After making waves in the art world, NFTs are facing major legal hurdles. A federal case tried in Manhattan just tested NFTs and the limits of intellectual property laws, ultimately awarding luxury brand Hermès $133,000 in damages from artist Mason Rothschild, who made and sold non-fungible tokens of the brand’s iconic Birkin handbag.
According to the Wall Street Journal, this is one of the first cases addressing the intersection of NFTs, IP law, and art’s free-speech protections.
Hermès sued Rothschild for over 100 images he dubbed MetaBirkins. The NFTs depicted handbags with the same shape and style as the luxury accessories. Hermès claimed the images were infringed on their trademark. Still, during the trial, Rothschild’s attorneys argued that the brand’s trademark rights didn’t apply because the NFTs were protected artwork intended to make a statement about conspicuous consumption.
The case’s outcome will likely boost companies seeking to protect their intellectual property from being traded and sold in virtual marketplaces. Had Rothschild won, it could have ushered in significant legal disruptions, but the victory for Hermès means existing intellectual property doctrine will remain unchanged.
This is not the only lawsuit of its kind. Other companies, including Nike and Miramax, have brought lawsuits claiming NFT creators infringed on their trademarks and copyrights.
The rise of NFTs has produced multiple new challenges to intellectual property law. Companies will need to keep up with evolving technology or risk losing their legal battles. The outcome of this ruling serves as a reminder that existing IP laws still apply in the digital world and can be used to protect companies’ rights.
