So what happened?
A major NFT case was decided on February 8, 2023 as the French luxury fashion house Hermès won the MetaBirkins lawsuit against the artist, Mason Rothschild. The jury was not convinced that the artist’s MetaBirkins project, which involved non-fungible token (NFT) versions of Hermès Birkin bags, was protected under the First Amendment. The jury determined that Rothschild had infringed on Hermès’ trademark rights. NFTs have been gaining popularity in recent years, with SNL even making a skit to explain them, and this case was especially anticipated given that it was the first NFT case centered on trademark law. Previously decided NFT cases focused primarily on copyright law.
Tell me more about the MetaBirkins lawsuit
Hermès had filed suit against Rothschild for his MetaBirkins project in the U.S. District Court for the Southern District of New York on January 14, 2022 after previously having sent Rothschild a cease-and-desist letter sometime around December 2021. Rothschild stated that his MetaBirkins project was “an experiment to see if I could create that same kind of illusion that [the iconic Hermès Birkin bags have] in real life as a digital commodity” by bringing it into the metaverse. The project primarily involved digital renderings of the Birkin bag covered with fur which commanded price tags in the hundreds and thousands of dollars (with one even being resold for $47,000!).
During the trial, the jury needed to essentially determine whether Rothschild was using the project as a cash graband was free-riding on the Birkin bag reputation or whether Rothschild was using the project to provide commentary on the fashion industry. In the end, the jury took one day to deliberate and awarded Hermès $133,000 in damages after finding Rothschild liable for cybersquatting, trademark infringement, and trademark dilution. The jury found that Rothschild’s use of the Birkin bag was not protectable speech under the First Amendment. Rothschild plans on appealing the verdict.
The MetaBirkins lawsuit will be extremely influential on future NFT cases as this case is one of the few NFT cases that has been decided as others are slowly working their way through the courts.
What does this verdict mean?
There are various implications for this verdict. Some commentators speculate that this verdict is meaningful for brand owners because it indicates that courts will likely protect brands’ trademarks in the rapidly expanding digital marketplace. Others consider the verdict as a blow to the artistic legitimacy of NFT art and as a dangerous precedent because it limits the free speech rights of NFT artists. However, there is also speculation that the MetaBirkins verdict is not a blow to NFT art but rather that it is actually a narrow verdict that is not particularly weighty as far as NFTs are concerned.
The journalist, Sander Lutz, noted that the jurors needed to answer a simple question at trial: “are these items art or commerce?” Thus, when the issue is phrased as such, this could suggest that the focus of the trial was trademark law and not NFTs as an art medium per se. Additionally, it is important to remember that while the verdict may have a chilling effect on artists in the NFT space, the verdict is a federal district court decision and therefore does not have the same level of authority that a Supreme Court decision would. Regardless of the scope of the decision, the verdict of the MetaBirkins lawsuit will be extremely influential on future NFTs cases as this case is one of the few NFT cases that has been decided as others are slowly working their way through the courts. Only time will be able to tell what impact this decision will have on future NFT cases as courts interpret it.
What upcoming cases might this verdict influence?
It is highly likely that the verdict will play an important role in the Yuga Labs lawsuit against the artist, Ryder Ripps, which was filed in June 2022. Yuga Labs created the NFT collection Bored Ape Yacht Club (BAYC), and as a “conceptual art protest,” Ryder Ripps created his own collection of NFTs that are essentially copycats of Yuga Labs’ collection. Just like the MetaBirkins lawsuit, the focus is on trademark law and NFTs. No trial date is set yet.
Quick question – what will happen to the MetaBirkins NFTs now?
Kevin Mentzer, a data science professor who testified for Hermès during the trial, stated that it is up to Hermès to decide what to do with the MetaBirkins and that the company will likely remove sales of MetaBirkins from NFT marketplaces. The tricky part is that unlike infringing physical assets that can usually easily be destroyed, infringing digital assets present a tougher problem as it is difficult to destroy NFTs and difficult to prevent resales by current NFT owners.
So now what?
As the MetaBirkins lawsuit has provided some insight into the realm of trademark law and NFTs, the world now waits as upcoming NFT cases are positioned to cycle through the courts and provide more clarity on how NFTs fit into our legal framework.
Melissa Zaleski attended University of Virginia for college where she majored in biology and minored in Spanish language. In law school, Melissa is a staff member on the North Carolina Journal of Law and Technology and is a teaching assistant for the undergraduate course Environmental Law and Policy.