Trademark infringement has extended to the metaverse—with luxury brand Hermès of Paris Inc. battling digital artist Mason Rothschild in court over the creation and sale of nonfungible tokens that depict images resembling its hard-to-get Birkin bags.
A trial over the alleged infringement of Hermès’ intellectual property began in Manhattan federal court this week, with the multibillion-dollar corporation claiming the name of the NFTs—MetaBirkin—misled consumers into incorrectly believing they were affiliated with Hermès.
Also read: Gucci, Tiffany dive into NFTs despite slump
“Hermès brought the lawsuit because they thought it infringed and thought people would wrongly think Hermès was involved,” Oren Warshavsky told the jury in his opening statement. The sticky situation is made stickier because the company apparently has plans to join the metaverse as well, Warshavsky revealed.
It’s the first case involving trademark infringement to NFTs, digital assets that are bought and sold with blockchain technology, to go to trial. Quentin Tarantino and Miramax LLC settled their dispute over whether the film director could sell NFTs depicting his screenplay for the award-winning film Pulp Fiction before their case made it to trial.
The Hermès dispute also pits artists’ First Amendment rights against company intellectual property claims.
Rothschild’s lawyer, Rhett Millsaps, told the jury that as long as the product is artistically relevant and doesn’t explicitly mislead consumers, then it’s protected under the First Amendment of the Constitution, guaranteeing freedom of expression.
He compared Rothschild’s style to that of Andy Warhol, a leader in the US pop art movement who’s renown for his portrayals of Campbell’s soup cans, Coca-Cola bottles and Brillo Soap Pads boxes.
“Art doesn’t exist in a vacuum,” Millsaps told the jurors. “Context matters.”
Rothschild, a Los Angeles-based artist and entrepreneur, took the stand Tuesday afternoon telling the jury he’s worked at various fashion store like Christian Dior SE and Saint Laurent and has done graphic design for local stores and individuals.
In March 2021, he and his now-fiancé opened a retail concept store called Terminal 27 that was named by Vogue as one of the best fashion boutiques in the country.
“I’ve been in the art space for awhile doing my own art and going to galleries,” Rothschild told jurors. “It’s always been a main staple of my life.”
He said he respected Hermès, though “maybe a bit less after the lawsuit.”
“I value fashion and art and I appreciate what they do,” he said. He is expected to resume his testimony Wednesday.
Millsap told the jury earlier that the artist was simply eager to share and distribute his work—work he took credit for. Though media outlets including the New York Post published that Hermès was behind the MetaBirkin NFT, Millsaps said Rothschild shut down that narrative and called up reporters to correct them.
Most of Rothschild’s projects make some kind of social commentary, Millsaps said. The MetaBirken NFT, he said, is about the luxury-consumer culture, and whether people would ascribe the same value to an NFT as they do to the actual product.
That’s unclear so far. Some of the NFTs, which Rothschild initially sold for $450 each, have resold for tens of thousands of dollars. The Baby Birkin NFT sold at an auction in May 2021 for $23,500. That’s more than the $8,500 Hermès Halzan 25 sells for on Madison Avenue Couture’s website, but still far less than the Hermès Birkin 25 Himalaya Niloticus Crocodile Diamond Encrusted Hardware, which is listed at $500,000. The 25-centimeter Hermès bags are also known as Baby Birkins.
The Rothschild NFTs are designed with the same shape as the actual Hermès bag, but are covered with fur instead of leather and have some type of visual or pattern on them. The Baby Birkin NFT has a moving picture of a fetus inside the bag. Rothschild also proposed on social media a plan to recreate the designer bag’s famed horse keychain — which the company used as evidence to demonstrate the violation to Hermès’ trademark of not just the Birken name but its configuration, even though the plan was never implemented.
The NFTs hurt Hermès’ ability to bring its own digital products into the metaverse, Nicolas Martin, Group General Counsel at Hermès who specializes in intellectual property, told the jury on Tuesday.
“If we want to bring our most iconic handbag to the digital market it’ll always be compared to MetaBirken,” he said. “We lost the opportunity of being first on the market, which is really impactful for Hermès.”
It’s not the first time Rothschild’s creations have landed him in trouble. He printed college logos on apparel and received a cease-and-desist order from one of the schools, Warshavsky said.
Kevin Mentzer, an expert witness testifying for Hermès’, told the jury that the research he conducted showed Rothschild made about 55.2 Ethereum tokens, worth about $87,700 on Tuesday.
Robert Chavez, the president and chief executive officer of Hermès of Paris, was the first witness in the trial, explaining to the jury in video testimony the prestige of the bag, each of which is crafted by one person and takes 18 hours to 24 hours to make. Sales of Hermès bags were about $100 million a year over the last decade, Chavez said.
He told the jury that he hasn’t heard of a client asking for a bag completely made of fur — like the design in Rothschild’s NFT — nor was he aware of a loss in revenue as a result of MetaBirkin. In fact, he said the original bag is still in high demand and has a lengthy wait list.
“The demand far exceeds our ability to supply,” he said.
Also read: The rise of flash robs and NFT craze among celebrities