A U.S. District Judge, Justice Jed S. Rakoff, has granted Hermes’ request for a permanent injunction against the artist, Mason Rothschild, preventing him and persons in “active concert or participation with him” from using their trademark “Birkin” holding that the continued sale and marketing of “MetaBirkin” NFTs would likely cause confusion and cause irreparable harm to Hermes. The Hon’ble Judge’s decision comes at a critical juncture and highlights the blurring lines between artistic expression and trademark infringement in the digital realm, particularly in the context of NFTs.
In the previous year, Hermes International and Hermes of Paris, Inc. filed a case against Rothschild, accusing him of infringing their trademark “Birkin” and creating a false impression of endorsement by the luxury fashion house with his digital NFTs known as “MetaBirkin”, which depicted Birkin handbags covered in fur and artwork.
In February 2023, a jury awarded Hermes $133,000 in total damages holding Rothschild liable for trademark infringement, dilution, and cybersquatting. The jury held that the sale of these NFTs amounted to trademark infringement as customers were likely to be confused with the origin of the bags. It was further noted that NFTs as artistic work could not be protected under the First Amendment of the U.S. Constitution if it violates trademark laws and deceives consumers.
Following the jury’s verdict, the parties filed post-trial motions; Rothschild requested a judgment in his favour or a new trial along with leave to interview the jury, and Hermes sought a permanent injunction against Rothschild to prevent continued infringement of their trademarks by promoting the said NFTs on social media platforms, etc.
The matter was heard in the U.S. District Court for the Southern District of New York. The Hon’ble Judge opined that Rothschild’s continued marketing of the NFTs would likely confuse consumers and cause irreparable harm to Hermes, and thus, a permanent injunction was necessitated. He denied Rothschild’s requests to dismiss the verdict or hold a new trial, stating that Rothschild’s scheme defrauded consumers into believing that Hermes endorsed his “MetaBirkin” NFTs by using variations on the company’s trademarks.
However, the federal Judge refrained from ordering Rothschild to transfer the NFTs in his possession considering that (a) Rothschild and associated parties have already been restrained from further infringement, (b) “MetaBirkin” NFTs are at least in some respects works of art, and (c) though he continued to market his NFTs, it was done before an injunction was issued.
Given the jury’s decision holding Rothschild liable for cybersquatting, the court directed the defendant to hand over the domain name – www.metabirkins.com and related materials to Hermes. Further, the defendant has been ordered to transfer the royalties, financial benefits, etc., earned from the “MetaBirkin” NFTs from January 31, 2023, through June 30, 2023, to Hermes by July 15, 2023.