Bloomberg Law

How the Hermès NFT Affair Will Impact Expression and Business

On February 8, iconic luxury fashion brand Hermès won a major court victory in Hermès International SA c. Rothschildthe world’s first case of intellectual property infringement by creators of non-fungible tokens.

The court found that Rothschild violated the company’s trademark by creating and selling “MetaBirkin“NFTs who have riffed on the line’s signature status bags.

Despite the obviously artistic aspects of these digital art images, the jury ultimately concluded that they were not expressive enough to merit protection against Hermès’ infringement action. As a result, Hermès was awarded $133,000 in trademark infringement damages.

This case highlights the complex legal implications of creating digital art and sets a precedent for other companies seeking to protect their brand and assets from any form of digital intellectual property infringement.

Physical rules still apply

Hermès has made huge profits with its iconic Birkin bag, one of the most well-known and sought-after luxury products on the market.

It is therefore not surprising that when Hermes learned about the “MetaBirkin” project, they were quick to file a lawsuit against Rothschild. What does this victory for Hermès mean for other brands, artists and the NFT industry in the future?

If the recent verdict says anything, it’s that the same old IP rules will apply in the NFT space. Concepts around brand, artistic expression, fair use, and the First Amendment will be analyzed in the same way in the metaverse as they are in the physical universe.

Artists and creators should be aware that there is a significant risk in exploiting the goodwill of well-established brands for commercial gain.

Just because NFTs and the metaverse are new mediums that statutory law hasn’t fully caught up to, doesn’t mean previously established laws relating to trademarks and other intellectual property don’t apply.

On the contrary, just as the shift from written content from newspapers and magazines to online forums has not changed trademark and intellectual property law, neither will the shift from the sale of physical objects to NFTs. more.

Impact on brands

In new digital spaces and elsewhere, established brands will not allow their trademarks and other intellectual property rights to be infringed or diluted by artists seeking to profit from their copyrighted material.

Thanks to the Hermès case, these companies are confident that their proven enforcement efforts should prevail.

Therefore, artists should be aware that having their art expressed via NFTs or in the metaverse will not protect them from the same IP enforcement efforts that could be made against infringers selling physical or digital assets. other creators online.

Takeaways for artists and creators

NFT producers must guarantee the value and legal value of their creation by taking into account the intellectual property law in force and, if necessary, by obtaining the appropriate rights clearances.

It is worth consulting with an intellectual property legal expert when considering the use of branded material in NFTs and other digital creations, particularly if it is intended for wider commercial sale.

Established brands like Hermès rely heavily on their brand’s goodwill – that is, the value of their name and designs in the marketplace relative to others – for sales and will protect that goodwill with zealous.

Therefore, artists seen as attempting to trade or take advantage of this clientele will face legal challenges regardless of their medium.

Using big brands in commercial artwork is inherently risky. Rothschild’s lawyer attempted to argue that the artist’s depiction of Hermès’ luxury Birkin bags was no different from Andy Warhol’s use of the Campbell’s Soup logo in his well-known serigraphs. But the argument did not prevail.

Instead, the jury likely recognized that Rothschild’s “MetaBirkin” NFTs were more of a large-scale business venture trading on the brand and goodwill that Hermès had built since the 1830s.

The precedent created by this case points to the legal vacuum between the for-profit marketing of an artist who exploits a brand’s established goodwill to sell chunks of NFT and the creation of a work of art displayed in a gallery as an artistic expression.

While not all major brands are currently playing in the NFT space, creators and artists should be aware that this case will reassure companies that their current brand investments and future moves in the NFT space will be protected.

The case is Hermes International et al v. Rothschild, SDNY, 1:22-cv-00384-JSR, 2/8/23.

This article does not necessarily reflect the views of Bloomberg Industry Group, Inc., publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Author Information

Andre Comer is a partner at Fortis Law Partners where he leads the firm’s trademark practice, advising companies on trademark registrations and protection.

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