In one of the first intellectual property cases involving non-fungible tokens (NFTs), a federal jury found that the sale of “MetaBirkin” NFTs violated Hermès International SA's (“Hermès'”) rights to its “BIRKIN” trademark in Hermès International et al. v. Rothschild (S.D.N.Y. Case No. 22-CV-384 (JSR)).
Hermès is a luxury fashion company, best known for its “Birkin bag.” Hermès owns trademark rights for the Birkin name, Birkin logo, and Birkin trade dress.
Mason Rothschild created and minted a series of MetaBirkin NFTs, each consisting of an image of a “fuzzy” Birkin handbag. Rothschild sold the MetaBirkin NFTs for approximately one million dollars and claimed the NFTs were a tribute to Hermès' famous Birkin handbag.
Hermès sued Rothschild for trademark infringement, dilution, and cybersquatting. The case has drawn the attention of brand owners, artists, and intellectual property lawyers as a window into how courts will treat NFTs.
On February 2, 2023, the court denied both parties' cross motions for summary judgment, setting the case for trial. At issue in the trial was whether or not these NFTs were commodities, sold for profit, or art protected by the First Amendment.
Rothschild claimed that the MetaBirkin NFTs were “artistic experiments” subject to First Amendment protections. Rothschild attempted to establish that the MetaBirkin NFTs are entitled to the First Amendment protections, similar to those previously afforded to Andy Warhol's famous Campbell's Soup Can paintings. The attempt to establish such a connection was thwarted when the judge ruled that expert witness Blake Gopnik, art critic and author of the Andy Warhol biography Warhol, could not testify at trial.
Hermès produced pages of text messages and other evidence in support of its stance that the MetaBirkin NFTs were primarily commercial commodities. The text messages included statements from Rothschild that he was “sitting on a goldmine” and wanted to “create the same exclusivity and demand for the famous handbag.” In view of this evidence, the jury rejected Rothschild's assertion that his use of the Birkin marks constituted artistic expression shielded from liability by the First Amendment.
At trial, the jury found that Rothschild's NFTs were commodities subject to trademark laws that allow trademark owners to stop others from capitalizing on their goodwill. The jury further found that Rothschild's use of the marks was likely to cause consumer confusion as to the source of the NFTs, based on competing survey evidence. The jury awarded $133,000 in damages for Rothschild's infringement, dilution, and cybersquatting of Hermès' trademarks.
Some have speculated that this decision may have a chilling effect on the NFT market as artists feel a lack of First Amendment protection for their NFTs. Others, however, praise the decision as one that strengthens the rights of trademark owners, allowing them to enforce their rights even to works on the blockchain. While this case was the first federal jury verdict in a trademark infringement case concerning NFTs, it is unlikely to be the last, and it remains an open question as to whether lesser-known brands with a narrower scope of protection will be able to assert infringement claims based on use of a mark in connection with an NFT if the brand owner is not also in the business of minting NFTs.
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