Feb 9, 2023

After several days of deliberation, the nine-person jury in the copyright infringement trial between Hèrmes and non-fungible token (NFT) artist Mason Rothschild ruled Wednesday in favor of the French luxury brand.

Video transcript

Hermes winning its trademark lawsuit against meta Birkins NFT is setting a powerful precedent for NFT creators. The verdict ends a year long battle between the French Luxury House and NFT artist Mason Rothschild over his Meta Birkin NFT collection and we've got Ulta and Donny joining us to discuss. She's a general counsel and Chief Compliance Officer at Enclave Markets. OTA. Thanks for joining us. So you have previous experience in the world of NFTS and you were previously the chief legal officer for NFT focused social media platform, Nifty. Maybe you can break down what were the legal arguments here for Hermes for the artist Mason Rothschild. How did and how did it play out? Yeah. Uh Thanks so much for having me back and especially talking about my NF DS, which are still my very favorite area of practice. Uh I, I think that this is a very interesting case. I mean, honestly, I was not surprised by the verdict. I know that the NFT community was quite surprised by the verdict and I recall that I had sort of this uh discussion with Mason and this was back when the lawsuit was just filed and I think he tweeted that. Um He uh I mean, he was tweeting back to Harris and he was saying that even if you're uh insulted by my art as an artist, I'll not apologize for creating it, which was a little bit interesting at that time. I mean, of course, I'm all about artists and, and, and, and, and I love how much artists can do about NFD, but I tweeted back at him and I said that you're kind of playing with fire because I mean, here you're dealing with a big brand. So pretty much Christian Her Hermes uh claimed the trademark was being diluted and that uh potential consumers might be uh not only confused but also fooled into buying his uh uh unaffiliated um virtual goods. So while I think, and, and this goes back to how much brands are interested in the metaverse, but at the same time, they need to protect their IP. So I know that we still have a lot of skepticism among the general public about the NFTS. But at the same time, in order for brands to truly uh approach metaverse and be and, and approach NFTS as well. Of course, I mean, we have to understand that law laws are going to be applicable to NF DS as well just because you are creating this digital art doesn't mean that no, I mean, no consumer protection laws are applicable there. And, and I mean, there are, I think that the jury, some articles are saying that the jury had a hard time to kind of understand the NFTS. Honestly, I think that the jury in this case, they had uh the based on the questions that they asked the judge, I think that they were much curious and I think they approached this case with much more curiosity. But at the same time, I think that they understood also that here we're not talking only about the artistic value, but we are talking a lot more about consumer confusion. So from all, all the elements that I think the the jury considered here or that element that was probably most impactful in my, in my opinion was consumer confusion. And there was a lot of data. Uh I mean, if you read uh the the final verdict, there was a lot of data that kind of pointed to a lot of evidence. I'm sorry, there was a lot of evidence about that pointed to to that uh consumer confusion. All right. So I suppose there's on one hand, the brand consumer confusion and on the other hand, artistic expression, freedom of speech. And when you have those two elements together, you know, what is the standard that has to be proven to say, you know, it is artistic expression, freedom of expression, if you will and uh versus the importance of keeping up a brand? Absolutely. And I think we're probably gonna see this argument a lot more. I think, uh I mean, there are so many interesting cases that uh we're going to have uh potentially this year uh heard by courts. But I, I mean, in my opinion, uh in my opinion, NFTS are so much more than just assets for so for capital gains and not only they allow the digital artists to gain that uh uh recognition that they so much deserve, but also be able to acclaim that recognition. But at the same time, I I'm just wondering, yeah, what, what, what's the difference, for instance, between, you know, Campbell's soup and um um Andy Warhol, you know, he, he did photos or painted images of uh Campbell's soup and, and that seemed to be OK. Um You have the case with Shepherd Ferry and uh Obama and taking a photograph of an A P photographer and, and saying this is hope and this is artistic expression, et cetera. So I guess maybe what is the standard of proving of goodwill versus artistic expression? Yes. And, and that, that's a great, great question, Chris. And I mean, in, in uh the Campbell soup cans, I think that there is a lot more artistic relevance there. But at the same time, there is not so much sort of piggyback on the reputation of the firm. And why do I say that? So if you read this verdict uh very closely, I think that uh the main uh angle of this decision was uh analyzing the artistic relevance of Meta Perkins, right? But uh there was so much evidence there that the real intent of Mason Rothschild was to piggy back not only on the reputation, but this was for his own economic benefits. So, I mean, some uh data that I can bring here is just that pretty much every NFD was priced at 4 50. And then he also received, I think if I'm not mistaken, a 7.5 percent of secondary sales. And also I think that the uh at the IP Council or I mean, who represented Hermes, he pointed to a lot of evidence that the real intent of Mason Rothschild is going, was going to be to, to benefit and, and to benefit from the reputational uh from the reputation from the famous brand as Hermes. But at the