Hermes Held Another Trial On Trademark Infringement

Recently, the artist Mason Rothschild held another hearing with Hermes in the Federal Court of New York on the trademark infringement case. The NFT infringement case that lasted more than one year will usher in the final verdict.

This is also the first NFT related case to be brought to the court for discussion after the fire of the NFT Metauniverse concept. This case also brings out a series of problems related to it. How does IP protect its rights in the meta universe? Where is the artistic boundary of digital collections?

MetaBirkins VS Platinum Bag

On January 30, Hermes filed a lawsuit against MetaBirkins NFT creator artist Mason Rothschild for trademark infringement in the South District of New York.

This dispute was initially initiated by Hermes in January 2022, when Mason Rothschild created and released a series of MetaBirkins inspired by Hermes' iconic Birkin package online, and soon gained high popularity in the "Metauniverse" digital world.

MetaBirkins NFT series is a collection of 100 NFT Birkin packages covered with artificial furs of various colors and designs. It is understood that MetaBirkins NFT will appear at Art Basel in 2021.

In December 21, the NFT was launched on the trading market. According to the announcement on MetaBirkins' official Twitter, the trading volume of MetaBirkins reached 150 ETH ($600000) within 48 hours of its launch. Later, the auction price even reached $46000, more expensive than a real Birkin bag.

One month after the official release of MetaBirkins, Hermes sent a letter to the artist, claiming that he infringed his federally registered trademark by selling NFT works called MetaBirkins. Rothschild also posted a reply on MetaBirkins' social account, saying that his creative rights were protected by law.

Later, Hermes filed an appeal against Mason Rothschild, accusing him of infringing federal and common law trademarks, falsely designating the country of origin, trademark dilution, domain name rush registration, and damaging business reputation and dilution according to the General Business Act of New York, and seeking monetary compensation, including the profits he obtained from selling NFT, and the prohibition against his further use of his trademark.

In the 47 page complaint, Hermes believed that the MetaBirkins NFT created by Mason Rothschild infringed the logo of the brand Birkin package. Birkin bag is the most classic and popular bag of Hermes brand.

In the documents Hermes submitted to the court, it was also said that the Metabirkins NFT series improperly used the Birkin trademark, which misled consumers and gave them the impression that Hermes supported the series.

In response to these allegations, Mason Rothschild filed a motion of rejection last March. His core point is that according to the First Amendment, he should be allowed to create art according to his interpretation of the world around him. His original intention of creating these controversial NFT works was to design and produce an art project that reflected the then popular "no fur" initiative in the fashion industry and created the same value for digital handbags, He wanted to see if digital images could create an illusion equivalent to a physical product.

However, the subsequent rejection, accompanied by the gradual progress of this case, may be one of the cases that the court will lay the foundation for how to deal with the trademark law related to NFT in the future.

After Hermes filed a lawsuit against Mason Rothschild, the auction price of MetaBirkins NFT also plummeted from a high of $46000 to about $3600.

After Hermes informed OpenSea of its trademark problem, MetaBirkins NFT was finally taken off the shelves in OpenSea. However, according to the official Twitter of MetaBirkins, it is still sold on other trading platforms.

Both sides can't argue

In addition to the controversy over money income, there are many discussions about the development process of this art project, how it is promoted, resold, named, and more various issues discussed by three key witnesses, including the ambiguous relationship between art, fashion and technology. Just like the mathematical geometry formula, the relationship between the changes in different combinations and intellectual property rights and the Constitution brings different results.

Hermes lawyers and executives claimed that some consumers mistakenly believed that MetaBirkins originated from Herm è s and that its brand had been diluted. However, Mason Rothschild's legal team believes that his works and artistic expression are protected by the * * * amendment. MetaBirkins is a two-dimensional digital art, rather than a three-dimensional wearable device oriented to the meta universe. But then an article by Rothschild was taken out, in which he said MetaBirkins had "technically prepared for the metauniverse".

The two sides also repeatedly stressed how indispensable the developer Mark Design is in the process of making MetaBirkins. When MetaBirkins was generated in November 2021, he did not know how to use Houdini, a 3D production software. The definition of the use of 2D and 3D in the digital world will also be a focus of debate in the future of the case.

Mason Rothschild and his lawyers have always believed that his artistic expression should be protected by the * * * amendment. MetaBirkins is ultimately two-dimensional works, rather than three-dimensional handbags that can be used in the metauniverse or real life. In the digital world, they can be hung on the wall like paintings.

Rothschild and his team also tried to find the biographer of Andy Warhol, Dr. Blake Gopnik, who came to the scene to testify, and compared MetaBirkins' creation with Andy Warhol's Campbell's tomato can work. The latter was also not authorized by the brand, but was subsequently opposed by Hermes.

There are also many arguments about MetaBirkins' "improvement" and "inhibition" of demand in the digital market, because there were many other products inspired by Hermes in the same period, such as Tom Sachs and Tyler Shields mentioned by Rothschild.

Impact on nft industry

From the end of 2021 to the beginning of this year, the two sides have continuously put forward motions for modification, and the definition of NFT works and the positioning of the brand range in related fields have gone through multiple rounds of refinement, As Felicia Boyd, the intellectual property brand leader of Norton Rose Fulbright US LLP, said in an interview, "We are at the critical moment of trademark law, * * * amendment and technological change. These factors have come together in the past few years, causing a large number of cases... The legal teams of both sides are very skilled, and they have prepared for long-term review."

The fact that Hermes has been in court all the way may have sent a clear signal to the NFT art world that adding Hermes elements to their works may cause them legal trouble. Since the beginning of the epidemic, the NFT field has seen explosive growth, but with the run and collapse of the cryptocurrency market, the field entered a calm period in the second half of last year.

For the case of Hermes and MetaBirkin NFT, many lawyers and intellectual property experts also continue to pay attention, believing that the case may have an impact on the NFT industry.

Laura Lamansky is a partner of Michael Best&Friedrich LLP Law Firm. She believes that this case is a "major turning point for Web3 and digital goods", and that the trial may have an impact on the future of the NFT industry. This will further show you the enforceability of real world trademarks in the digital world, and the extension of brand rights to their trademarks or products in the digital space.

The wave of litigation has been impacting the NFT space, and there are many cases about copyright issues. Michael Kasdan, a blockchain lawyer, believes that the case is only a local court case in the end, but it is also an interesting case.

Since the NFT boom, brands and companies have been constantly cracking down on NFT projects that infringe copyright, intellectual property rights and trademarks. For example, on February 4, 2022, Nike filed a trademark infringement lawsuit against StockX, because it is said that the online dealer of StockX manufactured NFT similar to Nike sneakers.

In December 2022, Smart Baokemeng accused Kotiota Studio of infringement. Kotiota Studios has been accused of using official fictional characters to promote their "Fairy Baoke Dream World" game.

This trial of Hermes against MetaBirkin NFT may lay the foundation for how intellectual property can be applied to digital assets and NFT world.

As more and more luxury brands enter the metauniverse and launch their respective NFT projects, we can also more clearly define the court's definition of how IP can safeguard its rights in the metauniverse, and the balance between "artistic boundaries" and "artistic expression" of digital collections from this trial.