Last month a trademark drama revolving around stripes took place in a New York court. A few weeks have passed since that case closed, but now there is a new trial to keep an eye on. This time it is all about handbags - real ones and "non-fungible token" bags - as the Hermès Vs Mason Rothschild's MetaBirkins trial kicked off at the beginning of the week in the Southern District Court of New York. The jury trial is being overseen by U.S. District Judge Jed S. Rakoff.
As you may remember from a previous post, in May 2021 American artist Mason Rothschild (real name Sonny Estival) launched his "Baby Birkin" NFT in collaboration with Eric Ramirez. The NFT consisted in the animation of a 40-week-old fetus growing inside a transparent Hermès' Birkin bag. It was launched on the curated social and shopping platform Basic.Space and sold for about $47,000, but, in that case, the French luxury house didn't contact the authors to complain about the NFT as that was just a one-off.
In November 2021, Rothschild launched 100 "MetaBirkin" NFTs and an Instagram account linked to the project. The artist's MetaBirkins were essentially Hermès' Birkin bags reinvented in bright coloured fuzzy faux fur. Some of them were also inspired by artworks by Van Gogh, Goya, Dali, Leonardo da Vinci, Michelangelo, Hokusai, Twombly, Rothko and Maurizio Cattelan (surprisingly, Rothschild wasn't sued also by the artists he took inspiration from for his bags or by the museums where the artworks he borrowed for the MetaBirkins are preserved). The NFTs were launched and sold on the OpenSea platform.
At the beginning, Rothschild conceived them as a "tribute" to Hermès' famous design, but then he highlighted they were a commentary on fashion's history of animal cruelty and on Hermès' ultra-expensive leather handbags.
The situation soon changed and Rothschild received a cease and desist letter from Hermès. On his Instagram page the artist appealed to the First Amendment, even though OpenSea removed the MetaBirkins from its platform and Rothschild started selling them on Rarible, another NFT platform.
The saga continued with a trademark lawsuit (Hermès International et al. v. Mason Rothschild), filed by the French luxury company in January 2022. The company stated that Rothschild was refusing "to stop selling the METABIRKINS NFTs," which allegedly caused consumer confusion. Rothschild was accused of trademark infringement, false designation of origin, trademark dilution, cybersquatting, and injury to business reputation and dilution under New York General Business Law.
Rothschild took again to Instagram to explain that his lawyers at Lex Lumina PLLC highlighted that the First Amendment in the US Constitution gave him the right to make and sell art depicting Birkin bags, "just as it gave Andy Warhol the right to make and sell art depicting Campbell's soup cans."
But, as stated in a previous post, this case may not be the proper one: yes, Warhol did not seek permission to use the cans from the soup company, but Campbell's Soup artworks were seen as non-infringing because it was clear to the public that it would have been unlikely for the company to sponsor paintings. The use of the cans remained in the artistic realm and Warhol didn't do commercial products such as T-shirts (but sold his artworks featuring the soup cans) and Campbell didn't complain; the company was instead happy to see their product on the walls of museums and in collectors' homes.
A bitter legal battle followed, instead, between Hermès and Rothschild throughout 2022: in March last year the artist answered with his own filing, insisting his art was protected by First Amendment rights and selling it did not diminish those rights. That appeal was later dismissed, while Hermès filed an Amended Complaint, highlighting alleged consumer confusion.
Between March and April 2022, Rothschild filed a Motion to Dismiss Hermès' amended complaint, invoking the precedent set by the "Rogers Vs Grimaldi" copyright case (1989; also used in the Nike / Lil Nas X / MSCHF litigation, as you may remember), but Hermès filed an Opposition to the Motion. In May 2022 Judge Jed Rakoff of the U.S. District Court for the Southern District of New York stated that "The Rogers Test" was appropriate in part, but denied Rothschild's Motion to Dismiss. Several appeals and Notices of Motion for Summary Judgment and Memos in Opposition of the Motions for Summary followed and, eventually, in November a trial date was announced for 2023.
The jury trial started on Monday, 30th January: Hermés is represented by law firm BakerHostetler and their attorney Oren Warshavsky focused during Monday's session on trademark infringement, presenting to the jury a Birkin bag and explaining how it usually takes an artisan 18 to 24 hours to make one. Jurors were then showed Rothschild's social media posts about the MetaBirkins, including one that read, "Not your mother's Birkin".
