Hermès proposes to block Metabirkin NFT sales after the trial
Rothschild has until March 10 to respond to the motion and is expected to file it by Friday.
“As plaintiffs, Hermès may first submit its argument. This case is far from over, Rhett O Millsaps II, legal counsel for Rothschild, said in a statement. “This latest filing is a gross overreach by Hermès and an attempt to punish Rothschild because they don’t like his art, but what’s new? Rothschild will respond in court in due course.” Hermès did not respond to a request for comment.
Mark Sommers, partner at Finnegan, identifies the four factors Hermès must prove to obtain the injunction: whether Hermès was irreparably harmed by Rothschild’s actions; whether monetary compensation is insufficient to compensate for the alleged damage suffered by Hermès; if the damage to Hermès without an injunction outweighs the damage to Rothschild, an injunction should issue, and vice versa; and whether the public would be “distributed” by a permanent injunction.
NFT Implications
The proposed permanent injunction highlights risks for both buyers and sellers of NFTs, says Trexler. “Part of the appeal of NFTs as an investment product is that it is safe, but if granted, the injunction would show that NFTs are indeed vulnerable to attack by a court,” he explains.
It also raises questions for NFT artists whose existing work could potentially infringe IP, says Elan. “What should the artist do to mitigate potential damages arising from the infringement? Should it reach the IP owner? Should it set aside all royalties received? Should it contact the buyer(s) of the NFT to prevent further secondary sales?” The scope of the injunction may provide some answers.
The proposal should also give marketplaces pause, says Elan, as they do not want to be caught in the crossfire. “The last thing an NFT marketplace wants to deal with is a claim by a brand that it was complicit in the alleged infringement because it failed to remove an allegedly infringing NFT,” he says.
Should the court grant Hermès’ request, the implications would be small, Sommers says, since parties who succeed before a jury tend to succeed in receiving permanent injunctions. The damage is less about monetary loss than loss of brand value (in this case the Birkin brand), he explains. The injunction, which would stop Rothschild from promoting the Metabirkins NFTs, is a way for Hermès to double down and “make up for this loss of value”, he says.
A denial can actually be more disturbing, says Sommer, when it comes to the implications. If the court denies Hermès’ request, it could signal to NFT creators that they can continue to exploit valuable trademarks even after being found to infringe that trademark — “as long as some minimal damages are awarded to the trademark owner” (which was the case with the 133 000 dollars awarded to Hermès), warns Sommers. “The trademark owner would then be left to sue again, which could create an unproductive cycle of litigation between brand owners and creators.”
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