The interpretation of the First Amendment in the context of NFT creation appears to be shifting in the US legal landscape. In the recent legal battle between French luxury fashion house Hermès and artist Mason Rothschild, Hermès has managed to secure another win.
The Fair Use Dilemma
The copyright infringement dispute revolved around the MetaBirkin NFT collection. Hermès has effectively secured a permanent court injunction halting all sales of these digital artworks.
It's important to note that the First Amendment governs intellectual property rights and the possibilities for unlicensed use of copyrighted items under specific conditions. This encompasses the fair use doctrine of a copyrighted work. Essentially, it all boils down to whether substantial alterations have been made to a licensed piece.
The issue lies in the absence of a definitive explanation for what constitutes "sufficient alterations" and "fair use". Yet, up until now, the First Amendment has consistently shielded NFT creators who have employed images and objects covered by intellectual property rights.
The Onset of the Lawsuit
The legal dispute commenced at the outset of 2023 when Hermès accused the creator of the MetaBirkin NFT collection of the inappropriate use of the Birkin trademark, which belongs to the fashion house. Specifically, the plaintiff argued that the mere title of the NFT collection was misleading, leading buyers to mistakenly believe that the couture bag maker endorsed Mason Rothschild and his non-fungible tokens.
Rothschild's appeal to the First Amendment and his disavowal of liability proved unsuccessful. The jury, comprised of nine members, ruled that the artist owed $133,000 in compensation for damages. Similarly unsuccessful were the defendant's attempts to draw parallels with the celebrated works of Andy Warhol. Warhol built his career upon sufficiently modifying other authors' photographs, images of trademarks, and products of prominent brands. It's noteworthy that the legal claims were not concerning the Hermès depiction on Rothschild's NFTs, but rather the collection's name itself. In the view of Hermès, the "Birkin" suffix in "MetaBirkin" was redundant, as it mirrors the name of a well-known fashion brand.
The jury concluded that it was his [Mason's] decision to use trademarks in the name and design of NFT MetaBirkins and rejected his disclaimer,the court filing said.
The NFT collection comprises 100 depictions of women's fur handbags in the Birkin style, and it has been reported that Mason Rothschild earned over $1 million from their sale.
Sales Ban
This situation provoked the resurfacing of the legal dispute between Mason and Hermès. The couture house asserted that the first court ruling didn't curb the MetaBirkin NFT promotional strategies and the non-fungible tokens continued to be sold.
As previously stated, a permanent ban on selling MetaBirkin NFTs was sanctioned by Manhattan judge Jed Rakoff at the end of June. The judge reacted quite critically to the artist's recurrent references to the First Amendment.
The defendant’s entire scheme here was to defraud consumers into believing. Nothing in the First Amendment insulates him from liability for such a scheme,the judge passionately expressed.
This set the seal on the case of Hermès versus Rothschild. The court disallowed him from utilizing the Hermès trademark and enacted a direct prohibition on selling the MetaBirkin NFT collection.
Controversial MetaBirkin NFTs Source: Twitter
An Alarming Tendency
This court case could have been perceived as an isolated incident. However... In defending his collection, Mason endeavored to draw comparisons with the creative works of Andy Warhol, who legitimately constructed artworks showcasing soup cans or soda images under the shield of the First Amendment. But this argument was overruled. Moreover, the famous Andy Warhol himself, or rather his Foundation (since the artist died back in 1987), also landed in court charged with copyright infringement.
In the middle of May 2023, the Supreme Court of the United States ruled that the late artist had breached a photographer's copyright by creating a series of silk screen images based on photographs of the late singer, Prince. An appellate court arrived at a similar verdict and the celebrated artist unexpectedly became a common plagiarist.
Ramifications and Takeaways
Both these precedents underscore the intricate nature of intellectual property rights in the digital age, raising questions about the thin line separating artistic self-expression and duping consumers. The Hermès versus Rothschild case may carry serious ramifications for the NFT marketplace, where artists were freely using popular brand logos and product images until not long ago. Creators will now have to strike a balance between artistic self-expression and acceptable distortions. Currently, the legal precedent seems to disfavor digital artists. After Rothschild's defeat, their odds of being taken to court over plagiarism have substantially escalated.
