US Court finds in favour of Hermes in NFT Birkin stoush

Dean Gerakiteys, Dunja Poljak
02 Mar 2023
Time to read: 3 minutes

A U.S. jury has decided in favour of the luxury brand Hermès in its claim of trade mark infringement against Mason Rothschild's use of MetaBirkin in relation to NFTs.

In late 2021 artist Mason Rothschild released a collection of 100 furry digital handbags NFTs named the MetaBirkins. The artist also registered and used the domain name and social media handles such as @metabirkins to promote the MetaBirkin NFTs. The NFTs were a viral sensation.

Hermès Birkin handbags sell for tens of thousands to hundreds of thousand of dollars each and are highly sought. Used vintage bags are sold for more than the retail price with rarity driving the price.

Hermès sued Rothschild for trade mark infringement and dilution, misappropriation of its BIRKIN trademark, cybersquatting, false designation of origin and description, and injury to business reputation. Hermès filed a range of evidence and relied on surveys indicating consumer confusion between the origin of the MetaBirkin and the Birkin brand. Hermes claimed that over $1 million worth of NFTs had been traded by January 2022.

Rothschild defended his use of the MetaBirkins as works of art claiming that his MetaBirkin NFTs were “inspired by the acceleration of fashion’s ‘fur free’ initiatives and embrace of alternative textiles” and that the disclaimer displayed at the bottom of his website: “We are not affiliated, associated, authorized, endorsed by, or in any way officially connected with the HERMÈS, or any of its subsidiaries or its affiliates”, was sufficient to avoid any confusion.

Rothschild also sought to rely on the US Constitution’s First Amendment as giving him “the right to make and sell art that depicts Birkin bags, just as it gave Andy Warhol the right to make and sell art depicting Campbell’s soup cans.”

After a week’s trial before a jury in the U.S. District Court for the Southern District of New York, the jury delivered a verdict in favour of Hermès. The jury’s decision may have been influenced by the evidence pointing at the commercial nature of Rothschild’s venture. Reports in media outlets indicate that Rothschild is planning to appeal the decision.

Take care and classify

While it is certainly an important win for brand owners it is also a reminder of the importance of considering the types of goods and services for which to seek protection when applying to register trade marks.

For brand owners seeking to sell their products in the metaverse, or for those otherwise seeking to register crypto trade marks, the 12th edition of the Nice Classifications came into effect on 1 January 2023 and changes in it reflect the emergence of non-fungible tokens and virtual worlds and include crypto-specific goods and services for trade mark registrations.

Whether existing trade marks registered for physical goods or related services provide owners with protections against potential infringing use in respect of virtual goods or services will need to be considered on a case by case basis. Here, Hermès’s rights were protected, but the company has already sought to expand its registered trade mark rights by filing an application in the U.S for the mark covering NFTs and virtual goods and services including retail store services featuring virtual goods and entertainment services, namely, providing online, non-downloadable virtual goods in classes 9, 35 and 41.

What is the Nice classification?

Established by the Nice Agreement in 1957, the International Classification of Goods and Services for the purposes of the Registration of Marks (the Nice Classification) provides a standardised system for classifying the goods or services for which a registered trade mark relates. The 12th edition came into force from 1 January 2023 and is notable for its inclusion of more specific goods and services classifications relating to crypto assets and services.

Changes to the Nice Classification

The 12th edition of the Nice Classification includes the following classifications which are relevant to those who engage in the metaverse, cryptocurrencies, blockchain or NFT-based business pursuits:

Class 9 (which includes computer software) will include:

  • downloadable computer software for managing crypto asset transactions using blockchain technology;
  • downloadable digital files authenticated by non-fungible tokens [NFTs];

Class 42 (which includes computer software design and development services) and will include

  • mining of crypto assets / cryptomining.

IP Australia has also made modifications to classification

IP Australia adopts the Nice classification and its own classification terms which it has also modified to include:

Class 9:

  • downloadable digital handbags authenticated by non-fungible tokens [NFTs];
  • downloadable digital handbags authenticated by non-fungible tokens [NFTs];

Class 35 (which includes retails services):

  • Brand creation services relating to digital goods authenticated by non-fungible tokens [NFTs] for others;
  • retail services for virtual goods;

Class 42:

  • hosting digital platforms for the minting of digital goods authenticated by non-fungible tokens [NFTs]

Key takeaway

While this decision is a U.S. one, it illustrates the importance of ensuring that brand owners secure their intellectual property rights and demonstrates the benefits that such rights can have against unauthorised use. The decision should also provide some caution to those creating NFTs. Similar NFT cases are likely to arise in future, including in Australia, and expose the challenging issues that arise as new technologies emerge. Brand owners should continue to ensure that their trade marks are properly protected. The recent modifications to the Nice classification provide some clarity on the approaches to classification in this space.

Please contact Clayton Utz if you would like any assistance or advice relating to updating or lodging trade mark registrations for crypto and NFT based goods or services.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.