Trademark Law Update – Jury Finds MetaBirkins NFT Branding Infringes The BIRKIN Trademark – Trademark

A jury has spoken in a case brought in the U.S. District Court
for the Southern District of New York by Hermès against the
digital artist Mason Rothschild, who had created and sold
“MetaBirkins” non-fungible tokens (NFTs) depicting
digital images of faux-fur-covered versions of the luxury BIRKIN
leather handbag.

Examples of MetaBirkins NFTs

Jury Verdict

We previously reported that New York federal judge Jed S.
Rakoff had ruled in this case that the NFTs qualified as artistic
works, and thus were subject to the Second Circuit’s test for
balancing free speech against trademark rights where trademark
references to the depicted material are more likely to be deemed
fair use if not explicitly misleading. Therefore,
Rothchild’s use of the name “MetaBirkins” might have
been entitled to First Amendment protection.

Nevertheless, the nine-person jury found Rothschild liable for
trademark infringement and for diluting the distinctiveness of the
BIRKIN trademark, and explicitly found that the First Amendment did
not bar liability. The jury also found Rothschild guilty of
unlawful cybersquatting by using the MetaBirkins.com domain
name.

The verdict was unclear whether the jury thought the use of
“MetaBirkins” was explicitly misleading, or because the
jury thought that the NFTs were more akin to commodities than
artwork.

The jury awarded Hermès $110,000 in profits and resale
commissions received by Rothschild for selling the NFTs using a
version of the Hermès trademark, and an additional $23,000
in damages for cybersquatting on the Hermès domain name.

Hermès International v. Rothschild, No.
22-cv-384 (S.D.N.Y. Verdict February 8, 2023).

Significance

This is one of the first decisions applying real world trademark
rights to the virtual world of NFTs. Rothschild’s defeat may
serve as a setback to the marketing of NFTs, viewed by many as
digital artistic works of creative expression. First Amendment
protection in naming these NFTs may now be limited.

Essentially, the more participants in the NFT market continue to
trade, sell, and promote NFTs using the trademarks of the items
depicted in the NFTs, the more these digital assets could be viewed
as commodities with diminished trademark rights. Evolution of the
metaverse may exacerbate this view, as digital assets, such as
“MetaBirkins,” become perceived as virtual wearable goods
for avatars as distinguished from being works of decorative
art.

Possible Future Steps

Subsequent to this verdict, Rothschild took to Twitter to
express his disapproval with the jury’s decision by tweeting
“[w]hat happened today was wrong. What happened today will
continue to happen if we don’t continue to fight. This is far
from over.”

Procedurally, this could signal that Rothschild will appeal the
verdict to the Second Circuit, possibly to argue that this case
should not have gone to the jury in the first place.

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