A New York court has found that Mason Rothschild’s sale of NFTs named MetaBirkins depicting the iconic Birkin handbag model, as well as his use of the metabirkin.com domain name, infringed trademark rights held by Hermès; the ruling issued on 8 February 2023 has awarded the French fashion house 133,000 USD in damages.

The MetaBirkin case is among the first in which a court is asked to rule on whether NFTs can legitimately include images without the consent of the holder of rights on the image itself, and on the limits of the right to use a third party’s trademark in a work of art.

The United States Southern District Court of New York (“the court” in the following) had already issued an order on the case in May 2022, followed by a court decision dated 8 February 2023.

Facts in the case

MetaBirkins created by Mason Rothschild – images from looksrare.org

Hermès brought proceedings against Mason Rothschild after the artist created and sold, without the consent of Hermès, a number of NFTs of digital images reproducing the Birkin bag, an iconic model for which the French maison owns trademark and trade dress rights.

The artist invoked case law that has extended the protection of freedom of expression enshrined in the First amendment of the United States Constitution to “expressive” works of art reproducing registered trademarks owned by third parties.

The decision

The court’s jury was tasked with deciding whether Mason Rothschild, in advertising and selling online the MetaBirkin NFTs, had infringed intellectual property rights held by Hermès – causing, inter alia, the dilution of the Birkin trademark – as well as whether protection under the First amendment was applicable.

In its ruling of 8 February 2023 the court held Mason Rothschild liable for trademark infringement and trademark dilution as well as for cybersquatting with regard to the registration and use of the metabirkin.com domain name.

The court held that MetaBirkin NFTs made reference to an easily recognisable handbag model, and that buyers had perceived the NFTs as content connected with the renowned handbag sold by Hermès.

For the same reason the decision ruled out, based on case law, that First amendment protection was applicable, without evaluating the merit of whether the MetaBirkins possessed the expressive character which would qualify them as works of art.

Material evidence and testimonies were presented during the trial proving that in representing his MetaBirkin project to investors and partners Mason Rothschild had described himself as a “marketing strategist”, and the production and sale of MetaBirkin NFTs as “a gold mine” thanks to the exploitation of the Birkin bag’s renown; according to some commentators, such elements could have weighed on the choice to consider First amendment protection inapplicable.

It should also be noted that during this trial Hermès affirmed that the MetaBirkin project had hindered its own plans to enter the NFT market.

In conclusion, Mason Rothschild has been ordered to pay Hermès 133,000 US dollars in damages, which the court found to be the profit made by the artist from the MetaBirkin project.

However this judgement may not have put an end to the dispute: Mason Rothschild has already decided to appeal before the Supreme Court, according to news published by specialised media.

Comment

The ruling of 8 February 2023 in the MetaBirkin case certainly spells good news for the fashion industry and for trademark holders in general; however, it must be noted that in this specific case

• the trademark used without the right-holder’s consent is famous
• Hermès was able to prove that it had been planning its entry into the NFT market before the disputed facts took place.

It is therefore still advisable, in any industry, for holders of trademarks that are not as well known as the Birkin one, and who could have difficulty in producing evidence of earlier plans to enter the NFT market, to put all the safeguards and monitoring activities in place that are necessary to protect trademark rights in the metaverse and elsewhere; first and foremost, trademark registrations should be extended to cover the sale of NFTs and of digital products in general.

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