Hermes vs. NFT artists can help define the legal landscape for digital assets

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Help! He stole my bag…’s intellectual property rights.

Starting today, a blockchain entrepreneur whose MetaBirkins NFTs look strikingly like the ultra-expensive actual Birkin bag will face off in court with luxury designer Hermès. The case could set a precedent for digital assets and copyright law in the burgeoning world of cryptocurrencies, metaverses and all the other things your nephew is still into.

How do you solve a problem like NFT?

Mason Rothschild debuted the MetaBirkin NFT, digital images of furry bags sporting designs that Mona Lisa, zebra hide, and smiley, in 2021. And despite not physically carrying your phone, wallet, or compact, one of the most expensive MetaBirkins goes for 100 ethereum — that’s more than $160,000 and comparable to some actual Birkin bags. Hermès sues Rothschild for trademark infringement. His Defense: The First Amendment and Artistic Expression.

Like many aspects of the internet and digital currencies, NFTs are not heavily regulated. What guidelines exist are influenced by previous federal laws, but there is not one solid framework. Experts hope the Birkin case will create more understanding of this type of legal battle, which is likely to become more common:

• One of the first intellectual property cases involving NFTs was between Miramax and Oscar-winning director Quinten Tarantino. The grindhouse connoisseur had partnered with Secret Network to sell NFTs of his original handwritten script to Pulp Fiction, but the film studio, which owns the rights to the film, claimed that he violated copyright law. It was eventually settled out of court (with Miramax likely offering Tarantino something worth more than Marsellus Wallace’s briefcase) and further auctions for the NFTs were cancelled.
• Nike is currently suing online sneaker resale marketplace StockX for counterfeiting and false advertising because virtual shoes on the platform feature the brand’s iconic swoosh. But in this case, each NFT is tied to a physical item, meaning that if you buy one of the NFTs, you technically own the actual sneakers as well even if they’re not on your feet yet. StockX claims it’s a quick way to verify ownership for sellers who want to turn shoes quickly.

“[The Birkin case] will give us more guideposts for what to do with NFTs,” Thomas Brooke, a lawyer at Holland & Knight, told The Wall Street Journal. “With new technology, courts often have to apply existing law and figure out what works.”

It’s about the music: Although the NFT market may appear as a crazy fad and complicated version of the school yard Pokémon shops, there are advantages to adopting blockchain technology. In the music industry, even if a song is streamed many times on Spotify, much of that revenue goes to record labels and publishers. Many independent artists have started selling their songs as NFTs as a way for fans to directly support them. It’s the futuristic version of throwing a penny in a busker’s guitar case.