A Manhattan federal jury ruled in favor of Hermès International in its trademark infringement lawsuit against the artist Mason Rothschild over the release of his “MetaBirkins” NFTs.
The Manhattan nine-person jury found Rothschild liable of trademark infringement, brand dilution and cybersquatting. They also found that the First Amendment does not bar liability. In terms of damages, Hermès will be awarded $110,000 for trademark infringement and brand dilution, as well as $23,000 in statutory damages for cybersquatting.
Rothschild heard the verdict read remotely, as he was not in the courtroom Tuesday or Wednesday, due to not feeling well. Before the verdict was read, Justice Jed Rakoff praised the jury, which had started deliberating the case Monday afternoon, in federal court in the Southern District Court for being “very attentive and listening carefully to all of the testimonies.”
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Hermès sued the 28-year-old artist, whose given name is Sonny Estival, for creating and selling 100 MetaBirkins — colorful faux-fur Birkin bag-inspired non-fungible tokens — in November 2021. The luxury brand contended the NFTs confused consumers, diluted the brand and impacted its in-the-works plans for NFTs. Rothschild and his legal team have insisted that the two-dimensional digital tokens were a commentary on fashion’s fur-free initiative, an experiment in replicating the luxury handbag’s perceived value and an act of artistic expression that is protected under the First Amendment.
In response to the verdict, an Hermès spokesperson issued the following statement: “Hermès is a house of creation, craftsmanship and authenticity which has supported artists and freedom of expression since its founding. In this dispute the House was compelled to act to protect consumers and the integrity of its brand.”
But the legal battle may continue. An attorney for Rothschild, Lex Lumina PLLC’s Rhett Millsaps, said Wednesday afternoon, “We will appeal. We will take every legal avenue that we have. It’s a great day for big, luxury brands and a terrible day for artists and the First Amendment.”
Looking ahead, Rothschild’s legal team “feels they have a very strong appeal,” and they expect to have “a lot of support from the art an NFT communities.” Millsaps said. “I think you’re going to see a lot of people in the art and NFT world rallying to Mason Rothschild’s side….There is still quite a battle ahead. Obviously, this case is about much more than Mason Rothschild and the ‘MetaBirkins’ NFTs.”
Rothschild, who was not available for an interview Wednesday, issued a statement through a spokesperson. Regarding the verdict, he said, “Take nine people off the street right now and ask them to tell you what art is. But the kicker is whatever they say will now become the undisputed truth. That’s what happened today.”
He described Hermès as “a multibillion-dollar luxury fashion house who says they ‘care’ about art and artists, but feel they have the right to choose what art is and who is an artist. Not because of what they create but because their CV doesn’t scream ‘artist’ with a pedigree from a world-class art school. That’s what happened today.”
The statement continued, “A broken justice system that doesn’t allow an art expert to speak on art but allows economists to speak on it. That’s what happened today.”
That was an apparent reference to the judge’s decision to not allow testimony from contemporary art critic Blake Gopnik whose work has appeared in The Washington Post, Newsweek and The New York Times. His portfolio includes a comprehensive biography of Andy Warhol, whose Campbell soup can silkscreen series was said to be in a similar vein to the MetaBirkins, according to Rothschild’s lawyers. Gopnik had written a report for Rothschild’s case explaining why MetaBirkins are art, and had been put forward as a witness in the case.
Last week, Rakoff explained in court why Gopnik would not be allowed to testify. While Gopnik was offered as an “expert on quote-unquote business art, in his report and deposition, he fails to identify in any meaningful fashion what his methodology is and how he applied it in this case….” Stating that in his deposition, Gopnik never offered a “systemic definition of business art,” Rakoff said, “Basically, it’s just his personal opinion and that doesn’t do it anymore.
Rothschild’s statement continued, “What happened today was wrong. What happened today will continue to happen if we don’t continue to fight. This is far from over.”
Hermès is represented by Baker & Hostetler LLP. In addition to Lex Lumina, Rothschild is represented by Harris St. Laurent & Wechsler LLP. Throughout the trial, which started in federal court in the Southern District of New York on Jan. 30, a few different colored Birkin bags rested on a nearby table as a reminder of the authentic product to jurors. During the closing argument, Hermès’ legal team showed a series of images comparing a real Birkin to one of the MetaBirkins.
The Birkin was first introduced in 1984 and named for Jane Birkin, who suggested the need for such an oversize luxury handbag to an Hermès executive on an international flight. The jury was also informed that Hermès sells more than $100 million in Birkin bags each year, and has done so for the past decade. The item, which retails for upward of $12,000, is the company’s bestselling product of the thousands that Hermès produces. Each bag requires 18 to 24 hours of work by one craftsperson to produce. Hermès executives and its legal team claimed repeatedly that the MetaBirkin NFTs damaged the Birkin brand, which is a registered federal trademark for its name and its design.
They noted how the luxury company had not filed a trademark infringement case in 20 years, and has never sued an artist or had issued a cease and desist letter to an artist before Rothschild. The Hermès legal team also suggested repeatedly that Rothschild is not an artist, but a brand builder, in that he was building a community, offering loyalty program like incentives and other features like brands do. They also cited a report created by Harvard Business School professor Scott Kominers that suggested that the average daily trade price for the first 17 days that MetaBirkins were available — before being removed from Open Sea — made them “a massive outlier” compared to multiple branded entities, each of which has millions of social media followers versus the estimated 8,000 to 10,000 that Rothschild had at that time. The criteria and results for that were later disputed at length by Rothschild’s team.
One of the numerous texts that the lawyers for Hermès referred to throughout the case was one where Rothschild said, “People don’t realize how much you can get away with by saying in the style of.”
The Hermès team also presented articles from the media that mistakenly tied Hermès to the MetaBirkins project, but were later corrected.
In its closing argument, Rothschild’s attorneys insisted that Rothschild’s work was art and that the First Amendment protects his artistic freedom. To highlight the MetaBirkin’s two-dimensional design, a cut-ut paper printout of a MetaBirkin was held up with an actual leather Birkin bag to show the members of the jury the difference between the two. They also suggested that Hermès just didn’t like Rothschild’s art.
His lawyers also noted how he took credit for the project wherever possible on social media and in interviews, and never misled anyone to believe that Hermès was involved. They compared the MetaBirkins to Andy Warhol’s silkscreen series of Campbell soup cans. The defense also had noted how Rothschild had posted a disclaimer on the MetaBirkin site, and on some resale sites. They also questioned what evidence showed the likelihood of confusion, but acknowledged the articles that had been corrected and a few inquiries from reporters, whose job it is to ask questions. They also suggested that the opening price for MetaBirkins — which was sold in Ethereum and was equivalent to about $450 based on the cryptocurrency’s value at that time — was not reflective of someone looking to make a profit.
The defense lawyers also cited how Rothschild was creating an experiment about the perceived value in luxury goods and how that might apply to the digital world. They also had referred to testimony that had been given by Hermès Americas president and chief executive officer Robert Chavez that he was not aware of any evidence that MetaBirkins had impacted sales of Birkins in 2021.