In a landmark digital artwork case, Hermès won a trademark infringement case on February 8 against Mason Rothschild, the artist behind a collection of “MetaBirkin” non-fungible tokens (NFTs).
However, even though Rothschild will no longer be able to create the NFTs, this does not mean that MetaBirkins will not continue to exist and sell on secondary markets, perhaps at an even higher price than before.
Hermès first sued Rothschild in January 2022, alleging that his collection of 100 NFTs depicting virtual Birkin bags infringed the company’s trademark. While the artist argued that his work was a form of artistic expression and therefore protected under the First Amendment, a federal jury in Manhattan disagreed and returned a verdict finding Rothschild guilty of trademark infringement, dilution and cybersquatting and ordering him to pay Hermes 110,000 dollars worth of MetaBirkin profits. Rothschild’s publicist did not respond to requests for comment.
The 100 NFTs were initially sold for $450 each, with Rothschild receiving royalties on most of the 59 subsequent resales that totaled more than $1 million in value, said Kevin Mentzer, a professor of computer science at Nichols College in Dudley , Massachusetts, who testified for Hermès. .
“It is up to Hermès to decide what to do with this collection going forward,” Mentzer said. The company will likely remove sales of MetaBirkins from NFT marketplaces, he said. Previously, OpenSea, one of the largest NFT marketplaces, stopped listing them after Hermès notified the platform of trademark infringement issues.
However, only MetaBirkin holders can destroy the actual NFTs themselves, Mentzer said. “And there is nothing to prevent anyone who owns these from buying and selling them from any of the marketplaces.”
Destroying the collection is almost impossible
Through the trial, Hermès expressed its own plans to enter the NFT world. Rothschild’s collection harmed the company’s “own ability to offer products and services in virtual marketplaces that are uniquely associated with Hermès and meet Hermès’ quality standards,” according to the brand’s complaint. Hermès declined requests for comment.
But taking MetaBirkins off the market would be nearly impossible, said Jeremy Goldman, an intellectual property attorney in Los Angeles. “There’s a real unanswered question with blockchain: what happens in the event of a breach?”
In typical infringement cases involving physical goods, a positive ruling would allow a company to seize and destroy the assets, Goldman said. But seizing a digital asset is a much scarier area. “It’s very difficult to get rid of the tokens or disconnect the artwork,” he said, adding that while Hermès can prevent major NFT marketplaces from selling MetaBirkins, there’s not much they can do to prevent the collection’s sale outside of that .
“It’s not that different from what happens in the real world. If a manufacturer makes counterfeit goods, there’s not much control once they leave them, Goldman said. “It’s very difficult to put that genie back in the bottle.”
And while the value of MetaBirkins may decrease because of the court ruling, they could just as likely see a bump in demand because of their new status as contraband, he said.
Another issue complicated by the digital nature of this case is customer care, Goldman said. Owners of physical assets usually have recourse against those who sell them counterfeit goods, such as fake luxury handbags. However, it remains unclear whether MetaBirkin holders can extract compensation from Rothschild, he said.
