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Landmark Legal NFT Decision Favours Intellectual Property Owners

Herbert Smith Freehills | Sue Gilchrist, Aaron Hayward, Byron Turner and Joshua Sanchez-Lawson | Feb 10, 2023

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The Manhattan federal jury's decision suggests registered brands can be protected against NFT infringements

  • Hermès has succeeded in its case of trade mark infringement against non-fungible token (NFT) artist Mason Rothschild. This was the first US trial considering the enforceability of intellectual property rights against the creator of NFTs. The outcome represents a win for IP owners in the fight for protection of their brand, and offers a cautionary tale for creators of NFTs.

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  • In late 2021, digital designer Mason Rothschild created 100 'MetaBirkins'. These were NFTs featuring stylised digital depictions of the Birkin bag. The first MetaBirkin to be auctioned sold for $40,000.
    • Birkins are highly exclusive handbags, valued in the tens-to-hundreds of thousands of dollars
    • Hermès filed a complaint against Rothschild in New York, alleging various causes of action including registered trademark infringement and other claims such as trademark dilution, common law trademark infringement and cybersquatting on ‘metabirkin’ domain names.
    • Rothschild claimed in defence that the MetaBirkins were works of art – artistic commentary on the cultural status of the iconic handbag and constituted a lawful use of Hermès’ IP under protections in the US for artistic expression.
    • Decision: A Manhattan federal jury found in favour of Hermès, awarding damages. Hermès had sought damages to (in part) compensate for losses resulting from the impact on its plans to enter the NFT market itself.

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  • Going forward: Brand owners should use this decision as an opportunity to reconsider their trademarks and the protection they offer over the digital aspects of their business. This is particularly important for brands that want to use NFTs or other digital assets to engage consumers, or simply prevent third parties using their brands to do the same.

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