In a closely watched case, Luxury fashion giant Hermès has prevailed over digital artist Mason Rothschild, with a Manhattan federal jury finding him guilty of trademark infringement.

The nine-person jury at  the US District Court for the Southern District of New York found in favour of Hermès on 8 February, deciding that Rothschild had infringed Hermes’ trademarks and awarded the fashion behemoth $133,000 in damages.

Hermès was represented by a team from national US firm BakerHostetler while two specialist New York boutiques lined up for Rothschild: Lex Lumina, which was founded in 2021 with the goal of tapping academic talent, and Harris St Laurent & Wechsler.

 At issue was a collection of 100 non-fungible tokens (NFTs) of furry digital handbags called MetaBirkins, a nod to the famous Hermès bag, released by Rothschild in December 2021.

Hermès sued Rothschild for trademark infringement and dilution, misappropriation of its BIRKIN trademark, cybersquatting, false designation of origin and description, and injury to business reputation.

The jury this week, along with finding Rothschild guilty of trademark infringement, also determined that the NFTs were not protected by the First Amendment. Rothschild had claimed they were artistic works and thus protected by the First Amendment, which gives “the right to make and sell art that depicts Birkin bags, just as it gave Andy Warhol the right to make and sell art depicting Campbell’s soup cans”.

Commenting on the dispute, Gowling WLG’s legal director Seiko Hidaka said: “This was a strategically smart case for the luxury brand owner to pick on. The facts of the case paints the defendant as an opportunistic money maker, leading the judge to characterise him as a potential "swindler" (outside the jury's earshot). 

“Yet, the jury took three days to deliberate the question whether MetaBirkins NFTs constituted art or trademark infringement.  These nuanced aspects will no doubt be lost in time. The verdict will have handed what Hermès – and all other brand owners - a valuable shot across the bow to all creators out there intending to utilise trademark rights to gain traction.”

RPC sports, entertainment and IP lawyer Josh Charalambous and retail and consumer group partner Ciara Cullen pointed out: "Hermès' victory over NFT maker does not set a legal precedent that can be enforced around the world." 

They added that: “The decision should not be seen as an impingement on artists or creators, but rather a reminder that intellectual property laws apply even to NFTs and digital assets in the metaverse.”

In total, Rothschild and his associates produced 100 MetaBirkins, which have, through June 2022, sold for more than $1.1m.

Hermès International et al v Mason Rothschild moved to trial to be heard in front of a jury at the US District Court for the Southern District of New York on 30 January, it finished last Monday 6 February.

Deborah A Wilcox, head of trademark and copyright, led the Baker Hostetler team which also comprised Oren J Warshavsky, co-leader of the global fraud and international asset tracing and recovery team, partner Gerald Joseph Ferguson and associates Kevin M Wallace, Francesca Rogo, Lisa Bollinger Gehman and Jessica Fernandez. 

The Lex Lumina team representing Rothschild comprised founder and managing partner Rhett Millsaps, co-founder Christopher Sprigman, of counsel Mark McKenna and consultant Rebecca Tushnet, Frank Stanton Professor of the First Amendment at Harvard Law School.

Jonathan Harris, founder and managing partner of Harris St Laurent & Wechsler, was joined by partner Adam Oppenheim and associate Ashley Robinson. The boutique represents a full range of clients in complex disputes, employment and business advisory matters. Both boutiques are based in New York.

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Background

Rothschild filed to dismiss the case in May 2022, but a New York federal judge denied the motion. Both parties had pushed for summary judgment late last year but it was denied by district Judge Jed S Rakoff.

He released an opinion on why the case needed to go to trial on 2 February. In it, he said that the court was asked to determine two questions: whether the digital images underlying the NFTs should be evaluated under the Rogers v Grimaldi test for artistic works or the Gruner and Jahr  test for general trademark infringement. Secondly, whether, under whichever test is applied, the MetaBirkins NFT images or related products infringe and/or dilute Hermès' trademarks pertaining to its Birkin handbag.

He said the case needed to be evaluated under the Rogers v Grimaldi test for artistic works. “As to the second question, the Court finds that there remain genuine issues of material fact that preclude summary judgment.”