the undisputed truth. That’s what happened today," he said. 

"A multibillion-dollar luxury fashion house who says they 'care' about art and artists but feel they have the right to choose what art is and who is an artist. Not because of what they create but because their CV doesn’t scream artist with a pedigree from a world class art school. That’s what happened today.

"A broken justice system that doesn’t allow an art expert to speak on art but allows economists to speak on it. That’s what happened today."

He added: "What happened today was wrong. What happened today will continue to happen if we don’t continue to fight. This is far from over.”

'Digital' handbags

Around December 2021, Rothschild created a collection of digital images, each of which depicted an image of a blurry faux-fur-covered Birkin handbag.

A month later, the French fashion house sued Rothschild for copying its Birkin handbag, inspired by actress Jane Birkin.

In May 2022, Judge Rakoff had ruled that the Rogers test applied, at least in part, to the trademark infringement analysis of Rothschild’s activities, but also held that Rothschild must face claims of trademark infringement.

Robert Freund, of Robert Freund Law in New York, told WIPR that the verdict "represents a significant victory for brand owners seeking to protect their marks in the Web3 space, especially with respect to NFTs and digital artwork".

"The jury's decision sends a message to creators that simply labelling a digital item as 'art' does not make it so—the distinction between a commercial good and an artistic expression must be carefully evaluated," he said. "Context is critical, and it's likely that more brands will be emboldened to take legal action where their marks are used in Web3 projects without their permission."

WIPR has contacted representatives for Hermès for comment.

See tomorrow for more reaction to this ruling.

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More on this story

14 February 2023   The trademark decision will shock a market built on selling digital artworks, finds Sarah Speight. Crowell & Moring | Withers & Rogers | Dickinson Wright | Knobbe Martens | Greenberg Glusker.
7 March 2023   Luxury brand says Rothschild has continued to “brazenly violate” Hermès’s IP by selling MetaBirkin NFTs | Control over smart contract is at heart of ongoing dispute | Designer has rallied support online and in media outlets.
16 March 2023   Hermès’ representatives and expert witnesses at trial “acted dishonestly at trial” | Defeated ‘artist’ insists that fashion house has tarred his reputation | Full details on renewed motion.