On Monday, the NFT artist Mason Rothschild and the French luxury brand Hermès settled a trademark dispute that had been going on for a year.
This week, the trial between Mason Rothschild, a 28-year-old non-fungible token (NFT) artist, and Hermès came to an end. The trial tested art and trademark law.
Since Rothschild showed his MetaBirkins collection of 100 furry digital handbags at Art Basel in Miami in December 2021, tensions between the two companies have been growing. The project was an expansion of “Baby Birkin,” a one-of-a-kind NFT piece of art that sold at auction in May 2021 for 5.5 ETH, or about $23,500.
Rothschild said that his new collection was “inspired by the acceleration of fashion’s ‘fur-free’ initiatives and embrace of alternative textiles.” At the start, each NFT cost 0.1 ETH, or about $450.
On December 16, 2021, Hermès sent a letter to Rothschild telling him to stop. Reuters says that OpenSea and other marketplaces took the collection off the market in January 2022 after it sold for more than $1 million.
Hermès International sued Rothschild on January 14, 2022, for “stealing the goodwill in Hermès’ famous intellectual property to make and sell his own line of products” and making customers confused.
Rothschild said on Twitter that Hermès’s claims were “false” and that he wanted to set a new standard in art and NFT.
View this post on InstagramA post shared by MetaBirkins (@metabirkins)
“I am not creating or selling fake Birkin bags. I’ve made artworks that depict imaginary, fur-covered Birkin bags,” he wrote it. “The fact that I sell the art using NFTs doesn’t change the fact that it’s art.”
Rothschild showed a 1964 letter from the Campbell Soup Company’s product marketing manager to Andy Warhol, in which he praised Warhol’s pop art made from non-perishable items and wished him luck.
A statement in response to: Hermès International, et al. v. Mason Rothschild. pic.twitter.com/pil6brfGTl
— MetaBirkins (@MetaBirkins) January 17, 2022
Rothschild said in March 2021 that his work was a First Amendment comment “animal cruelty inherent in Hermès’ manufacture of its ultra-expensive leather handbags.” In the lawsuit, his lawyers said, “These images, and the NFTs that authenticate them, are not handbags; they carry nothing but meaning,”
Rothschild tried to get the case thrown out in May 2022, but a federal judge in New York said no in a one-page ruling. Hermès also asked for a summary judgment in October 2022, but the judge said no.
The case was heard in the Southern District of New York on January 30, 2023.
In the courtroom
Before the jury started deliberating on Monday, the lawyers for Hermès and Rothschild said their final words.
Oren Warshavsky, a lawyer for Hermès, summed up the week’s testimony. Hermès was “trying two different cases,” one of which was that consumers didn’t know who issued the NFTs, and the other was that the Birkin brand was being diluted.
— MetaBirkins (@MetaBirkins) January 17, 2022
“Rothschild’s MetaBirkin NFTs and Birkin Bags aren’t sold side-by-side,” Warshawsky said, explaining how MetaBirkin NFTs and real Birkins might confuse NFT collectors.
He said, “The NFT market is immature and highly speculative, and most people don’t know how it works.”
Rothschild’s defense team hired Dr. David Neal, managing partner and founder of Catalyst Behavioral Sciences, to look at a pre-trial survey done by MMR strategy group president Dr. Bruce Isaacson to see if there was any confusion between Hermès Birkin bags and MetaBirkin NFTs.
Neal changed Isaacson’s likely misunderstanding number from 18.7% to 9.3%, which suggests that more people knew the difference between Birkin Bags and MetaBirkin NFTs than was first thought.
Warshavsky also said that the Hermès brand is hurt by the Birkin name in the NFT line. He said that when more people use a trademarked name, it becomes less linked to the original brand. He stressed that the Starbucks brand would lose value if someone started a sportswear company with the same name.
Other testimony says that Rothschild’s use of the trademarked Birkin name made his collection worth more. Warshavsky used the testimony of Harvard Business School professor and a16z researcher Scott Kominers, who said on Friday that the MetaBirkin NFT collection made money before it came out because it was called Birkin.
“Metabirkins sold at the amount they did because of the Birkin name,” said Warshavsky. “People spent that money because of the name MetaBirkin, regardless of which NFT they were getting.”
This week, the jury should make a decision.
What is at stake?
The crypto, art, and law communities are all interested in the case because it involves trademarks, non-fungible tokens (NFTs), and First Amendment rights.
Greenspoon Marder LLP senior counsel Gai Sher said, “This case is one of the first and arguably the most prominent lawsuits to ever focus on trademarks and NFTs and whether trademark rights extend to the digital sphere. This case could very well set a legal precedent not only for trademarks in the context of NFTs, but for all digital assets as they relate to fair use and free speech.”
Rothschild said last week that his NFTs were “part of an experiment” to show how much luxury is worth. He asked the nine-person jury, “Is it the way you look or the product?” Sher asked.
View this post on InstagramA post shared by Hermès (@hermes)
In May 2022, the district court said it would use the Rogers v. Grimaldi criterion to decide the case. This criterion looks at the balance between artistic expression and trademark infringement. Sher says that this was a key moment in the case.
“The Rogers Test says that an artist can use a trademark with an expressive work if the trademark is artistically relevant to the product and doesn’t mislead customers about the sponsorship, endorsement, or other connection to the business. “Hermes argues that although Rothchild’s NFT bags don’t have real-world utility, many luxury brands are entering the digital space and creating digital assets of their own which creates consumer confusion,” she said.
Rothschild’s NFTs, she said, are “non-speech, commercial, and maybe even useful things that just happen to be in virtual form right now.”
“The increasing innovation around virtual products in connection with metaverse technologies will require further analysis that the courts have not yet addressed,” she noted. “It will be interesting to see how courts will analyze trademark infringement claims in the context of virtual functional NFTs and how this in turn will affect brands’ decisions to launch functional NFTs in the virtual space.”
Content Source: coindesk.com
