Hermès wins landmark lawsuit over ‘MetaBirkin’ NFTs

An artist who sold non-fungible tokens featuring digital depictions of Birkin handbags has been ordered to pay $133,000 in damages to the brand’s owner Hermès, a victory for the French luxury group in a landmark case over how US intellectual property rights are applied to digital assets.

A New York jury rendered the verdict on Wednesday following a week-long trial, in which lawyers for artist Mason Rothschild argued that he was commenting on alleged animal cruelty involved in the production of leather goods and should be protected by the right to artistic expression under the Constitution’s First Amendment.

Rothschild’s defence team compared their client’s work to that of pop artist Andy Warhol, who depicted Campbell’s soup cans and Coca-Cola bottles “in stylised but plainly recognisable form”.

However lawyers for Hermès, whose original physical Birkin bags range in price from $9,000 to $500,000, accused Rothschild of “stealing the goodwill in Hermès’ famous intellectual property to create and sell his own line of products”.

They argued that customers were likely to confuse Rothschild’s “MetaBirkin” NFTs with genuine Hermès products, and that his website URL was too similar to that of the luxury goods company.

Rothschild created the digital art collection at issue in 2021. It contained 100 fluffy Birkin bags, covered in fur. The colourful designs came amid a surge in hype about NFT technology, when many leading designer brands were looking to make their own collections.

The collection fetched more than 200 ethereum (about $790,000 at the time) in sales. Hermès complained and later sued, accusing the artist of infringing its trademark.

After deliberating for more than two days, the jury awarded Hermès $110,000 for intellectual property infringement and $23,000 for cyber squatting — using a domain name that is confusingly similar to one used by the Paris fashion house itself.

Jonathan Harris, a lawyer for Rothschild, said the decision marked a “good day for luxury brands” and a “bad day for artists”.

Hermès said that as “a house of creation, craftsmanship and authenticity which has supported artists and freedom of expression since its founding” it was “compelled to act to protect consumers and the integrity of its brand”.

However, Rothschild characterised Hermès as “a multibillion-dollar luxury fashion house who says they ‘care’ about art and artists but feel they have the right to choose what art IS and who IS an artist”.

“This is far from over,” he added.

The case has been closely followed by legal experts as well as the world’s biggest retail and luxury brands as big names including Nike, Gucci and Balenciaga venture into NFTs and the metaverse.

Luxury brands are keen to experiment with the publicity potential of new digital platforms, but have been cautious due to concerns about intellectual property rights and risks to brand image.

Gaëtan Cordier, partner at Eversheds Sutherland in Paris, said it was an “important decision” that sends a “message to NFT developers, reminding them that in the absence of specific regulations, intellectual property standards that apply in the physical world as well as on the internet remain applicable to NFTs”.