Attorney Rhett O. Millsaps II, from the legal firm defending Rothschild, Lex Lumina, highlighted again that his art and artistic expression are protected by the First Amendment, reminding the jury the artist sold his NFTs for $450 each, but their values increased (and, according to him Rothschild only got "a small percentage" of those sales) via the resale market. Rothschild's attorney again compared the artist's modus operandi to Andy Warhol's.
Yet Judge Rakoff did not allow Dr. Blake Gopnik, author of a biography of Andy Warhol, to testify at the trial and make comparison between the MetaBirkins and Warhol's art. According to Judge Rakoff, Gopnik (who supports the thesis that MetaBirkins can be filed under the "Business Art" practice) would be the only person who could draw parallels between Warhol's and Rothschild's art.
Rothschild's legal team also mentioned the fact that the idea to cover bags in fur was a satirical commentary and that Hermés was trying to punish the artist being afraid of what his art may say about luxury culture (yet it should be noted that, when the artist first launched his project, there was no mention of it being a bitter commentary of the fashion/luxury industry).
Rothschild's team also explained that the artist reached out to some reporters who had mistakenly linked Hermés to the MetaBirkins to clarify it wasn't an official collaboration.Robert Chavez, president and chief executive officer of Hermés Americas, appeared in a pre-recorded testimony at Monday's trial and provided information about the Birkin bag and its history. Then, to highlight that the project had generated confusion among consumers, he noted that, while guest lecturing in 2021 at Columbia University and Harvard Business School, students had asked if the company was involved with the MetaBirkins.
He went on to explain that Hermés had previously been developing its own plans to venture into the metaverse and NFTs for a few years. It should be highlighted that Hermès and other fashion companies are registered in specific fields that allow them to sell perfumes, accessories, garments and, in some cases, home décor items. But most of them aren't registered to sell digital products in the metaverse. Birkin is a name registered indeed in connection with leather goods, and not in connection with virtual products.
Nicolas Martin, group general counsel for Hermès, who was heard on Tuesday, also stated that the company was working on a "miniverse": even though he wasn't aware of the specific plans regarding it, he explained that one possibility was that of using digital twins for authentication aims and NFTs as virtual benefits attached to physical products that may give consumers access to exclusive events (a common practice nowadays to engage consumers).
Hermés has sold more than $1 billion worth of Birkins (each bag generally retails from $12,000 to $200,000) in the past decade in the U.S. alone and one interesting point that came from Chavez's testimony was the fact that he was not aware of any lost revenue due to the MetaBirkins, so the company wasn't damaged by the project. Rothschild's legal team also emloyed Hermés International financial analysis to show how its ready-to-wear and accessories category had grown at two times the rate of its leather goods and saddlery (Birkins are under this category) in the first half of 2022 versus the first half of 2021.
One confusing moment came courtesy of Hermès' expert witness, Nichols College's professor of data science Kevin Mentzer: he claimed that NFTs are not digital art and that they are collectibles, but his explanation of what NFTs are and how they work was deemed by Judge Rakoff as "far more confusing than helpful" for the jury.
The case continues and, while it is rather complicated, it is legally intriguing and important as it will help defining how to apply trademark law to NFTs and the virtual world (do trademarks IRL apply indeed to the virtual world? Do such rights automatically extend to the digital space and the metaverse, or should companies like Hermès be registered also as producing digital products to be able to sue somebody?) and how First Amendment rights apply to the metaverse.
Besides, there is another conundrum here, as highlighted in a previous post about the case: Hermès is seeking monetary damages, including Rothschild's profits (according to OpenSea that amounts to over 200 Ethereum, around $900,000) and wants Rothschild to transfer the MetaBirkins.com domain to it and to "deliver up for destruction to Hermès all unauthorized products and advertisements in his possession or under his control bearing any of Hermès' Federally Registered Trademarks or any simulation, reproduction, counterfeit, copy or colorable imitation." But NFTs are stored on the blockchain where records cannot be altered once they are entered; and if an NFT of a Birkin that was sold became inaccessible, the individual owners of the allegedly infringing NFTs would be damaged (and will Hermès also end up going after them? and is it actually legal to go after the people who bought a MetaBirkin NFT, if the non-fungible token in question is not actually a picture of a bag infringing someone's copyright, but a smart contract and lines of code on the blockchain?) Sounds like the jury will have a lot to ponder and debate about in the next few days.
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