NFT judgement: Hermès wins NFT lawsuit for trademark infringement

Hermes International SA V. Rothschild, S.D.N.Y., No. 1:22-cv-00384

A Non-Fungible Token, or NFT for short, is a digital work of art with a certificate of authenticity. This certificate of authenticity is stored in the blockchain and is therefore immutable. Furthermore, unlike cryptocurrency, for example, NFTs are indivisible, so NFTs can only be purchased as a whole.

The NFT artist Mason Rothschild created a collection of 100 “MetaBirkin” NFTs in 2021. Here he assembled a collection of different Hermès Birkin bags, with synthetic hair in a range of modern colour and also visual implementations. Rothschild created and sold the NFTs in late 2021, following an extensive marketing campaign through his social media and website. As described in our report “NFT the new hype – what to watch out for from an intellectual property perspective” of 1 March 2022, Hermès reacted and filed a lawsuit against the artist for trademark infringement against Hermès’ “Birkin” brand in January 2022.

As a result, the first judgement in this matter has now been issued. The court in New York/Manhattan ruled in its judgement that Hermès was entitled to total damages of 133,000 dollars. It also held that Rothschild’s NFTs were not protected expression within the meaning of the First Amendment to the US Constitution.

The court found that the NFTs were more akin to consumer products, which are subject to strict trademark laws to protect brands from imitators and those seeking to capitalise on their reputation.

Throughout the case, Rothschild argued that his NFTs were works of art protected by the First Amendment, not unlike Andy Warhol’s famous screen prints of Campbell’s soup cans. His lawyers described the NFT project as an “artistic experiment” that explores the value society places on status symbols.

Rothschild’s lawyers pointed to the decades-old “Rogers” test. This standard, first defined in 1989 in Rogers v Grimaldi, allows artists to use a mark without permission as long as it has a minimum level of artistic relevance and does not expressly mislead consumers. Rothschild moved to dismiss the case on the basis of the Rogers test. The court ruled that the test was applicable but that more evidence was needed to evaluate it.

The court was the first ever to examine how NFTs – digital assets that have exploded in popularity over the past two years – should be viewed through the lens of intellectual property law.

Legal experts have been following the case closely. It could influence pending and future NFT cases that test the often blurred line between art and consumer products.

If you work with or are interested in NFTs, we recommend that you protect yourself from a legal perspective at an early stage so that you can fully exploit the potential of this promising technology. Our experts in this field will be happy to assist you.

Christian Kröner         Clemens Bauer          Katharina von Seydlitz-Brandl