same time, I think that he was promoting this on various social media, uh I mean, channels. So, I mean, in this particular case, it wasn't only about the artistic relevance, in my opinion, it was mostly the intent that was behind uh I mean, this whole project and compared to Andy Warhol and Campbell's Soup, in which case, Andy made Campbell's soup cooler than, than it was, but it was a statement, it was a statement. I mean, this is a situation that if I'm gathering correctly, I mean, in his, he's defending himself and you're saying he's being disingenuous. He's just saying, oh, no, this is art this is really art, you know, uh you know, but yeah, I'm sorry to admit that but I think so. Yes and, and, and uh and, and yeah, sorry, go ahead. I know it's quite a lovely. Yeah. Right. But, but I mean, are we seeing this repeatedly in the NFT space because uh the the brands have been slow to act in creating these NFTS and you might see artists and, and creators jumping to the void to take over brand identities and brand names. Do you think that this stops that um from uh other artists from trying to, to to profit off of uh brands that have been quick to start NFTS? Uh Honestly, I don't think that this this decision is going to stop that sort of behavior, but I do expect that we're gonna see some changes in beaver from both from big brands and also from artists. I mean, one good lesson to be learned from this whole uh from this case is that at the end of the day, I mean, brands are approaching NFTS are approaching digital art, but at the same time, they do care about their own reputation, especially famous and well known brands like Hermes in this case. So this is super important even for artists to remember uh if you have that right? Licensing uh I mean, with this specific brand, uh this uh I mean, that's, that's perfectly fine but just thinking that a quick disclaimer or a very short disclaimer for this specific project was supposed to kind of put uh a child on, on, uh, I mean, on the safe, I don't think that that is a good argument at all. And definitely we're gonna see a lot of more cases about this. I mean, uh personally, I don't think that this jury verdict because this is jury verdict in the district court case. So it only decides a dispute that is not actually uh presidential for future dispute. Now, can a real child sort of appeal this, he can still appeal this jury verdict and the district court decision uh not uh we call this not uh judgment, not with standing the verdict. But even if it goes to the second circuit, I'm not sure if Second Circuit really is going to care a lot about this particular case in, in, in my opinion, I'm much more excited about an a new uh not a new but upcoming Supreme court case that is pretty much on uh uh some similar arguments. Is this another example though of just an area of crypto that's just really confusing. And the guidelines and the sort of um things that you're not supposed to do are a little bit unclear and you sort of have a little bit of like a regulation by enforcement uh approach where it's like, you know, all these people are doing this stuff, some people get caught, some people don't get caught and you know, there's just not really clear rules of the road when you start out to actually know what you can and can't do. Uh, that's a great question and, uh, I, I hope we're gonna see a little bit more of these cases and I personally do not like the regulation by enforcement, but I think we need some precedent for courts in order to establish some principles, especially when artists are trying to work with big brands. I mean, as I said, in order for NF DS, we do see a lot more adoption. I've been in the NFT space for so many years now and I'm glad to see so much more adoption from the big brands, but the big brands are not going to let clear of their IP infringement. I mean, their IP portfolio is, is what matters to them the most. So even if you're thinking to piggyback on uh a brand reputation or even if you are considering a fair use defense and uh uh sort of uh uh in as a counterargument, we have to keep in mind that even parody in some cases is going to have a higher threshold uh analysis from the courts in my opinion, when it comes to big brands. All right. Uh Searching here is so late last year you joined Enclave Market says General Counsel and Enclave Markets calls itself the world's first fully encrypted exchange, combining parts of sexes and dees that centralized exchanges and decentralized exchanges. So how do you think the crypto sector is responding in the wake of FTX collapse? A very notorious centralized exchange? Yeah. Yeah, I'm just so excited Chris, you know, but uh this exchange and uh when I jumped on board, this is a subsidiary of a labs, but it's been quite an interesting ride and, and, and of course, we're very much impacted from the FDA fallout. But I think like this is sort of a full uh this, this is sort of a silver lining for the model of our exchange. So our exchange uh combines the world of traditional and decentralized finance through its facts. And uh I mean, there is so much more to talk about fully encrypted exchanges, but pretty much the it is an exchange that is governed by code specifically written to prevent uh front running. What happened with FDA use of user funds, the stop loss hunting and also a lot of more malicious behavior. So we are into our exchange is uh built entirely on a securing clave that prevents any single party, including uh the exchange operators itself from controlling uh customer funds or, or even tampering with the code base. So it I I it's a very exciting model and, and we have had a great response from the community. So I'm very excited to thing with enclave marketta. Congratulations on your new journey. And thanks for joining us this morning, that was enclave markets General counsel and Chief Compliance Officer Alta and do.

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