Hermes, the luxury company with a market cap of 142 billion euros ($162 billion), has sued NFT creator Mason Rothschild, who designed the MetaBirkins NFTs. The New York lawsuit was filed last Friday alleging trademark infringement. At first glance, MetaBirkins seems like a simple trademark infringement, but we’re not so sure. If brands want to protect brands in the virtual world, those brands should ideally cover digital or electronic objects.
The lawsuit accuses the creator of NFT of being “a digital speculator who seeks to get rich quick by appropriating the METABIRKINS brand for use in the creation, marketing, sale and facilitation of the exchange of assets known as non-fungible tokens (NFTs).” He continues that “the METABIRKINS brand simply rips the famous BIRKIN brand from Hermès by adding the generic prefix ‘meta’ to the famous BIRKIN brand”.
Hermès has a long list of brands, and the NFTs most definitely show Birkin-type bags. The designer created 100 digital faux fur handbags as a “tribute to Hermès’ most famous handbag.” Some of the digital assets were resold for over $40,000 and according to NFT Rarible Marketplace, the collection fetched over $1.2 million.
To quantify Mr. Rothschild’s earnings, he initially sold the 100 bags in December 2021 for around $322 each, receiving $32,200. Additionally, he gets 7.5% of resales of $1.2 million, or $90,000, giving a total earned of just over $120,000. But of course, it’s all about future income.
Will Rothschild bend in the face of the trial? No, he intends to hold on. And he’s pretty belligerent.
We see three areas where Hermes’ case could be weak, and a couple where it is weak on MetaBirkins’ side.
Are Hermès trademarks valid for digital?
Hermes claims infringement of the Hermes and Birkin trademarks.
In mid-December, Hermès sent a cease and desist letter to Rothschild and persuaded OpenSea to remove the NFT listings (so Rothschild just moved to other markets). Attached to the letter was a long list of brands, with the term “Hermès” covering every item under the sun. Well, ALMOST everything under the sun that is physical. But the digital side, not so much.
For the Hermès brand, a class was canceled concerning “images, sounds and electronic data relating to clothing, shoes, handbags, watches”, etc. Cancellation refers to a lack of evidence of continued use.
The Birkin brand is much narrower, regarding handbags. Again, these appear to be physical handbags. However, this includes the design of the handbag, which could very well be a problem for Rothschild.
Even though the mark covers digital goods, the artist makes a separate claim.
Rothschild claims First Amendment right for art
In his response to the lawsuit, Rothschild states, “The First Amendment gives me the right to make and sell artwork of Birkin bags, just as it gave Andy Warhol the right to make and sell artwork of Birkin. ‘art depicting Campbell cans’. And Rothschild says he won’t be intimidated.
Do buyers believe they are buying Hermès art?
Let’s move on to a third potential weakness: whether or not shoppers think they’re buying a Hermès bag. The first MetaBirkins was sold in early December, and we checked an archived version of the website, which contained a disclaimer that MetaBirkin is not related to Hermes.
We suspect most shoppers will be aware of the lack of association with Hermès. It was pretty clear in a Yahoo News interview that Rothschild was an artist. While NFT ownership is pseudonymous, many NFT collectors buy ETH domain names and use them for their NFT wallets. Several of the MetaBirkins owners have ETH domains so they can be reached.
Logically, if Hermès had sold a relatively small number of NFTs, they would have made a lot more money. Initial sales of MetaBirkins brought in $32,200. In September, Dolce & Gabbana sold nine NFTs for $5.65 million.
However, on the other hand, the marketplaces where NFTs are sold do not have disclaimers. Before the OpenSea listing was closed, it was mentioned that MetaBirkins was a tribute to Hermes, although the statement should have been more explicit about not being associated.
Also, a few people know about Birkin, but not that it is a Hermes brand. Depending on your perspective, the name of the artist can be lucky or unlucky. One would expect Mason Rothschild’s name to be a play on “House” Rothschild, but it appears to be the designer’s real name.
MetaBirkins becomes counterfeit!
There is no small irony that MetaBirkins has a problem with counterfeits. So, while NFTs are easy to trace, fraudsters often create tokens with similar names and scam art to trick people into paying for fake NFTs.
In the lawsuit, Hermes argues that the existence of fake or counterfeit MetaBirkins NFTs means that Rothschild claims a trademark over the term MetaBirkins, which is problematic.
We’ll have to see how that plays out in court, but brands need to know that they need to have proper brands that cover the digital realm as well.
The author is not a lawyer, and this is not legal advice.