A jury in New York on Wednesday handed Hermès a victory in its trademark suit against MetaBirkin NFTs creator Mason Rothschild, a decision expected to establish important precedents for how the law treats the blockchain-based digital assets.

Rothschild must pay total damages of $133,000, which includes estimated profits he received from the NFT sales of $110,000 and $23,000 for cybersquatting on the MetaBirkins.com domain.

The verdict in the closely watched trial, held in a US federal court in New York, confirms that trademarks on real-world items can apply to digital goods and NFTs, an outcome that’s likely to shape how fashion and individual creators approach NFTs.

Hermès had accused Rothschild of violating trademarks it holds on its well-known Birkin bags and diluting the Birkin name. Rothschild’s attorneys sought to portray the MetaBirkins as artistic expression protected as free speech in the US.

The jurors ultimately sided with Hermès, finding the MetaBirkins did not qualify as protected art and were more like regular consumer products that infringed the luxury house’s trademarks.

NFTs surged in popularity over the past few years as collectors bought up the blockchain-based assets, which allow for verifiable ownership of digital goods. Numerous fashion brands jumped at the opportunity and released their own NFTs, though trading has since cooled significantly as the crypto market has faltered.

During the trial, Hermès revealed it had been considering releasing its own NFTs when it learned of Rothschild’s MetaBirkins, a series of 100 unique images depicting fur-covered Birkin handbags in colourful variations.

“This is my artistic take on an icon, my remix,” Rothschild previously told BoF.

Hermès, however, viewed the MetaBirkins as Rothschild’s attempt to profit from its protected marks and filed a lawsuit. The company’s attorneys introduced text messages from Rothschild as evidence in the trial where he urged others to promote the MetaBirkins, which he at one point referred to as a “goldmine.”

Legal experts have followed the proceedings to see what precedents it might set regarding NFTs, whose technical underpinnings raise questions about how the law should apply to them. While these technicalities did play some role in the trial, much of the evidence and witness testimony focused on more traditional trademark issues, like whether Rothschild’s MetaBirkins confused consumers into believing Hermès collaborated on the project or otherwise sanctioned it.

The jurors found that, NFTs or not, Rothschild’s MetaBirkins did infringe Hermès’ trademarks under US law.

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