Hermès motions to block Metabirkin NFT sales following trial
Rothschild has until 10 March to reply to the motion and is expected to file by Friday.
“As plaintiffs, Hermès gets to file their argument first. This case is far from over,” Rhett O Millsaps II, legal counsel for Rothschild, said in a statement. “This latest filing is a gross overreach by Hermès and an attempt to punish Mr Rothschild because they don’t like his art, but what’s new? Mr Rothschild will be responding in the Court in due course.” Hermès did not respond to a request for comment.
Mark Sommers, partner at Finnegan, identifies the four factors Hermès has to prove to be granted the injunction: whether Hermès was irreparably harmed by Rothschild’s actions; whether money damages are insufficient to compensate the alleged harm Hermès suffered; whether the harm to Hermès absent an injunction outweighs harm to Rothschild should an injunction issue, and vice versa; and whether the public would be “disserved” by a permanent injunction.
NFT implications
The proposed permanent injunction highlights risks for both buyers and sellers of NFTs, Trexler says. “Part of the appeal of the NFT as an investment product is that it is secure, but if granted, the injunction would show that NFTs are indeed vulnerable to outside attack by a court,” he explains.
It also raises questions for NFT artists whose existing work could potentially infringe on IP, Elan says. “What should the artist do to mitigate any potential damages arising from the infringement? Should it reach out to the IP owner? Should it set aside all royalties received? Should it reach out to the purchaser(s) of the NFT to prevent further secondary sales?” The extent of injunctive relief could provide some answers.
The motion should also give marketplaces pause, Elan says, as they won’t want to be caught in the crossfire. “The last thing that an NFT marketplace wants to deal with is a claim by a brand that it was complicit in the alleged infringement because it failed to delist an allegedly infringing NFT,” he says.
Should the court grant Hermès’s request, the implications will be minor, Sommers says, since parties that succeed before a jury tend to succeed in receiving permanent injunctions. The harm is less about monetary loss than loss of brand value (in this case, the Birkin brand), he explains. The injunction, which would stop Rothschild promoting the Metabirkins NFTs, is a way for Hermès to double down and “remedy that loss of value”, he says.
A denial could actually be more disruptive, Sommer says, in terms of its implications. If the court were to refuse Hermès’s request, it could signal to NFT creators that they can continue to leverage valuable trademarks even after being found to infringe on that trademark — “so long as some minimal damages are awarded to the trademark owner” (as was the case with the $133,000 damages awarded to Hermès), Sommers cautions. “The trademark owner would then be left to sue again, which could create an unproductive cycle of litigation between brand owners and creators.”
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