In the recent groundbreaking ruling that could have far-reaching implications for the world of fashion and digital art, luxury fashion house Hermès has emerged victorious in a landmark legal battle over non-fungible tokens (NFTs). The case marks the conclusion of the first-ever trial examining NFTs and the decision is expected to serve as a precedent for their use in the industry of fashion.

The dispute centered on Mason Rothschild's MetaBirkins, a collection of NFTs that featured digital renderings of Hermès' iconic Birkin bag. Rothschild claimed that the NFTs were a form of artistic expression protected by the First Amendment. “I am not creating or selling fake Birkin bags. I’ve made artworks that depict imaginary, fur-covered Birkin bags,” stated Rothschild on social media. 

In response, Hermès argued that the use of their trademarked Birkin name and design constituted trademark infringement, since it confused the customers and could potentially harm the reputation of the brand. “MetaBirkins sold at the amount they did because of the Birkin name," said Oren Warshavsky, a lawyer representing Hermès. "People spent that money because of the name MetaBirkin, regardless of which NFT they were getting.”

After less than a month of proceedings, the jury seated in the court in Southern District of New York sided with Hermès', awarding the luxury brand $133,000 in damages, ruling that MetaBirkins didn't qualify as protected artwork, rather they were categorized as ordinary consumer goods. The verdict clarified that intellectual property rights extend to digital possessions and NFTs, highlighting the need for creators to respect these rights and seek permission before using a brand's name or image in their work.

What to expect next?

It is no news that the fashion industry has long been a target of counterfeiters, who produce cheap copies of luxury items and sell them at a fraction of the price. Therefore, the Hermès decision is of particular significance for the emerging market of NFTs, which have exploded in popularity in recent years as a means of selling unique digital assets, including art, music, and fashion. As the market continues to grow, brands are expected to take proactive steps to protect their intellectual property and safeguard their business interests in the digital realm.

The Hermès ruling further serves as an implicit warning to NFT creators that intellectual property law is enforceable on the blockchain and underscores the importance of trademarks in protecting a brand's reputation. Therefore, to avoid the risk of costly trademark infringement lawsuits and potentially devastating financial losses, NFT creators will have the Hermès case at hand as a stark reminder to observe intellectual property rights in the digital age.