Hermes and Nike have taken legal action to address the rise of unauthorized NFTs (non-fungible tokens), which have gained significant popularity and value. This surge in NFTs has led to an increase in legal disputes and complexities.
Recently, Nike filed a lawsuit against StockX, a shopping platform, for creating and selling NFTs featuring Nike’s logo and branding. Similarly, Hermes, a French luxury brand, sued artist Mason Rothschild for auctioning 100 “MetaBirkins,” digital representations of the brand’s famed Birkin bag. Some of these NFTs have fetched prices in the tens of thousands of dollars.
The outcome of these legal cases remains uncertain. Annabelle Gauberti, a lawyer specializing in creative industries, stated that the Hermes case could swing in either direction. Rothschild argues that his work is protected under the First Amendment as art, which may hold validity in US courts. Gauberti referred to a previous case in which Louis Vuitton lost a legal battle against a Dutch artist who incorporated the brand’s bags into an artwork depicting a Darfur refugee. The “fair use” defense, which allows artists to use trademarked words or products for artistic purposes or parody, often holds weight in UK and US law.
However, Gauberti believes that Rothschild may struggle to convince a judge that his work has artistic merit. It is unclear what message Rothschild intends to convey other than making a profit, which poses a challenge for his legal team. On the other hand, Nike’s case against StockX is more commercially focused, as StockX has never claimed the NFTs to be art. The application of trademark law in the digital realm is still unclear.
An ongoing debate revolves around whether NFTs should be treated differently from physical art. Rothschild compares his MetaBirkins to Andy Warhol’s famous Campbell soup paintings, arguing that NFTs do not diminish their artistic value. However, legal experts contest this comparison, pointing out that Campbell Soup Co. is unlikely to venture into selling paintings, while Hermes could potentially create their own NFTs. Additionally, the nature of NFTs as proof of ownership rather than the actual content adds to the complexity.
Companies can take several measures to protect themselves. Hermes has demanded that Rothschild remove and destroy his MetaBirkins, and one NFT platform, OpenSea, has already agreed to remove them from sale. However, enforcing online laws presents challenges. Even if lawsuits are successful, it is difficult to pursue individuals who have already purchased the NFTs or prevent their resale in secondary auctions. Enforcing rules online is akin to the “wild west.”
One solution, proposed by Gauberti, is for brands to proactively establish their presence in the NFT space by creating official NFTs. Nike has followed this approach by acquiring RTFKT, a company specializing in designing digital sneakers. Gauberti believes that being proactive and developing their own NFTs offers the best defense for brands. However, some brands remain cautious as their core products are physical, and they are assessing the potential success of the metaverse.
As the popularity of NFTs continues to grow, the legal landscape surrounding them is constantly evolving. The outcome of Hermes and Nike’s ongoing lawsuits will offer crucial insights into the intersection of trademark law and artistic expression in the digital realm.
