NFTs are an especially new technology, and currently go quite underregulated; it was previously unclear as to how much weight a real-world trade mark carried in the digital realm. The Hermès Int’l v. Rothschild case offers some certainty in this developing area of law and a greater degree of clarity in the Web3 space.
Within the hallowed halls of fashion accessories, the Hermés Birkin retains its own special niche. Initially designed in 1984 for young wealthy mothers, the bag has since been coveted as a powerful symbol of exclusivity and social status. Digital artist Mason Rothschild (real name Sonny Estival) released his own line of Birkins, or, rather, MetaBirkins, in December 2021.
Hermés, however, were not impressed. As Rothschild revealed via an open letter on the @birkinbags Instagram page, the French fashion label had issued him with a cease-and-desist letter. Alleging that the MetaBirkins were “a playful abstraction of an existing fashion-culture landmark… akin to selling… physical art prints,” Rothschild apologised but nevertheless castigated Hermés’ apparent failure to follow the “moving tide of innovation and evolution.” He refused to pull the MetaBirkins from the digital market.
This collection of 100 digital handbags released by Rothschild are an example of what is a known as an NFT. These non-fungible digital tokens use the blockchain technology to ensure that they are unique and unchangeable, existing solely in the virtual realm. Often, they are purchased using cryptocurrencies, which themselves derive their value from their exchange rate with real-world currencies.
In January 2022, Hermés filed suit against Rothschild, alleging that his MetaBirkin series “simply a swindler” who “intentionally misled consumers into believing Hermés was backing… [his] products”. Ironically, the court were faced with many of the same questions that were being addressed in 1988, just months before Rogers v Grimaldi was even decided: “What is art, and can it be legislated?”.
Ultimately, the court sided with Hermés: They were granted their request for a permanent injunction, and Rothschild was denied both a judgment of law in his favour and a retrial. Rothschild was barred from using Birkin marks, in order to prevent the general public from being mislead as to the source of the MetaBirkins. Additionally, his www.metabirkins.com domain was found to have constituted cyber-squatting, which is the unauthorised use of domain names that are indistinguishable from pre-existing trade marks. Furthermore, Rothschild was ordered to disgorge any profits he derived from the MetaBirkins NFTs since the beginning of trial to the present day, on top of $133,000 in damages owed to Hermés.
Free Speech and Protecting IP Rights
It appears there is something of a legal tension between the protection of trade marks and the safeguarding of (American First Amendment) free speech rights. This challenge is complicated further by Rothschild’s efforts to blur the line between artistic expression and commercial product within a sprawling digital marketplace.
In this debate around the distinction between protected artwork and digital appropriation, many drew comparisons between Rothschild’s MetaBirkins and Warhol’s Campell’s Soup cans. Art historian Blake Gopnik contends that both artists practise within the “business art” tradition, which seeks to erode the border between artmaking and pure commerce. Nevertheless, Judge Jed Rakoff did not share his view that the “MetaBirkins positively obscure their connection to the [Hermés] brand”. Rather, the MetaBirkins did not “based on reliable data or a clear methodology“.
Perhaps the greatest takeaway from this MetaBirkin case is that physical or real-world trade mark rights can extend into the digital realm. Despite the challenges inherent to the Wild West of the World Wide Web, Hermès Int’l v. Rothschild provides clear assurance that intellectual property can still be safeguarded.