Artist Mason Rothschild was ordered to pay Maison Hermès International US$133,000 this month, after a New York jury rejected his defence of freedom of expression to find instead that his 'MetaBirkin' NFT infringed the fashion house's trademark rights. Clothilde Kerbrat discusses the metaverse trademark infringement ruling and why it sets an important precedent for the enforcement of IP rights in the digital age.
In December 2021, the US artist Mason Rothschild created a collection of non-fungible tokens (NFTs) bearing the image of the iconic Birkin bag by Hermès. Those NFTs – which he called 'MetaBirkins' – were sold via a dedicated website (metabirkin.com) to around a hundred buyers and transferred via the blockchain. Each NFT was associated with a unique image of the bag. Such was his success that by June 2022, the artist had already sold a hundred of them for a total of more than a million US dollars.
Metaverse trademark infringement: Hermès argues damage in race for NFTs
After its formal cease and desist letters were not successful, Hermès International and Hermès of Paris, Inc. brought an action for interim relief against Rothschild before a New York federal court on 14 January 2022. The luxury fashion house accused the artist of trademark infringement, dilution, unfair competition and cybersquatting, and requested a preliminary injunction to stop the sale of these NFTs, as well as damages. In addition, Hermès argued that the sale of the MetaBirkin NFTs had caused it a competitive disadvantage in the race to invest in the NFT market, consequently limiting its potential to make a profit.
In response, Rothschild sought to argue that Hermès' claims for trademark infringement and dilution should be dismissed on the basis that the MetaBirkins are simply works of art: "I'm not creating or selling fake Birkin bags. I'm creating artworks that depict imaginary, fur-covered Birkin bags," he said after the case was filed. "The fact that I sell the art using NFTs doesn't change the fact that it's art."
Metaverse trademark infringement: The freedom of expression argument
US case law grants works satisfying a "minimum artistic relevance threshold" enhanced protection under freedom of expression (Rogers v Grimaldi). To benefit from this protection, there must be artistic relevance in relation to the underlying work and/or it must not be explicitly misleading as to the source of the work.
The artist sought to call on this enhanced protection in his defence, adding that the artistic intention behind the MetaBirkin NFTs was to convey a message about the influence of the famous bag on modern society and to denounce the use of fur by the luxury industry. Hermès countered that the American artist was not pursuing any goal of artistic expression, but rather was seeking commercial gain.
The question as to whether Rothschild's decision to focus his work on the Birkin bag stemmed from genuine artistic expression or from an unlawful intent to profit from the famous brand proved challenging for the judges of the US District Court to answer. They chose instead to put the fate of the parties into the hands of a federal jury.
Jury sides with brand owner in metaverse trademark infringement dispute
In its 8 February 2023 verdict, the jury ultimately found Rothschild guilty of trademark infringement, dilution and cybersquatting, having been unconvinced by the artist's arguments relating to artistic freedom. Rather, the jury believed that Rothschild had knowingly sought to deceive consumers and was in reality seeking to pursue a purely financial goal. As a result, the artist was ordered to pay Maison Hermès US$133,000 in damages.
This metaverse trademark infringementdecision, among the first in the field of NFT, will undoubtedly set an important precedent for future similar cases in this field. It also underlines that the application of the First Amendment protecting freedom of expression does not exclude all liability.
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