Do NFTs infringe trade mark rights?
In the first case to address trade mark infringement by non-fungible tokens (NFTs), a New York jury has awarded French luxury goods company Hermès $133,000 in damages. On 7 February 2023, the US jury found Mason Rothschild liable for trademark infringement, dilution and cybersquatting.
This is a US case, the trial was held before a jury and the decision is likely to be appealed – so we should not read too much into it. But with several other trade mark cases involving NFTs pending before various courts, it has attracted considerable attention.
What are MetaBirkins?
The case concerned 100 MetaBirkins NFTs sold by Rothschild, an American artist. MetaBirkins were digital images of colourful furry bags which were designed to look similar to the iconic BIRKIN bag.
Rothschild also registered the domain metabirkins.com. The NFTs were originally priced at $450 each, but soon reached thousands of dollars.
Hermès owns numerous trade marks for the BIRKIN name and trade dress although at the time of the dispute it did not have registrations covering virtual goods.
In its complaint and during the jury trial, Hermès presented survey evidence showing consumer confusion and argued that Rothschild intended to exploit the goodwill in its marks.
It also claimed that its own plan to launch NFTs had been disrupted as a result of the MetaBirkins. Its complaint is available here.
Rothschild argued that the sale of NFTs was an art project and was protected by the First Amendment, under the standard set in the Rogers v Grimaldi test, and his lawyers compared the NFTs to Andy Warhol’s paintings of Campbell soup tins. Rothschild also pointed to a disclaimer on his website.
However, his arguments did not sway the jurors.
Rothschild’s legal advisers have said he will appeal the decision, so there may be more clarity from the appeals court. There are also other cases relating to NFTs pending before the US courts, such as Nike v StockX.
An evolving area
There is a lot of excitement about NFTs and many brand owners are seeking trade mark protection for virtual goods in class 9, particularly following the EUIPO guidance (which we reported here) published last year and the recent update to the Nice Classification.
While we have not seen any judgments from the UK courts on this question yet, there are disputes brewing and not all of them will be resolved pre-trial. It is therefore very useful to see how the issue is being argued in other jurisdictions.
If you have any questions about trade mark protection for NFTs, or concerns about use of trade marks in NFTs or the metaverse, please contact us to discuss the options available.