In a landmark digital artwork case, Hermès won a trademark infringement suit on Feb. 8 against Mason Rothschild, the artist behind a collection of “MetaBirkin” non-fungible tokens (NFTs).
But while Rothschild will no longer be able to create the NFTs, this doesn’t mean that MetaBirkins won’t continue to exist and sell on secondary markets, perhaps at an even higher price than before.
Hermès first sued Rothschild in January 2022, alleging his collection of 100 NFTs depicting virtual Birkin bags infringed upon the company’s trademark. While the artist claimed his work was a form of artistic expression and therefore protected under the First Amendment, a Manhattan federal jury disagreed and returned a verdict which found Rothschild guilty of trademark infringement, dilution and cybersquatting and ordered him to pay Hermes $110,000 worth of MetaBirkin profits. Rothschild’s publicist did not respond to requests for comment.
The 100 NFTs were first sold for $450 each, with Rothschild receiving royalties on most of the 59 subsequent resales which totaled more than $1 million in value, said Kevin Mentzer, a data science professor at Nichols College in Dudley, Massachusetts, who testified for Hermès.
“It’s up to Hermès to decide what to do with this collection going forward,” said Mentzer. The company will likely remove sales of MetaBirkins from NFT marketplaces, he said. Previously, OpenSea, one of the largest NFT marketplaces, stopped listing them after Hermès notified the platform of trademark infringement issues.
However, only MetaBirkin holders themselves can destroy the actual NFTs, said Mentzer. “And there’s nothing stopping anyone who owns these from buying and selling them off any of the marketplaces.”
Destroying the collection is nearly impossible
Throughout the trial, Hermès expressed its own plans to enter the world of NFTs. Rothschild’s collection harmed the company’s “own ability to offer products and services in virtual marketplaces that are uniquely associated with Hermès and meet Hermès’ quality standards,” according to the brand’s complaint. Hermès declined requests for comment.
But taking MetaBirkins off the market will be nearly impossible, said Jeremy Goldman, a Los Angeles-based intellectual property lawyer. “It’s a real unanswered question with blockchain: what happens in the event of infringement?”
In typical infringement cases regarding physical goods, a positive ruling would allow a company to impound and destroy the assets, said Goldman. But impounding a digital asset is a much murkier area. “It’s very difficult to get rid of the tokens or de-link the artwork,” he said, adding that while Hermès can prevent major NFT marketplaces from selling the MetaBirkins, there’s not much they can do to prevent the collection’s sale outside of that.
“It’s not so different than what happens in the real world. If a manufacturer creates counterfeit goods, there’s not much control once they’ve left,” said Goldman. “It’s very hard to put that genie back in the bottle.”
And while the value of MetaBirkins may decrease because of the court ruling, they could just as likely see a bump in demand because of their new status as contraband, he said.
Another issue made complicated by the digital nature of this case is customer recourse, said Goldman. Owners of physical assets typically have recourse against those who sell them counterfeit goods, such as fake luxury bags. However, it’s still unclear whether MetaBirkin holders can extract compensation from Rothschild, he said.