Last week saw a New York jury find that a non-fungible token version of Hermes’ widely-acclaimed Birkin bags violated its trademark rights. Mason Rothschild’s ‘Metabirkins’ are NFTs with digital bag designs based on the famous designs of Hermès Birkin Bags. The NFTs were held to infringe Hermès’ trademark rights.
Arguments on Hermès’ side centred around plans the company has to develop its own NFTs, contending that the ‘MegaBirkin’ would infringe on its ability to move into this space with consumers confused between the similarity of the two. Another key argument was that the ‘MetaBirkin’ brand would afflict the reputation and exclusivity of the Birkin brand.
Rothschild argued that it was entitled to sell the artworks attached to the NFTs, likening them to pieces of art akin to Andy Warhol’s prints of Campbell Soup cans, and thus protected by the First Amendment. Blake Gopnik, an art critic who worked on the defence similarly sees them as in the Warholian tradition, expanding that rather than imitating or purporting to be a Birkin bag, they are instead commenting on the culture of commodities.
What is a non-fungible token?
NFTs are digital items that you own, with proof of ownership stored on a blockchain – a publicly accessible digital database. They can be traded and exchanged for money, cryptocurrencies, or other NFTS, with the value determined by the market and owners – ‘Everydays: The First 5000 days’ by Mike Winklemann is one of the most expensive NFTs sold to date, at $69.3 million in 2021.
NFTs are created through ‘minting’ whereby the information of an NFT is recorded on a blockchain. The process includes a new block being created, NFT information being validated, and the block then being closed. As part of this, smart contracts that assign ownership are often incorporated, which manage the transferability. As tokens are minted, they are assigned a unique identifier linked to only one blockchain address. If there are 5000 NFTs of an identical item minted, each token has a unique identifier.
When are they used?
2017 saw the emergence of ‘cryptokitties‘, digital representations of cats with unique representations. This quickly amassed a following that spent $20 million in purchasing, feeding, and caring for them. Individuals were reported to have spent over $100,000 each in this manner. Other categories of NFTs include photography, sport, trading cards, and virtual worlds, whereby ownership can be granted of avatar wearables and digital property, amongst others.
Why is this case important?
This is one of the first cases examining digital assets and may be precedent-setting in determining whether NFTs more broadly are similar to commercial goods, or shielded by the First Amendment as an artistic appropriation. Jurors, in this case, sided with Hermes, deciding that NFTs are in fact commercial products, and therefore subject to intellectual property laws. While the precedent is an important one if set, the case was heard in a US District Court, and is anticipated to be appealed, so it remains unclear what the lasting effect will be.