A jury ruled in favor of Hermes in its dispute over digital artworks that mirror the design of its famed Birkin bag, that bear the name "MetaBirkins" and are tied to non-fungible tokens. Finding that MetaBirkins creator Mason Rothschild is liable on all three counts, trademark infringement, trademark dilution, and cybersquatting, and that he is not shielded by First Amendment protections, the jury returned their verdict earlier this morning, awarding Hermes approximately $133,000 in damages.
This highly watched case started in January 2022 when Hermes filed its complaint against Rothschild in the U.S. District Court for the Southern District of New York, alleging that by way of his sale of a collection of 100 METABIRKIN NFTs, which unlawfully used Hermes' HERMES trademark, BIRKIN trademark, and BIRKIN trade dress, Rothschild engaged in trademark infringement, dilution, unfair competition, and cybersquatting. Hermes sought injunctive relief and monetary damages. Hermes had also argued during the case that while Rothschild's unlawful use of Hermes’ Birkin bag trade dress and imagery is an aggravating factor, it was his unauthorized use of the BIRKIN trademark for NFTs that really forced Hermes to pursue him. As such, the primary issue, according to Hermes, was Rothschild's use of the Birkin trademark to refer to and promote the NFTs themselves, which Hermes claims, have value separate and apart from any associated images.
From the beginning, Rothschild disagreed with how Hermes framed the case, arguing that "MetaBirkins is the title of an art project and a series of 100 artworks; it is not a [trade]mark." Relying heavily on the test established by the Second Circuit in Rogers v. Grimaldi and the work of artists like Andy Warhol, Rothschild argued that his adoption and use of the MetaBirkins name was protected free speech under the First Amendment because the MetaBirkins artworks and associated NFTs are art and commentary on Hermes' Birkin handbag, and therefore, should not constitute infringement, dilution, or cybersquatting.
The case has been closely watched considering its status as one of the first to center on alleged infringement - and dilution - of "real world" trademark rights in the virtual world.
Considering the case's focus on the line between tangible goods and those that exist in the virtual world, the outcome here is very significant because it gives potential weight to the theory that digital goods are actually ‘things’ capable of being infringed.
Hardly the final word in this developing area of law, several other cases are currently pending that will continue to help to shape trademark dealings in the virtual world. Nike v. StockX, another trademark case that centers on NFTs, is proceeding before the U.S. District Court for the Southern District of New York, while Yuga Labs v. Ryder Ripps is testing NFT-centric trademark questions before a federal court in California. The Jack Daniel's Properties v. VIP Products case could have significant implications for "expressive works" via the Supreme Court's impending decision over the applicability of the Rogers test to commercial products. The outcome in the "Bad Spaniels" case, which is expected to come by way of a Supreme Court decision this term, is likely to have an impact on the Hermes v. Rothschild case in the event of a Rothschild appeal.
We will be happy to keep our clients updated on these decisions and any other that are reached in this ever-expanding field, and we are happy to provide counsel on how best to protect your marks in the metaverse as this developing area of law continues to grow.
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