HERMES INTERNATIONAL and HERMES OF PARIS v. "MASON ROTHSCHILD" a/k/a SONNY…

Background

After a nine-day trial, an eight-person jury unanimously found Mason Rothschild liable on all three of Hermès’ claims: trademark infringement, trademark dilution, and cybersquatting. The jury found that Rothschild intentionally used Hermès’ Birkin trademarks in connection with “MetaBirkins” non-fungible tokens (NFTs) and the metabirkins.com website to confuse consumers into believing that Hermès was associated with or endorsed the project. The jury awarded Hermès $133,000: $110,000 in net profits and $23,000 in statutory damages for cybersquatting.

Rothschild filed two post-trial motions. Under Federal Rule of Civil Procedure 50(b), he sought judgment in his favor as a matter of law, arguing that no reasonable jury could have found him liable. Alternatively, under Rule 59(a), he sought a new trial. He also asked for permission to interview the jury foreperson and up to four other jurors, claiming that jurors may have considered prejudicial information outside the trial record. Hermès sought a permanent injunction based on Rothschild’s continued promotion and sale of the MetaBirkins NFTs.

Rothschild’s request to overturn the verdict or obtain a new trial

The court denied both forms of post-trial relief. It held that the jury instructions properly explained that Hermès had to prove the elements of its trademark claims and also prove that Rothschild’s use of the marks was not protected by the First Amendment. The court rejected Rothschild’s argument that the order of the instructions improperly treated the First Amendment as merely a defense. It also concluded that the instructions were at least as favorable to Rothschild as the applicable law required.

The court discussed the Second Circuit’s test for expressive works, commonly called the Rogers test, under which trademark liability may be barred unless the use has no artistic relevance or explicitly misleads consumers. The court noted that a later Supreme Court decision, Jack Daniel’s Properties, Inc. v. VIP Products LLC, questioned whether that test applies when a defendant uses a trademark to identify the source of the defendant’s own goods. Even assuming the Rogers test applied, the court held that the jury reasonably found that Rothschild intentionally misled consumers. The court stated that the First Amendment does not protect intentional fraud.

The court also held that sufficient evidence supported the jury’s findings under the trademark likelihood-of-confusion factors known as the Polaroid factors. That evidence included similarities between the Birkin handbag and the NFTs, the distinctiveness and cultural recognition of the Birkin bag, evidence that Hermès might enter the NFT market, an expert survey, and media mistakes identifying the MetaBirkins NFTs as a Hermès project. The court stated that actual consumer confusion was not required if the other factors established a likelihood of confusion.

The court rejected Rothschild’s remaining challenges. It reaffirmed the exclusion of his expert witness, concluding that the witness lacked a recognizable methodology, and stated that any error was harmless because the court had instructed the jury that the NFTs contained at least some artistic expression. The court also declined to reconsider its prior ruling that the Supreme Court’s Dastar decision did not bar Hermès’ claims. It upheld the jury’s findings on trademark dilution and cybersquatting, including the finding that Rothschild knew his use of the metabirkins.com domain name was unlawful.

Permanent injunction

The court granted Hermès’ request for a permanent injunction after applying the four-part test from eBay Inc. v. MercExchange, L.L.C. The court found that Hermès had shown continuing irreparable harm, that money damages were inadequate because Rothschild continued using the marks, that the balance of hardships favored Hermès, and that the public interest favored preventing consumer confusion.

The court rejected Rothschild’s arguments that a disclaimer would be sufficient or that the injunction would violate his First Amendment rights. It reasoned that the jury found the MetaBirkins name and design themselves were intentionally created to confuse consumers, and that Rothschild therefore could not claim First Amendment protection for the project in its existing form. The court also rejected his argument that Hermès’ alleged misconduct barred relief under the “unclean hands” doctrine, finding no persuasive evidence of the kind of egregious bad faith required for that defense.

The injunction bars Rothschild and people acting in concert with him, including associates and business partners, from using the Birkin marks or otherwise misleading the public about the source of the MetaBirkins NFTs. It orders Rothschild to transfer the metabirkins.com domain name and related materials to Hermès. The court declined to require transfer of related social-media accounts, although it barred use of the infringing mark on those platforms. The court also declined to require Rothschild to transfer his remaining MetaBirkins NFTs or their related smart contracts to Hermès for destruction.

The court ordered Rothschild to give Hermès an accounting and disgorge profits from royalties, transfer income, and other financial benefits received from the NFTs from January 31, 2023, through June 30, 2023. He was required to identify those earnings by June 30 and transfer them to Hermès by July 15. The court also ordered him to communicate the injunction’s terms to NFT purchasers and others, provide Hermès written confirmation of compliance within 31 days, and preserve documents related to the lawsuit.

Request to interview jurors and disposition

The court denied Rothschild’s request to interview the jurors. It found no concrete evidence that the jury considered outside information during deliberations. The court explained that post-verdict jury inquiries are allowed only in extraordinary circumstances supported by clear, strong, substantial, and incontrovertible evidence of a specific impropriety that could have prejudiced the trial. The court concluded that Rothschild’s allegations were speculative.

The court therefore denied both of Rothschild’s motions in their entirety and entered a permanent injunction against him, with the detailed terms set out in a separate injunction order.