Reality prevails as Hermès trumps MetaBirkins – Trademark Infringement and Non–Fungible Tokens (NFTs)

• South Africa

• Intellectual property

09-02-2023

In a first-of-its-kind case to focus on trademark infringement and dilution in the virtual world, a nine-person jury in Manhattan, New York has sided with the French fashion house, Hermès International S.A (“Hermes”) in its legal battle against Sonny Estival aka Mason Rothschild (“Rothschild”), the creator of the “MetaBirken” Non-Fungible tokens (“NFTs”).

In their decision, the jury found Rothschild to be guilty on all counts, and, Hermès was awarded $133 000,00 (One Hundred and Thirty-Three Thousand US Dollars) in damages, in total ($110 000,00 for trademark infringement and $23 000,00 for cybersquatting).

The conflict between the parties began in December 2021, when Hermès sent Rothschild a cease-and-desist, in which it advised that he was unlawfully using the Hermès trademark, Birkin trademark, and Birkin trade dress, and that such use constituted trademark infringement, dilution, unfair competition, and cybersquatting. Rothschild elected to defend the claims made by Hermès, claiming in an Instagram post that he had a right to use the term “MetaBirkin” to describe his “art”.

At trial, Counsel for Hermès highlighted to the court the value of its trademarks, including the “Birkin” word mark, and argued that Rothschild’s NFTs were not primarily about artistic expression, but rather, an attempt to profit off of the reputation and appeal of the well-known Hermès brand.

Rothschild‘s Counsel on the other hand, argued that his client’s “creations” and use of “MetaBirkins” are “protected free speech under the First Amendment because the MetaBirkins artworks and associated NFTs are art and commentary on Hermès’ Birkin handbag,” and therefore, do not constitute trademark infringement, dilution, and/or cybersquatting.

The outcome of this matter has significant implications insofar as the intersection of trademark law and freedom of expression in the NFT space is concerned and offers some clarity on how courts will deal with trademark infringement in the virtual world going forward.

With brands increasingly interested in exploring new digital platforms, coupled with the recent changes to the Nice Classification (12th Ed) to include appropriate trademark classification for NFTs (Class 9), metaverse activities (Class 41), and mining of crypto assets (Class 42), it is strongly recommended that clients consider filing trademarks in the relevant classes.