Business and Legal Insights

Luxury fashion brand Hermès sued Mason Rothschild in January 2022 alleging that the digital images underlying the non-fungible tokens (“NFTs”) produced and sold by Rothschild depicting faux fur-covered Birkin handbags – the “MetaBirkins” – constituted trademark infringement and dilution and that Rothschild was further violating anticybersquatting laws by using a similarly infringing domain name.

According to court filings, Rothschild produced and sold one hundred MetaBirkins fetching over $1.1 million in revenues and had plans to make as many as nine hundred MetaBirkins NFTs. Throughout the lawsuit, Rothschild maintained that his use of MetaBirkins for the NFT collection was protected under the First Amendment and therefore not a violation of Hermès’ trademark rights. We first wrote about the case here.

While the court previously found that the MetaBirkins NFTs could constitute a form of artistic expression, a federal jury disagreed. The jury verdict rendered last week in favor of Hermès found Rothschild is liable for trademark infringement, trademark dilution, and for cybersquatting. The jury also found that the First Amendment did not protect Rothschild from liability and awarded Hermès a total of $133,000 in damages on its claims. A copy of the jury’s verdict is available here.

This case, at the intersection of trademark law and the First Amendment, and the jury’s verdict, are among the first of its kind, but will not be the last to consider issues of infringement in connection with NFTs.

After the verdict, Rothschild’s legal team reportedly told the Financial Times the fight is “far from over” against Hermès “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.”[1] But the jury’s verdict is not inconsistent with the relevant precedent analyzing the extent of First Amendment protections against the interests of a brand owner’s trademark rights under the Lanham Act. See Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989) (“First Amendment concerns do not insulate titles of artistic works from all Lanham Act claims.”).

The takeaway here is that creators should obtain appropriate legal advice before naming and promoting their NFTs and proceed with caution if their work is a creative expression based on a preexisting-work or brand.  

The case is Hermes International et al v. Rothschild, Case No. 1-22-cv-00384, in the Southern District of New York.

[1] https://www.forbes.com.au/news/innovation/hermes-wins-trademark-lawsuit-against-furry-metabirkins-nfts-in-first-of-its-kind-trial/