1st round: Hermès wins the trial in the United States over the MetaBirkin NFTs. A timely decision to regulate the NFT, art and metaverse markets.
Counterfeiting or freedom of artistic expression? This was the question posed to the judges of the Federal Court of the State of New York in the MetaBirkin case which opposed the French luxury house, Hermès.
A look back at this court case which made headlines on the metaverse and which brings us some legal lessons for both NFT artists (non-fungible tokens) and intellectual property rights holders.
Reminder of the facts: two successive NFT projects using the name ‘Birkin’ and reproducing the iconic Hermès bag.
In 2021, the American Mason Rothschild, founded a creation studio specializing in Web3 and created in particular for its launch the NFT “Baby Birkin” with the 3D artist Eric Ramirez: an animated image representing a Hermès Birkin bag and a fetus the interior, which sold for $23,500. A few months later, the artist launched the “Meta Birkin” project, this time producing a Birkin bag in 100 copies, sold again in the form of NFT. Sales would have exceeded 1.1 million dollars according to Hermès. At no time did the artist ask Hermès for permission to use his design or trademarks for these two projects. In January 2022, Hermès sued the artist in New York State courts for counterfeiting the Birkin model, the corresponding trademark and cybersquatting, demanding that the project be stopped, the Metabirkin domain name be recovered and payment damages.
US Court opts for infringement
The French luxury house accused the American artist of having committed acts of counterfeiting, damage to his brand image and cybersquatting through the creation and marketing of works of art in the form of NFTs reproducing his bag Birkin and its brand. For his part, Mason had built his defense on freedom of expression, which is established as a constitutional right by the first amendment of the American constitution. The creator wanted, according to him, to transmit an artistic message and to denounce animal suffering. In the end, Hermès’ argument wins out. The jury found that the creator of NFT could not take advantage of the regime tolerating the use of protected marks in works of art. The Court therefore found the artist guilty of counterfeiting, trademark dilution and cybersquatting and ordered him to pay $133,000 in damages to Hermès. One can also wonder if the game would not be worth the candle in view of the media buzz generated by the case and the amount allocated by the Court? One would indeed have thought that the jury would have a little heavier hand on the amount of damages in application of the principle of punitive damages (principle according to which the court can award more substantial damages and often much higher than the gains collected to “punish” the counterfeiter).
The first legal lessons to be learned
In any case, this decision risks setting a precedent in the USA and not only! Like the decision of the Civil Court of Rome on the Juventus case which last July ordered the Blockeras company to cease the creation, promotion and sale of NFTs and associated digital content which reproduced the brands of the famous sports team, it is a safe bet that, in similar cases, our French judges will adopt a similar reading in order to protect the intellectual property of rights holders. The interpretation made here by the judges must therefore encourage web3 artists to exercise caution in respecting the intellectual property rights of third parties. For owners of intellectual property rights, a mark can be protected in the metaverse without necessarily having been registered for this service. A downside, however, the mark will have to be a mark of reputation, that is to say a mark which enjoys such a reputation that it no longer needs to be registered in all classes of protection. In the absence of such a reputation, the holders of intellectual property rights will have to continue to file their signs in classes covering Web 3.0.
Mason Rotschild has already indicated on social networks to appeal the decision. The case is therefore not over and still risks spilling a lot of ink, to the delight of lawyers…
