While the world of trademark law and NFTs (non-fungible tokens) is still in its infancy stage, some clarity can be gleaned from a recent federal ruling in New York.
For those of you who do not know, NFTs are a unique digital identifier that can be used to certify authenticity and ownership, as well as provide future rights to the original creator. When used in the art context, it can allow the creator of a digital image to sell that image, establish its authenticity and ownership as legitimate and then, depending on how it is set up, earn future royalties when the image is subsequently sold. Other benefits can be coupled with it as well, such as an artist giving future owners of the NFT early access to concert events or other special benefits.
In the recent NY case, an artist created over a hundred digital images (NFTs) depicting Hermès’ Birkin classic handbag, which he called “Meta Birkins”. He sold them for profit. The artist’s position was that this was artwork aimed at making a statement about conspicuous consumption. Hermès’ position was that it might, as many other brands have done, start selling or issuing its own NFTs and that the artist’s work was diluting Hermès’ brand and creating potential confusion.
The federal jury found against the artist and awarded Hermès $133,000 in damages. One interpretation of this result is that NFT and other digital images must be actual art and not just a depiction of an existing product where the sale of the digital image is largely driven by the value of the underlying brand and not by the value of the art itself. If you are a trademark owner, we encourage you to regularly search the Internet for mentions of your brand name or to contract with a third-party to conduct such searches on a regular basis so that you can proactively take steps to protect your brand.
We here at Scherer Smith & Kenny LLP remain available to address any questions you may have related to these or other trademark – or business-related issues, including assisting with taking steps to trademark your brand or to protect it. For additional information, please contact Brandon Smith at bds@sfcounsel.com or Heather Sapp at hgs@sfcounsel.com.
-Written by Brandon Smith