How The Hermès NFT Case Will Impact Expression And Enterprise

De Wikifliping

How the Hermès NFT Case Will Impact Expression and Enterprise.
Fortis partner Andrew Comer analyzes the Hermès "MetaBirkin" case and its legal precedent for NFTs and trademark laws. He considers the impact on artistic expression and luxury brands, and how NFT creators can legally ensure industry growth.
On Feb. 8, iconic luxury fashion brand Hermès secured an important legal victory in Hermes International SA v. Rothschild , the world’s first case concerning intellectual property infringement by creators of non-fungible tokens.
The court found that Rothschild violated the company’s trademark through his creation and sale of "MetaBirkin" NFTs that riffed off the renowned line’s signature status bags.
Despite the obviously artistic aspects of these digital art images, the jury ultimately concluded they were not sufficiently expressive to merit protection from Hermès’ infringement claim. As a result, Hermès was awarded $133,000 in damages for trademark infringement.
This case highlights the intricate 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 IP infringement.
Physical Rules Still Apply.
Hermès has made huge profits from its iconic Birkin bag, one of the most well-known and sought-after luxury products on the market.
So it was no surprise that when Hermès became aware of the "MetaBirkin" project, they were quick to pursue litigation against Rothschild. What does this win for Hermès mean for other brands, artists, and the NFT industry moving forward?
If the recent verdict says anything, it’s that the same old intellectual property rules will apply in the NFT space. Concepts around trademark, artistic expression, fair use, and the First Amendment will be analyzed the same way in the metaverse as they are in the physical universe.
Artists and creators need to be aware that there is a significant risk in trading on the goodwill of well-established brands for commercial profit.
Just because NFTs and the metaverse are new mediums that statutory law hasn’t fully caught up with yet doesn’t mean that previously established laws related to trademark and other intellectual property don’t apply.
Rather, just as written content moving from newspapers and magazines to online forums didn’t change trademark and intellectual property law, invest in nft the move from selling physical objects to NFTs will not either.
Impact on Brands.
In new digital spaces and elsewhere, established brands will not permit their trademarks and other IP to be infringed or diluted by artists seeking to profit off their protected material.
hrough the Hermès case, those companies have comfort that their tried-and-true enforcement efforts should prevail.
As a result, artists should know that the fact that their art is expressed through NFTs or cryptocurrency in the metaverse will not protect them against the same IP enforcement efforts that could be brought against infringers selling physical assets or other online creators.
Takeaways for Artists and Creators.
Producers of NFTs need to ensure their creation’s value and legal standing by considering existing intellectual property law and, where appropriate, obtaining the appropriate rights clearances.
It’s worth consulting a legal expert in intellectual property when considering use of branded material in NFTs and other digital creations, particularly if it’s intended for broader commercial sale.
Established brands such as Hermès rely largely on the goodwill of their brand—i.e., the value of their name and designs in the marketplace versus others—for sales and will protect that goodwill zealously.
Consequently, artists seen as attempting to trade or profit from that goodwill will face legal challenges regardless of their medium of expression.
Using major brands in commercial artwork is inherently risky. Rothschild’s lawyer tried 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 silk screens. But the argument did not prevail.
Instead, the jury likely recognized that Rothschild’s "MetaBirkin" NFTs were more of a large-scale commercial enterprise that traded on the brand name and interest NFT projects goodwill Hermès has been building since the 1830s.
The precedent set by this case indicates the legal gap between the for-profit commercialization of an artist trading on a brand’s established goodwill to sell swaths of NFTs and the creation of a piece of art on display in a gallery as artistic expression.
Although not all major brands are currently playing in the NFT space, creators and artists should be aware that this case will give companies comfort that their current brand investments and invest in nft future moves into the NFT space will be protected.
The case is Hermes International et al v. Rothschild, S.D.N.Y., 1:22-cv-00384-JSR, 2/8/23.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and NFT Bloomberg Tax, or its owners.
Author Information.
Andrew Comer is a partner at Fortis Law Partners where he leads the firm’s trademark practice, advising companies on registrations and brand protection.