Hermes Court drops Landmark NFT trademark ruling
On Wednesday, our legal landscape was handed a groundbreaking decision in favor of Hermès, in the extremely heated battle between the luxury fashion house and artist Mason Rothschild over an allegedly infringing NFT collection known as ‘MetaBirkins.’
After a year of back-and-forth litigation, the court revealed the nine-member jury decision, which held Rothschild liable for trademark infringement with respect to his MetaBirkins NFT collection, in favor of Hermès.
If there is anything to take away from this case, it is that The jury did NOT decide that NFTs are not artdespite what much of the media coverage has already depicted and misunderstood.
Rather, we have just witnessed the first ever trademark trial involving an NFT, where the jury was given a heavy burden – to decide how far “artistic expression” goes in this particular scenario, establishing a precedent that will now be used in cases involving consumer products, digital art and issues centered around an already established trademark.
“Take nine people off the street right now and ask them to tell you what art is, but the kicker is whatever they say will become the undisputed truth. That’s what happened today. A multi-billion dollar luxury fashion house that says they “care” about art and artists, but feel they have the right to choose what art IS and who IS an artist. Not because of what they make, but because their resume doesn’t scream artist with a pedigree from a world-class art school. That’s what happened today. A broken legal system that won’t let an art expert talk about art, but lets economists talk about it. That’s what happened today. What happened today was wrong. What happened today will continue to happen if we do not continue to fight. This is far from over”Rothschild said in a statement shortly after the verdict was handed down.
If you’re just coming to this matter, let’s do a quick recap.
Last January, French fashion house Hermès International (“Hermès”) sued artist Mason Rothschild for trademark infringement, alleging that his MetaBirkins NFT project actively misled consumers into believing it was associated with Hermès’ goodwill and likeness.
Hermès, whose origins date back to as early as 1837, is a world-renowned luxury designer and manufacturer of high-quality handbags known as BIRKIN bags. The first Birkin bag was made in 1984 and sold in the US in 1986.
These coveted Birkin bags are notoriously expensive and difficult to obtain unless you have a relationship with a sales representative, establish a purchase history with the fashion house, and/or demonstrate your knowledge of the brand over time.
MetaBirkins, a collection of 100 NFT Birkin bags covered in faux fur in a variety of colors and designs, has reportedly brought in billions of dollars for Rothschild, who Hermès believes he has unfairly profited from.
The highly heated trial began on January 30th of this year in the Southern District of New York, forcing the court to consider trademark law through an entirely new lens for the very first time as it relates to digital collectibles (NFTs), consumer products, and the First Amendment.
Hermès’ arguments
In its first 47-page complaint, Hermès claimed that Rothschild’s MetaBirkins infringed on the luxury brand’s well-established, historic Birkin brand.
The argument that MetaBirkins only served to cause consumer confusion would create a false association between the two companies, as the strength of the Birkin brand dates back to the 1980s. In addition, it said that Rothschild was never authorized to use its mark in the course of trade and as a result Rothschild could enjoy a financial gain and profit from the unauthorized use of the Birkin mark.
Rothschild’s arguments
Throughout the case, Rothschild continued to argue that his MetaBirkins NFTs were protected under the First Amendment of the US Constitution, comparing his digital artwork to Andy Warhol’s style exhibited in his iconic 1961-1962 series of Campbell’s soup cans.
In particular, Rothschild asserted a defense of fair use under the First Amendment—that what he has done with MetaBirkins is merely “selling the expression” of the Birkin bag, rather than trying to pass the artwork off as affiliated with Hermès in any way.
And that’s where Rothschild, by and through counsel, based the crux of their case—analyzing the MetaBirkins as an “artistic expression” of the Birkin bag, which would fail below the landmark Rogers test.
Throughout the pleadings, Rothschild explained that the MetaBirkin NFTs were works of art that commented “on the animal cruelty inherent in Hermès’ production of its ultra-expensive leather bags,” and that his MetaBirkin collection was “not handbags” and “carr.”[ied] nothing but opinion” when looking for leather options.
He wanted the court to recognize an artist’s “general freedom to choose the subjects they take up” and the ability to “depict objects that exist in the world as they see them.”
Last May, the court rejected a motion to dismiss filed two months earlier, allowing the Hermès lawsuit to move forward.
What is legal?
In cases like these involving claims of trademark infringement, Rogers test is most often used. In the landmark SCOTUS case, Rogers v. Grimaldi (“Rogers”), the court held that the use of an established trademark in an artistic work can only be asserted if the use of the mark:
- Hair no “artistic relevance” to the underlying work
OR
- Explicitly misleading as to the source of the content of the work.
While most courts require the second element of Rogers to consist of an “overt claim” (something extra that tips the scale), the Ninth Circuit has continued to hold that “the use of a mark alone can explicitly mislead consumers about a product’s source if consumers would ordinarily identify the source by the mark itself.”
A federal judge in California is pending Yuga Labs, Inc. v. Ryder Ripps case previously held in a Dec. 16 order that the Ninth Circuit “only applies Rogers test when ‘artistic expression is at issue'” and requires defendants such as Ripps and Rothschild to create a “threshold that shows that [their] allegedly infringing use is part of an expressive work protected by the First Amendment.”
The landmark decision
During the year-long trial, a blockchain expert testified that at the time Rothschild had earned about 55.2 ETH (about $87,700 USD as of press time) from the sale of MetaBirkin NFTs.
However, there is an argument that Rothschild’s last chance to really capture the jury was damaged by a last-minute setback on the first day of the trial, when the court ruled that a key expert witness for Rothschild was not allowed to testify in front of the jury.
That expert witness was famed art critic Blake Gopnik, who wrote Warhol’s 2020 biography. Hermès had argued in his court documents that Gopnik should not be allowed to testify because his expertise in art history was not based on reliable data or a clear methodology – and that anything he would talk about would be based on matters of public record.
Wednesday’s ruling awarded Hermès US$133,000 in damages and found that Rothschild’s MetaBirkins digital collectibles were not considered “protected speech” under the First Amendment – a landmark ruling.
And one that is far from over, according to Rothschild.
“Great day for big brands. Terrible Day for Artists and the First Amendment” said Rothschild general counsel Rhett O. Millsaps II.
Next up: Yuga Labs v. Ryder Ripps
In other news, the second-hottest legal battle involving Yuga Labs and California street artist Ryder Ripps handed down a ruling in one of the two lawsuits Yuga has brought to court – specifically RR/BAYC developer Thomas Lehman.
Read about Yuga’s showdown with Lehman and why there may be something more problematic at stake. The original lawsuit against Ripps is still ongoing and will also establish the second-ever ruling on trademark infringement and digital collectibles.
Other active cases in litigation focusing on NFTs and intellectual property law include Nike v. StockX and Jack Daniel’s Properties v. VIP Productswhich collectively will help expand the parameters first established here at Hermès.
For more Web3 related news and the original source of this article, please visit Hypemoon.
