On Hermès, NFT, Trademarks and the Metaverse : Lessons for the World of Luxury Brands

VISUEL Marchais Jourdan

Facebook owner Meta is reportedly diving into NFT digital collectibles craze and entering hype-fuelled $40bn market for creating and selling non-fungible tokens. Instagram and Twitter will do so too…In a matter of months, the NFT and Metaverse craze has taken on a whole new dimension and this will have a major impact on the wine world, as I recently wrote in INSIDE BORDEAUX “Why NFTs and the Metaverse are the Future of Fine Wine“. Brands need to be ready for this new experience, and they will need the very highest level of support because the issue is a complicated one. VitaBella Luxury & Lifestyle works with numerous experts in order to help their clients with their brand strategies around the world. As far as the luxury market is concerned, whether we are talking about wine, cosmetics or jewellery, for example, trademark protection in this new, virtual world will be of the utmost importance. Hermès’ announcement last week is proof of this. The luxury goods group has taken American artist Mason Rothschild to court after he used its Birkin bags as inspiration for the creation and sale of digital items in the virtual world of the metaverse. For a more detailed explanation of this market revolution, we turned to Guillaume Marchais, a partner in the law firm Marchais & Associés:
What does this announcement by Hermès tell us about what’s at stake here for luxury brands?
Guillaume Marchais: “Right now, Hermès is bucking the trend of the current frenzy in the fashion and luxury world for the metaverse and NFTs. Indeed, even if its reaction to what can clearly be considered an infringement of its copyright on the Birkin bag (the MetaBirkins) is legitimate, its announcement also indicates Hermès has no desire to join this virtual world for the moment, unlike almost all other luxury brands. Probably cautious in spite of the significant profits already turned by its contemporaries, Hermès emphasizes the importance of the tangible expression of real, manufactured objects. Aside from Hermès, the trend towards NFTs is deep-rooted and probably irreversible, based on the security offered by the blockchain. Hermès will no doubt eventually take the plunge, but its announcement has the merit of alerting us to the risks associated with these virtual “copies”. This comes on the heels of other alerts such as the NFT of Picasso’s bull, whose animated version created by the artist Trevor Jones was removed from the OpenSea platform after the intervention of the Picasso Administration, which oversees copyright protection for the prolific artist’s work. These copies, or virtual adaptations in the form of NFTs, created for commercial purposes, effectively raise the question of the counterfeiting of original works, or labels linked to creations.”
What action can be taken and can it succeed?
Guillaume Marchais: “Even though there hasn’t yet been a ruling, the Metabirkins would seem to clearly infringe Hermès’ copyright. From this point of view, the fact that the illegal reproduction of a work of art or a luxury product or the unauthorised use of a brand takes place in this virtual world really doesn’t change anything – they are counterfeits, just as copies are in the real world. So, the actions open to us are therefore the same, in France and elsewhere, and the chances of success are the same. The problem, it seems to me, is really the quantity of copies, because artificial intelligence enables the creation of countless avatars and versions of products, especially luxury ones, thus increasing the financial burden of fighting forgeries on luxury brands. In reality, if you’ll pardon the expression, we are on the verge of a multiplication of forgeries because of the speed at which NFTs are going to spread. These, like the metaverse, are really only vehicles, but they will make it more difficult for brands to fight against counterfeiting. The laws as they stand seem to be adequate, but perhaps measures will be introduced in the future that are specific to this digital universe.
How can the wine world protect itself to avoid these kinds of problems?
Guillaume Marchais: “The wine world is, of course, concerned by NFTs and the metaverse, especially, but not only, at the high-end. The first significant example, at least in France to my knowledge, was the association of Dom Pérignon and the famous performer Lady Gaga, in October, in the sale in an entirely digital NFT pop-up of (very real) bottles of a limited edition of Dom Pérignon 2005, 2006 and 2010 vintages, designed by Lady Gaga. More recently, Hennessy created its first NFT available on the digital platform BlockBar – a bottle of Hennessy 8 Cognac with a very original shape and label, designed by the artist Arik Levy. Using cryptocurrency, buyers could acquire copies of these NFTs or order a “real” bottle. It’s clear that big producers and prestigious estates will follow suit, particularly because of the high profits to be made. To anticipate the difficulties and react effectively against the very real counterfeiting activity which will inevitably multiply in this virtual universe, the wine world must register trademarks for everything possible, beginning with the brand name itself, of course, but also designs of creations (models, 3D brands, and copyrights in the country of registration). As far as trademarks are concerned, once again the situation may evolve. Where the bottle is only virtual, one could envisage filing something like “virtual wines, purchasable online with cryptocurrency, not downloadable, designed for use in a virtual environment”, in the Class 33 category (wines and spirits) of the French Intellectual Property Register, even if a classic registration for wines and spirits, without further detail, currently offers perfectly adequate protection.

Reach Guillaume Marchais – a partner in the law firm Marchais & Associés – via LinkedIn

(Guillaume Jourdan wrote this post. You can reach him via LinkedIn)