French Luxury fashion brand Hermès won a lawsuit Wednesday against digital creator Mason Rothschild for violating a trademark by selling NFT “Meta Birkins.” This was the first trial in history to consider intellectual property infringement by an NFT.
Metabirkin was not officially released as an NFT by Hermès, it was created in 2021 by digital artist Mason Rothschild. At that time, it was sold as a limited edition of 100 digital Birkins at 0.1 Ethereum (approximately $450 ) and made excited the NFT market. Including 7.5% of the profit from secondary distribution NFTs, Rothschild is said to have earned about $125,000 through Metabirkin.
As a result, Hermès filed a dispute in January 2022, claiming that MetaBirkin has infringed on the brand’s trademark and weakened the dignity of Birkin. Since NFT is a new market, no laws have been established in any country, and the lawsuit filed by Hermès has attracted attention as “the first trial to consider the infringement of intellectual property rights by NFT”.
Documents filed in Manhattan federal court raised a number of legal questions about NFTs and other digital assets, as follows:
- Do digital goods infringe on real products?
- What is the difference between digital art and imitation?
- If an NFT is a code placed on the blockchain to authenticate the art of a jpeg file, can NFT and jpeg be considered the same thing? Or is it something else?
- Are NFTs commodities or works of art protected by the First Amendment to the United States Constitution?
Ultimately, the jurors ruled that “digital images are not works of art,” and that the trademark law should apply to MetaBirkin. Also, they found that the MetaBirkins did not qualify as protected art and were more like regular consumer products that infringed on the luxury house’s trademarks. As a result, Rothschild pleaded guilty to trademark infringement and was ordered to pay damages totaling $133,000, which includes estimated profits he received from the NFT sales of $110,000 and $23,000 for cybersquatting on the MetaBirkins.com domain.
Following the outcome of the trial, Rothschild posted a critical comment on his Twitter account.
“Take nine people off the street right now and ask them to tell you what art is but the kicker is whatever they say will now become the undisputed truth. That’s what happened today. A multibillion dollar luxury fashion house who says they “care” about art and artists but feel they have the the right to choose what art IS and who IS an artist. Not because of what they create but because their CV doesn’t scream artist with a pedigree from a world class art school. That’s what happened today. A broken justice system that doesn’t allow an art expert to speak on art but allows economists to speak on it. That’s what happened today. What happened today was wrong. What happened today will continue to happen if we don’t continue to fight. This is far from over.”
On his Instagram page, he also included a sketch depicting himself during the trial and several photos of the trial, along with the following comments about the future penetration of the NFT and Web3.
“I put on my big boy pants these past couple weeks. Things didn’t shake out my way but the fight is far from over. I pride myself on being early to things, web3 included, and sometimes that comes with growing pains like these. It’s early. Most people don’t understand what this is but it doesn’t mean they never will. It is my duty and the duty of other creators in this space to show them. We keep it moving. Knocked down. Not dead.”
Also, in the wake of the ruling, some digital artists involved with Web3 have spoken out against Mason, supporting and defending his claims on social media.
Although the law has not previously defined whether trademarks and intellectual property rights apply to digital art, the ruling seems to have indirectly warned digital creators that intellectual property laws should be considered enforceable on the blockchain. As prominent brands and big companies enter the Web 3, NFT industry, we can expect many counterfeit NFT collections to be launched. However, digital creators will need to think through their launch before stepping into territory that could be considered potential trademark infringement.