Hermes wins MetaBirkins lawsuit, jurors not convinced NFTs are art

“What happened today was wrong,” he said in a statement. “What happened today will continue to happen if we don’t continue to fight.”

The verdict could provide some guidance for brand owners, said Megan Noh, an art lawyer unaffiliated with the case, “about the line between works of artistic expression and commercial goods”.

Birkin bags, named after actress Jane Birkin, are made by hand and take specialised artisans a minimum of 18 hours to make. Hermes does not disclose how many of the bags it has made since they were first created in 1984, but some researchers of luxury goods have estimated that there are now more than one million Birkins in the market. In 2021, auction house Sotheby’s sold a Birkin for more than $US226,000.

Rothschild had plans to create 1000 MetaBirkins, which he has described as an “ironic nod” to the renowned brand, but only 100 have been released since the project began in 2021.

Each was priced at $US450, and Rothschild also received 7.5 per cent of secondary sales. Hermes has claimed in court filings that MetaBirkins reached about $US1.1 million in total sales volume. Rothschild has estimated that he made about $US125,000 from the NFTs, including the initial sales and royalties.

“What we see in the Hermes case is how emerging technologies and historic, age-old brands collide,” said Ari Redbord, head of legal and government affairs at TRM Labs, a blockchain analytics firm.

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Over the past decade, the French company’s Birkin collection has steadily generated $US100 million in sales each year. In recorded testimony played during the trial, Robert Chavez, president and CEO of Hermes of Paris, said he was not aware of any revenue that the company lost because of MetaBirkins.

During opening arguments in the US District Court for the Southern District of New York, Oren Warshavsky, a lawyer representing Hermes, argued that MetaBirkins confused consumers who thought they were connected to the fashion brand.

“The reason for these sales was the Birkin name,” he said.

Rothschild’s legal team questioned whether people wealthy enough to afford Birkins, which cost thousands of dollars and often have years-long waitlists, would be genuinely misled by his art project.

Millsaps also argued that the NFTs were art that was protected under the First Amendment as free speech. He said Birkins were a “cultural symbol of rarefied wealth and status”, ripe for artists to explore as metaphors of consumerism.

“Art doesn’t exist in a vacuum — it’s often about context,” he said.

Blockchain assets such as MetaBirkins were part of the financial boom-and-bust cycle in cryptocurrencies over the past few years. At the market’s height there was a $US40 billion industry around digital collectibles, but fortunes eroded last year as the volume of NFT sales fell by 97 per cent.

Yet lawsuits are still playing out across the beleaguered industry, including trademark fights focused not on the technology itself, but the essence of what users have stored on the blockchain.

Noh said the best protection artists have against trademark disputes is the Rogers test, a legal standard established in 1989.

In that case, actor Ginger Rogers had sued movie producer Alberto Grimaldi, arguing that the film Ginger and Fred violated her trademark rights because it used her name in connection with its fictionalised depiction of a pair of washed-up Italian dancers. But a federal appeals court determined that the use of the name Ginger was an expressive element of the title, artistically relevant to the underlying film and therefore subject to First Amendment interests that needed to be weighed against the risk of misleading consumers.

Rebecca Tushnet, a Harvard Law School professor who helped prepare Rothschild’s defence, said the Rogers test meant “you can’t hold someone liable for infringement unless their work is artistically irrelevant or explicitly misleading”.

During the trial’s opening arguments, Hermes attempted to minimise Rothschild’s credibility and artistic intent by focusing on his business strategy, displaying text messages in which he asked social media influencers to “do one more shill post” that might raise demand for his NFTs. The company’s lawyer also told the jury that Rothschild had publicised its cease-and-desist letter on social media, hoping that conflict might drive interest.

Judge Jed S. Rakoff granted Hermes’ motion to exclude a report prepared by art critic Blake Gopnik that favourably compared the MetaBirkins to artwork by Andy Warhol and Damien Hirst. (Gopnik contributes to The New York Times.)

The defence painted a more sympathetic picture of Rothschild, 28, who worked in retail for streetwear brands and luxury brands such as Saint Laurent after dropping out of college. In 2021, he and Ericka del Rosario, now his fiancee, opened a concept store in Los Angeles called Terminal 27. He often hired assistants with the technical skills he lacked to work on projects, including MetaBirkins.

Rothschild was “a conceptual artist”, said Millsaps, his lawyer. “The idea guy, not the guy who executes the job.”

The strength of trademark rights will soon be tested again when a case between Jack Daniels and VIP Products, which sold squeaky dog toys resembling the whiskey maker’s bottles, goes in front of the Supreme Court.

Some veterans of the fashion industry wondered why Hermes had bothered litigating the case at all. Although Chavez testified that the company had been experimenting with its own NFTs, including a project intended for release this year, it has let other unsanctioned projects slide, like when New York City collective MSCHF turned the Birkin bag into $US76,000 “Birkinstocks”.

Ian Rogers, the former chief digital officer of fashion conglomerate LVMH, who currently works at a crypto company named Ledger, said the company’s preoccupation with Rothschild was puzzling.

“Maybe this hit close to home,” Rogers said. “Luxury people should understand NFTs, because if you have been in the business of explaining why someone would spend $US18,000 on a bag then you are pretty well-suited at explaining why someone would pay $US3000 for an NFT.”

This article originally appeared in The New York Times.