The MetaBirkins trademark infringement lawsuit came to an end yesterday afternoon in a New York court. Hermès International won a heated battle against the artist and entrepreneur behind the "MetaBirkins" digital collectible NFTs, Mason Rothschild (real name Sonny Estival).
The Manhattan nine-person federal jury ruled in favour of the French company and against Rothschild: the jury found Rothschild liable of trademark infringement, brand dilution and cybersquatting. The jury also decided that the First Amendment does not bar liability and awarded Hermès $133,000 in total damages.
As you may remember from a previous post, in May 2021 Rothschild 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. 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.
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. The NFTs were launched and sold on the OpenSea platform. The initial asking price for the MetaBirkins in Ethereum was around $450 for each bag, but their values increased via the resale market and one NFT was sold for $45,000; the artist received a 7.5 percent royalty for resales of MetaBirkins.
Soon after that, Rothschild received a cease and desist letter from Hermès. Fearing he would have caused consumer confusion, Hermès filed a trademark lawsuit (Hermès International et al. v. Mason Rothschild), accusing the artist of trademark infringement, false designation of origin, trademark dilution, cybersquatting, injury to business reputation and dilution under New York General Business Law.
Months of litigation followed and eventually a jury trial date was set. The trial started in the Southern District of New York on January 30: Hermès was represented by Baker & Hostetler LLP; in addition to Lex Lumina, Rothschild was represented by Harris St. Laurent & Wechsler LLP.
Hermès' legal team presented the Birkin bag to the jury and explained its history and the craftsmanship that goes into making one bag. The jury was also informed that Hermès 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.
The Hermès legal team highlighted in court that Rothschild's project generated confusion among consumers who believed this was an official collaboration (to this end the team presented articles from the media that mistakenly tied Hermès to the MetaBirkins project – publications such as L'Officiel, Elle and The New York Post erroneously reported that this was an official project; the articles were later amended). Hermès also suggested that Rothschild is not an artist, but a brand builder, intent on creating a community, offering loyalty program and rewards, just like brands do (while today's boundaries between careers are often blurred and you can be an artist and an entrepreneur, Rothschild is very much an entrepreneur as he is the co-owner with his fiancé Ericka del Rosario of hip Los Angeles-based art-fashion-event space and Web3-enabled cultural platform Terminal 27, a hit with the local crypto heads).
This point was supported by Scott Kominers, a Harvard Business School professor who developed a study for Hermès that showed how Rothschild's MetaBirkins pointed at NFT digital brand market rather than at the art-only NFT market, as they offered benefits such as loyalty incentives and future purchase opportunities (it would have been interesting to hear at the trial also some of the NFTs holders who bought the MetaBirkins to understand if they perceived what they had bought as independent art, as a collaboration with a brand or as a key to be part to a more exclusive virtual social club à la Bored Ape Yacht Club).
In his testimony during the trial, Rothschild explained how he developed and promoted the project. Rothschild and his legal team made connections between the MetaBirkins and Andy Warhol's silkscreen series of Campbell's Soup Cans, highlighting that artistic expression/artistic freedom is protected under the First Amendment and that MetaBirkins were an "artistic expression" of the Birkin bag (the team tried to prove this point with The Rogers Test). Besides, the team mentioned the fact that the idea to cover bags in fur was a satirical commentary on fashion's fur-free initiatives.
As the jury deliberated against him, Rothschild's attorney, Lex Lumina PLLC's Rhett Millsaps, announced they will appeal and they also expect the support from the art and NFT communities.
In a statement, Rothschild said: "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 multi-billion-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. Not because of what they create but because their [curriculum vitae] doesn't scream artist with a pedigree from a world-class art school. That's what happened today."
Rothschild also added: "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."
This was a reference to Judge Rakoff who 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’s expertise in art history wasn't based on reliable data or a clear methodology and Gopnik (who supports the thesis that the MetaBirkins can be filed under the "Business Art", a practice at the intersection of art and commerce, even though Judge Rakoff stated that Gopnik never offered a "systemic definition of what is business art") would be the only person who could draw parallels between Warhol's and Rothschild's art.
Rothschild then concluded: "What happened today was wrong. What happened today will continue to happen if we don't continue to fight. This is far from over."
The case is important because it sets a precedent when it comes to defining how to apply trademark law to NFTs and the virtual world. What the jury decided means that trademarks IRL apply indeed to the virtual world as well and that companies such as Hermès can control these innovative environments and enforce and protect their rights. In this case, the bags in question didn't have any purpose, but the Birkins still preserved their cultural status in a digital space. Brands should therefore be very careful as this means that intellectual property is valuable both physically and virtually.
The decision also shows how First Amendment rights apply to NFTs and the metaverse. The jury found indeed that digital collectibles were not considered "protected speech" under the First Amendment, which means that the NFT market is more complex than we may think and that using the "fair use" explanation doesn't automatically exempt an artist from liability.
The decision in favour of a powerful luxury brand means that artists will have to worry about the use of logos and of names of famous companies in their works. Moderating their language before posting on social media may also be advised (note: this is not censorship, but common sense): as stated above, Hermès claimed in court the artist was "a digital speculator" seeking "to get rich quick" by appropriating the historical brand. In support of this accusation lawyers for Hermès often mentioned a text in which Rothschild stated: "People don't realize how much you can get away with by saying in the style of."
Artists should always try and be aware of the risks connected with some commercial projects they may launch linked with famous brands: satire protects artists in some ways, but depicting commercial activities in an art piece and then trying to monetize it, can cause frictions and tensions. A good idea to avoid risks is always turn to a legal advisor with a sound knowledge in such issues; another good idea is pursuing an official collaboration.
In this case, during the trial, Maximilien Moulin, head of the Hermès innovation lab known as H Lab, spoke of how the company started exploring the possibilities offered by NFTs in December 2019 and their potential uses including authenticating product and special access to private events or exclusive services. According to the Hermès team and witnesses, the company had already created a (never released) digital Birkin bag as a prototype in October 2021 and, when the MetaBirkins were launched, Rothschild's NFTs hampered those plans (the company eventually submitted trademark applications for classes related to digital goods in August 2022.)
The company was therefore interested in exploring the possibilities offered by the metaverse. Rothschild's project in a way coincided with their studies and researches, so they could have maybe come together and collaborated, saving time and money.
In the last few years the number of fashion lawsuits revolving around copyright issues increased: as the legal landscape is becoming populated by constellations of lawsuits and legal cases of the most disparate types, you can bet that, at some point, we will get a Netflix (drama? documentary?) series about these cases.
Looks like fashion has stopped being simply frivolous and it is becoming increasingly litigious, so, if you're looking for a career in the industry, fashion law or legal advise services for fashion houses and brands could be viable options (as we stated already 13 years ago...) and very rewarding ones as well: questioned about his fee during the trial, Harvard Business School professor of business administration Scott Kominers revealed in court he charged $1,500 per hour for consulting services and $2,000 per hour for testimony; having worked more than 100 hours on this case for Hermès, he was paid more than $150,000 for one expert testimony alone. And if you think that would be too difficult and a bit boring as a job, well, you may still try your hand at that fashion law series for Netflix.
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