French luxury goods brand Hermès International S.A. has prevailed in its lawsuit against the creator of unauthorized MetaBirkin NFT collectibles, which the company said had violated its trademark for Birkin handbags.
A Manhattan federal jury decided in favor of Hermès on Wednesday, according to Bloomberg Law, awarding the company $133,000 in damages while noting that digital artist Mason Rothschild’s 100 MetaBirkin NFTs minted on Ethereum did not constitute a protected form of speech via the First Amendment of the U.S. Constitution.
The unofficial tribute to Hermès’ luxury handbags launched in late 2021, and in December that year, the company said that the “NFTs infringe upon the intellectual property and trademark rights of Hermès. The firm filed suit against Rothschild in January 2022.
The case is seen as a potentially significant early precedent for the NFT world, which is built around decentralized, permissionless platforms that let anyone sell digital items. An NFT is a blockchain token that can serve as a deed of ownership for various items, including digital goods like artwork and collectibles plus physical products as well.
That model has presented new challenges for brands attempting to protect their IP from unlicensed NFTs that have flooded marketplaces, as the industry has grown to generate about $25 billion worth of organic trading volume in each of the last two years.
Hermès isn’t alone in fighting back against unauthorized NFT duplications of its real-world assets. Nike, for example, filed suit against sneaker reseller StockX last year for creating unauthorized Nike-branded NFTs as digital claim tickets that buyers could redeem for physical shoes.
In other cases, centralized marketplaces—like leading NFT platform OpenSea—have had to ramp up their own copycat detection tools to automatically block alleged infringing assets from being sold through its storefront. Even so, those NFTs permanently remain on the blockchain and can potentially be accessed through other marketplaces.
In court last week, Rothschild described the MetaBirkin bags as an artistic “experiment.” He said that he had earned about $70,000 worth of royalties from secondary sales of the digital bags, on top of the approximately $450 worth of ETH he made from each original NFT sale.
Hermès said in court that it plans to enter the NFT space, as other luxury brands like Louis Vuitton and Dolce & Gabbana have done, and claimed that the MetaBirkin NFTs had created confusion around its brand and products.