What the Hermès MetaBirkins win means for the NFT market – SURFACE

The French label wins a lawsuit against the creator of MetaBirkin’s NFTs, with a jury ruling that the virtual bags are not protected by the First Amendment. The case is likely to affect how fashion brands approach their entry into the “Wild West” metaverse.

In the rarefied world of fashion, the Hermes Birkin bag is an exceptionally rare product – and at one time it could have reigned as the world’s rarest bag. Named after actress Jane Birkin, the handbags are painstakingly handcrafted by the luxury French brand’s specialist artisans over an agonizing 18-hour process. The ten-figure bags are exceptionally hard to come by and are known to have year-long waiting lists, sometimes fetching nearly 23 times their retail value at the secondary market.

So Hermes executives watched in horror as unauthorized digital versions of the coveted bag circulated on social media following 2021’s well-documented surge in NFTs. At first it was scary”Baby Birkin,” a 3D animation of a translucent handbag pregnant with a fetus created by artist Eric Ramirez and streetwear entrepreneur Mason Rothschild. The latter soon introduced 100 additional MetaBirkin NFTs–some equipped with giant tusks, others swathed in shaggy Grinch fur and emblazoned with smiley emojis–priced at $450 each.

Hermes quickly sued Rothschild, claiming that MetaBirkins was watering down the French maison’s trademark, causing confusion in the market and profiting from the appeal of the Hermes brand. Rothschild denied that his MetaBirkins are original works of art — in this case, digital assets sold on the blockchain — and shielded by the First Amendment. “This is a battle for ownership of luxury in the metaverse,” Susan Scafidi, academic director of the Fashion Law Institute at Fordham University, told Business of Fashion in an article called “Why Hermes probably can’t stop the MetaBirkin.”

It turns out Hermes can. A nine-person federal jury determined yesterday that Rothschild violated on the label’s trademark rights and awarded Hermes $133,000 in damages. The case concluded that his NFTs were not protected speech, a ruling that will likely affect how digital artists use trademarks in their work. The closely watched trial is the first to examine how NFTs can be viewed through the lens of intellectual property rights, and the findings are expected to guide how companies and creators approach art and branding in the virtual world.

It’s bad news for the struggling NFT market, which at its peak outperformed 40 billion dollars in value, but fell by the wayside 97 percent over the past year, illustrates the economic boom-and-bust cycle that has come to define cryptocurrencies. The NFT space often tries to adapt to the creative economy, but the reality now seems scarier – and will likely govern how legal experts approach trademark infringement cases in the future. Yuga Labs, creator of Bored Ape Yacht Club, recently submitted one infringement action against artist Ryder Ripps, who claimed the charges attacked his right to free speech.

“[This] will be a very meaningful cause for the fashion industry,” says Michelle Cooke, a trademark attorney not involved in the case, who predicted the case will be debated for years to come. “Their ability to control their brands in these digital spaces as much as they do in the real world will have significant implications for how much money they put into these new environments and how they enforce and protect their rights.”

Some fashion industry insiders found Hermes’ preoccupation with the lawsuit puzzling, especially when others third party projects involving Birkin has not set off any alarms. But the label argued that offering virtual goods falls within its “natural expansion zone“, especially as rival fashion brands like Gucci, Nike and Balenciaga continue to grow their metaverse footprint.