Hermès v. Rothschild Case on NFTs

World Intellectual Property Organization (WIPO) explains Trademark as follows “a trademark is a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises. Intellectual property rights protect trademarks.” In domestic law, the rights arising from the trademark registration belong to the trademark holder. The source of this right, as I mentioned, is based on intellectual property law.

Non-fungible tokens (NFTs) are assets that have been tokenized via a blockchain. The values built on blockchain technology that cannot be changed and are available to be subject to all kinds of legal transactions are called NFTs. The most crucial feature of NFTs is that they are not fungible goods. In other words, there is only one of that values on the blockchain system, which is why works of art are highly appreciated in the market as NFT. When NFTs are recognized as works, they are protected as works in Turkish Law under the Law on Intellectual and Artistic Works. We know that works are sui generis in domestic law. On the other hand, NFTs are not “work” under the law on Intellectual and Artistic Works.

With the development of technology and the widespread use of NFTs, the World Intellectual Property Organization tried to find a solution about what the work in this field is and which class it falls into. World Intellectual Property Organization has recently announced the newly enacted 12th classification list of the Nice Classification for the International Classification of Goods and Services for the Purpose of Registration of Trademarks, which will enter into force on 01.01.2023.

In Class 9:

New goods: “downloadable digital files authenticated by non-fungible tokens [NFTs]”, “computer network routers”, “portable document scanners”, “cases for smartphones incorporating a keyboard”.

Amendment of the goods: “downloadable computer software for managing cryptocurrency transactions using blockchain technology” to “downloadable computer software for managing crypto asset transactions using blockchain technology”.

The new classification can now provide brand protection for NFT and Blockchain products. These products will, in the state, start to be included in Class 9 of the Nice Classification from the first of January 2023.

The conflict between Hermès and NFT artist Rostchild, which made a great impression in the conflict between NFT and brands, will be discussed. This conflict occurred in December 2021 between the world-famous French fashion giant “Hermès” and NFT creator “Mason Rothschild”. The sales platform “OpenSea”, which mediates NFT trading on the Internet, is also one of the parties to the conflict. One of Hermès’ most famous products is the Birkin model women’s handbag. Named after the British actress/singer Jane Birkin, the bags have become status symbols, are pretty expensive, and have lengthy waiting lists for some of their models. At the same time, Birkin bag counterfeits are increasing worldwide, and Hermès makes great efforts to prevent these counterfeits and preserve trademark rights.

Mason Rothschild is the creator of the NFT series MetaBirkins and describes himself as an artist. MetaBirkins is a collection of 100 Birkin bag-look NFTs available for sale on OpenSea, an NFT marketplace. Hermès, the trademark holder, took action because Rothschild put the Birkin bags up for sale on Opensea and complained in some interviews that his NFTs were imitated and wanted to defend the rights of his NFTs. A man in charge from Hermès told the Financial Times on the tenth of December that Hermès did not authorize or approve Mason Rothschild to commercialize Birkin bags on the metaverse. He stated that Rothschild’s NFTs violate Hermès’ intellectual property and trademark rights and set an example for imitations of Hermès products in the metaverse.

Hermès has instigated a warning to OpenSea and Rothschild to protect its rights. According to Hermès, MetaBirkins will mislead consumers and lead to the perception that MetaBirkins NFTs are official Hermès products, even though they are official Hermès products. As a result of these warnings, MetaBirkins sales in OpenSea were stopped. However, Rothschild made known publicly that NFT works are within the scope of freedom of opinion and that the artist’s activities should not be restricted.

Hermès filed suit against Rothschild in a New York Federal Court on the fourteenth of January, accusing him of federal and common law trademark infringement, false designation of origin, trademark dilution, cybersquatting, and injury to business reputation and dilution under New York General Business Law. The parties’ trial started in the U.S. District Court for the Southern District of New York on the thirtieth of January. The world eagerly awaits the developments in this case and the court’s decision.

Bibliography

• https://www.decrypt.co/88431/birkin-handbag-creator-Hermès-calls-metabirkin-nfts-trademark-infringement
• https://www.wipo.int/edocs/mdocs/enforcement/en/wipo_ace_15/wipo_ace_15_10_presentations.pdf
• https://www.wipo.int/wipo_magazine/en/2022/02/article_0002.html

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Tagged with: Intellectual Property, World Intellectual Property Organization, WIPO, Trademark, Non-Fungible Tokens, NFTs, Blockchain