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In a case that could set a legal precedent for future digital assets, and what artists can and cannot create and render virtually, Hermès will go to trial against artist Mason Rothschild over his Metabirkin NFTs, set to begin 30 January. Both Hermès and Rothschild had pushed for a summary judgement without a full trial, however, these motions were denied.
The trial will be pivotal in the Web3 and digital goods space as it raises and potentially answers abstract questions about the meaning of a luxury handbag in an increasingly digital world. Key questions include how artwork is distinguished from luxury goods, and if a brand’s trademarks for products, such as those that protect Hermès’s physical Birkin handbags, extend into the digital sphere.
“The most prominent issues in the case are to what extent the First Amendment trumps another’s trademark rights and whether real-world trademarks are actually enforceable in a virtual context,” says Gina Bibby, head of the global fashion tech practice at law firm Withers.
Hermès first sued Rothschild in January 2022, stating that his NFT projects using the Birkin name and likeness “infringed upon the intellectual property and trademark rights of Hermès and are an example of fake Hermès products in the metaverse”. The brand argues that, although Rothschild’s digital designs don’t function as bags, they are likely to confuse customers at a time when many fashion brands have created digital assets that resemble physical goods. Rothschild countered that the pieces are artworks, and therefore protected by the First Amendment.
Rothschild first sold a one-of-one “Baby Birkin” art film as an NFT in May 2021. It depicted a foetus growing inside a Birkin bag, and was created with fellow LA-based creative Eric Ramirez. It sold on marketplace Basic.space for the equivalent of $23,500. At the time, Hermès declined to comment on the project, although it raised questions about intellectual property and digital goods. Soon after, a host of luxury brands filed to register their trademarks in relation to digital goods and virtual spaces (with the intent of this extending to NFTs). Notably, at the time, Hermès had not filed specifically in classes typically used in relation to metaverse and Web3. However, when a brand’s trademarks are incredibly recognisable, their protections often extend into other classes when tried in the court of law.
In December of 2021, Rothschild followed up on the “Baby Birkin” with 100 unique NFTs that depicted Birkin-like bags in a range of bright colours and materials (such as fur) that Hermès does not typically sell. The project was marketed as “Not your mother’s Birkin,” and “a very unique collection of 100 individual Birkin Bag NFTs created with simulated faux fur in a range of one-of-a-kind contemporary colours and graphic executions, serving as a heartfelt tribute to Hermès’s most famous handbag”, according to press materials.
The project quickly drew more than 10,000 fans on Discord who coveted a spot on the allowlist. A waitlist of more than 12,000 included rapper Tyga, television personality La La Anthony, singer Madison Beer and social media personality and podcast host Lana Rhoades. After the drop, the virtual bags resold for as much as $46,000, which was higher than the price of many physical Hermès bags. According to Hermès’s cease and desist letter, sent in January 2022, several consumers believed the brand to be affiliated with the NFTs — a claim that Julie Zerbo, founder of The Fashion Law, told Vogue Business is a central consideration in trademark infringements claims. Rothschild, on the other hand, maintains that his NFTs are protected, and filed a motion to dismiss, which was rejected by a judge in May 2022.
Rothschild’s team was notified of the plans to go to trial late afternoon on 30 December according to Bloomberg Law. Given the limited information at this stage, neither Mason Rothschild nor his lawyers have any comment. Hermès did not respond to a request for comment.
The court’s response is an indication of how complex and potentially consequential the case is. “I am not surprised that the respective parties’ motions for summary judgement were denied by the court, as there are significant legal questions at issue in the case that will shape future law,” Bibby says. She adds that the fact that the court issued its decision only after “careful consideration”, and is expected to issue an opinion explaining its ruling on summary judgement at the end of this month, suggests that the court understands the significance of the case.
This is not the only legal conflict regarding digital fashion and NFTs. In February of last year, Nike filed a lawsuit against resale marketplace StockX over digital renders of Nike sneakers that were sold to StockX customers as NFTs. Nike said that StockX “has chosen to compete in the NFT market not by taking the time to develop its own intellectual property rights, but rather by blatantly freeriding, almost exclusively, on the back of Nike’s famous trademarks and associated goodwill”. StockX responded by saying that it was a “mischaracterisation of the service StockX offers through [its] NFT experience”, and that the NFTs depict proof of ownership of physical.
Both Nike and StockX have filed their trademarks with the United States Patent and Trademark Office. While there aren’t currently specific classes that directly apply to virtual goods, a few common classes include 9, 35 and 41, which include downloadable virtual goods, online stores selling virtual clothing, virtual currencies, in-game clothing and authentication certificates. Other brands to file include Gucci, Ralph Lauren, Diane von Fürstenberg, Saint Laurent, Valentino, Balenciaga, Marc Jacobs and Alexander McQueen.
“We could be looking at a whole new world of design protection,” Jeff Trexler, associate director at the Fashion Law Institute, told Vogue Business upon the 2021 sale of the “Baby Birkin”.
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