US Court finds in favor of Hermes in NFT Birkin stoush – Knowledge

In late 2021, artist Mason Rothschild released a collection of 100 fur-covered digital handbag NFTs called MetaBirkins. The artist also registered and used the domain name www.metabirkin.com and social media such as @metabirkins to promote MetaBirkin NFTs. The NFTs were a viral sensation.

Hermès Birkin handbags sell for tens of thousands to hundreds of thousands of dollars each and are highly sought after. Used vintage bags sell for more than retail price with rarity driving the price.

Hermès sued Rothschild for trademark infringement and dilution, misappropriation of the BIRKIN trademark, cybersquatting, false designation of origin and description, and damage to business reputation. Hermès provided a range of evidence and relied on research indicating consumer confusion between the origins of the MetaBirkin and the Birkin brand. Hermes claimed that over $1 million worth of NFTs had been traded by January 2022.

Rothschild defended his use of MetaBirkins as artwork, claiming that his MetaBirkin NFTs were “inspired by the acceleration of fashion’s ‘fur-free’ initiatives and embrace of alternative textiles” and that the disclaimer that appears at the bottom of his website: “We are not affiliated, associated , authorized, approved by, or in any way officially connected to HERMÈS, or any of its subsidiaries or its affiliates”, was sufficient to avoid confusion.

Rothschild also sought to rely on the US Constitution’s First Amendment which gave him “the right to make and sell art depicting Birkin bags, just as it gave Andy Warhol the right to make and sell art depicting Campbell’s soup cans.”

After a week-long trial before a jury in the US District Court for the Southern District of New York, the jury returned a verdict in favor of Hermès. The jury’s decision may have been influenced by the evidence pointing to the commercial nature of Rothschild’s venture. Media reports indicate that Rothschild plans to appeal the decision.

Take care and classify

While it is certainly an important victory for brand owners, it is also a reminder of the importance of considering the types of goods and services for which protection can be sought when applying to register trademarks.

For brand owners who want to sell their products in the metaverse, or for those who otherwise want to register crypto-trademarks, the 12th edition of the Nice classifications came into effect on January 1, 2023, and changes to it reflect the emergence of non-fungible tokens and virtual worlds and includes crypto-specific goods and services for trademark registrations.

Whether existing trademarks registered for physical goods or related services provide owners with protection against potential infringing use with respect to virtual goods or services must be assessed on a case-by-case basis. Here, Hermès’ rights were protected, but the company has already attempted to expand its registered trademark rights by filing an application in the United States for the mark covering NFTs and virtual goods and services, including virtual goods store services and entertainment services, namely, providing online non-downloadable virtual goods in classes 9, 35 and 41.

What is the Nice classification?

Established by the Nice Agreement in 1957, the International Classification of Goods and Services for the Purposes of the Registration of Marks (the Nice Classification) provides a standardized system for classifying the goods or services to which a registered trademark relates. The 12th edition entered into force on 1 January 2023 and is notable for its inclusion of more specific goods and services classifications relating to crypto-assets and services.

Changes to the Nice classification

The 12th edition of the Nice Classification includes the following classifications relevant to those engaged in metaverse, cryptocurrency, blockchain or NFT-based business activities:

Class 9 (which includes computer software) will include:

• downloadable computer software for managing crypto asset transactions using blockchain technology;
• downloadable digital files authenticated by non-fungible tokens [NFTs];

Class 42 (which includes the design and development of computer software) and will include

• extraction of cryptoassets / cryptomining.

IP Australia has also made changes to the classification

IP Australia adopts the Nice Classification and its own classification terms which it has also modified to include:

Class 9:

• downloadable digital wallets authenticated by non-fungible tokens [NFTs];
• downloadable digital wallets authenticated by non-fungible tokens [NFTs];

Class 35 (which includes dealer services):

• Branding services relating to digital goods authenticated by non-fungible tokens [NFTs] change;
• retail services for virtual goods;

Class 42:

• host digital platforms for minting digital goods authenticated by non-fungible tokens [NFTs]