The Convergence of Trademarking, NFTs & Luxury Brands in a landmark decision by a New York Jury
This article discusses a landmark case from January 2023 which is a first of its kind which incorporates various legal concepts such as NFTs and Intellectual Property in relation to luxury brands.
Every year, women flock to the luxury capital, Paris to secure their dream bag- the Birkin named after iconic movie star Jane Birkin. There are a plethora of tutorials on YouTube that provides Birkin enthusiasts with a step by step guide on being offered a Birkin by a Hermes Sales Associate. However, some would rather own a Meta Birkin which costs roughly the same amount as a Birkin...
The case revolves around Mason Rothschild, the founder of Gasoline, a self-proclaimed "disruptive, creative studio," who created the virtual recreation of a prestigious Birkin bag known as the 'Metabirkin.' These NFTs were being sold for prices ranging from £10,000 to £52,000, as opposed to the starting price of an actual Birkin bag, which begins at £32,000 and can reach seven figures for special leather editions.
The conflict between Rothschild and Hermes, the renowned luxury brand, emerged in the last quarter of 2021 when Hermes filed a claim against Rothschild and Opensea, leading to the removal of the Metabirkins due to intellectual property infringement. However, the MetaBirkins company retaliated by arguing that Hermes' actions undermined the integrity of art and artistic freedom. This triggered a series of exchanges between the two parties with their day in court arriving in February 2023. Rothschild’s attempted to assert that his NFTs are works of art protected by the first amendment. The judge used the Rogers v Grimaldi test where the jury was advised by Jude Rakoff to decide if (i) whether the trademark use in an expressive work is artistically relevant to the underlying work, and (ii) if it is, whether it is explicitly misleading as to the source or content of the work.
The New York jury ruled that Rothschild had indeed violated Hermes' trademark, resulting in a $133,000 award for the French fashion house, however, the jury accepted the NFTs as works of artistic expression.
The jury decided on this case swiftly within a day indicating a lack of varying opinions on the matter within the jury. Some experts presume that the jury’s decision was due to the fact that the MetaBirkins was created with the aim of being profitable.
“We do not yet know what pushed the jury over to Hermès side. But one issue that they likely weighed was evidence indicating that Rothschild launched the MetaBirkins NFTs as a commercial venture,” more than an art project” – Michelle Cooke, ArentFox Schiff LLP
Another relevant case that can be cited in relation to this topic is Juventus F.C v. Blockeras s.r.l., No. 32072/2022, where a judge in Rome ruled in favour of the Juventus FC brand, establishing that the NFT creator had indeed infringed upon their trademark. It is worth noting that over the past year, there have been two jurisdictions that have rendered decisions in favour of the brands. It is understandable that the court system takes such actions to safeguard the overall health of the economy. This raises the question of when the justice system will perceive the digital realm of NFTs as an integral part of the broader economy within their jurisdiction.
Implications
This case is crucial to anyone in the NFT, digital art and intellectual property sector for lawyers and artists alike due to it setting a strong international precedent as the first of its kind. The decision of this case provides luxury brands and other corporations with strong support. This is crucial for luxury brands that base their core values on exclusivity. The Hermes Birkin is a piece of clothing that has become one of the most sought-after bags that many are unable to buy due to the limited amount created each year. Therefore, Hermes strong and tactical crackdown of the Metabirkins is reasonable. Many brands are aiming to connect with a new audience by entering the digital market, therefore this decision from this case allows them to ensure their exclusivity in the physical and digital world.
However, as Rothschild rightly points out, such a decision has the potential to hinder artistic integrity. Art serves as a means of self-expression and has increasingly become a platform for the exchange of information on social issues. It is concerning that these aspects could be curtailed. Rothschild drew a parallel between his Metabirkins concept and Andy Warhol's use of the Campbell's soup can in his iconic artworks, highlighting the transformative nature of art. The contemporary art world would have a significantly different landscape if, back in 1962, Campbell had taken legal action against Warhol for trademark infringement regarding the iconic Campbell Soup can.
These cases mark the beginning of a series of legal battles at the intersection of brands, trademarks, and NFTs. It is anticipated that numerous similar cases will arise in different jurisdictions over the next few years.
Advice
One would anticipate the need for additional legal clarification in this realm. Perhaps the establishment of distinct categories for different types of NFTs could aid in determining whether they constitute artistic expression or trademark infringement. However, until such clarifications are made, it remains a complex and uncertain landscape. Therefore, an important piece of advice for NFT artists at this stage is to exercise caution when incorporating brands and logos into their digital art, unless they are prepared to fight it out in court.
Hermes Int'l v. Rothschild, 22-cv-384 (JSR)
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