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The backstory: French fashion brand Hermès's Birkin handbags can go for tens of thousands of dollars and have generated over a billion dollars in sales in the US alone, with more than US$100 million in just the past decade. In 2021, artist Mason Rothschild created waves in the art scene with his "MetaBirkins" collection, NFT versions of these iconic bags.
Rothschild created a set of images of 100 fur-covered bags modeled after the real Birkins as an "art project," causing a frenzy during the NFT craze. He made a whopping 200 Ethereum (roughly US$790,000) in sales on the collection. But then, luxury brand Hermès sued him last year for trademark infringement, saying that he had blocked the brand's own NFT plans. On the other hand, Rothschild argued that the NFTs were artworks making a statement about luxury goods, and they were protected under the First Amendment.
More recently: This high-profile trial was one of the first of its kind for NFTs, and everyone was curious to see how it would impact future intellectual property cases involving these digital tokens.
The development: A Manhattan jury ruled in favor of Hermès. The French fashion house argued that Rothschild violated its trademark rights, and the MetaBirkins could easily confuse consumers. The jury agreed, awarding Hermes US$133,000 in damages for trademark infringement, dilution and cybersquatting. This case will likely set a precedent for future NFT trademark disputes.
"I'm not creating or selling fake Birkin bags. I'm creating art works that depict imaginary, fur-covered Birkin bags," said Mason Rothschild in an open letter after the case was filed. "The fact that I sell the art using NFTs doesn't change the fact that it's art."
The "Metabirkins brand simply rips off Hermès's famous Birkin trademark by adding the generic prefix "meta," said the complaint from fashion brand Hermès last year.
"We're at a point in trademark law, and First Amendment law, and changes in technology that have all been coming together in an avalanche of cases in the last couple of years," said Felicia Boyd, head of IP brands at Norton Rose Fulbright US LLP, to Bloomberg. "The legal teams from both sides are very skilled, and they have teed up the issues for long-term review."
"This question is really interesting because we really need to determine exactly what NFTs are," said Gai Sher, senior counsel at Greenspoon Marder LLP. "Are they artistic expressions, or are they functional commercial products?"
"You could have a one-of-one, oil-on-canvas painting that gets sold in a gallery and no one would treat that as merchandise or as a consumer product," said Jeremy Goldman, co-chair of Frankfurt Kurnit Klein & Selz PC's blockchain technology practice group, referring to Rothschild's NFT collection. "But if you take that same painting, and you put it on posters, and you sell 100 of them, then it starts to look more like a commercial product."