Hermès succeeds in enforcing trade mark rights in NFT dispute

In November 2021, Mason Rothschild, formerly known as Sonny Estival, created and sold one hundred NFTs linking to a depiction of a digital Hermès Birkin bag covered in faux fur and patterns, polka dots, and artworks such as the Mona Lisa and Van Gogh’s Starry Night. Rothschild also registered and used the domain name www.metabirkin.com and social media handles such as @metabirkins to promote the sale of the “MetaBirkins” NFTs. By early January 2022, Rothschild had sold in excess of $1 million in “MetaBirkins” NFTs.

Copies of Rothschild’s “MetaBirkin” Fuzzy Handbags

Hermès brought suit in the Southern District of New York against Rothschild asserting claims of trademark infringement, trademark dilution, cybersquatting and unfair competition under the Lanham Act and New York law based on Rothschild’s use of the Birkin mark to promote and sell the MetaBirkins NFTs. Hermès alleged that Rothschild’s use of the Birkin mark had caused actual confusion among consumers, sophisticated commentators, and even intellectual property attorneys who believed that the MetaBirkins NFTs were affiliated with, authorized by, or sponsored by Hermès.

Rothschild defended his actions on the grounds that his “MetaBirkins” works, and his efforts to promote and sell the same, were protected artistic expressions under the First Amendment of the U.S. Constitution. The district court judge twice refused to dismiss the Hermès claims prior to trial. Background to Hermès’ original claim against Mason Rothschild is detailed in our article together with our commentary, here.

On February 8, 2023, a jury found Rothschild liable for trademark infringement, trademark dilution and cybersquatting. The jury specifically concluded the First Amendment did not bar liability of any of these claims. In rendering a verdict across the board for Hermès’ , the jury necessarily reached the conclusion that Rothschild’s promotion and sale of the "MetaBirkins" NFTs was likely to confuse consumers as to the source or sponsorship of the same. The jury awarded $133,000 in damages to Hermès, an award consisting of a disgorgement of Rothschild’s net profits, $110,000, and an award of statutory damages totalling $23,000 for Rothschild’s cybersquatting. Post-verdict motions and appeals of the final judgment are highly likely.

As one of the first cases to consider the intersection of trademark and First Amendment law in the digital age, brand owners and creators should watch how the case proceeds. The First Amendment defense does not give artists the unfettered license to infringe another's trademarks, but does permit creators to create artistic works which comment upon the products or services offered by brands owners. At some point, however, the public's interest in avoiding consumer confusion or competitive exploitation will override the interests sought to be protected by the First Amendment.