Non-Fungible Tokens (NFTs) have ushered in an exhilarating new paradigm for digital art and collectibles. All this growth has opened up a Pandora’s box of legal disputes over copyright and trademark infringement. Landmark cases such as Hermès v. Rothschild and Miramax v. Tarantino continue to raise the question of the innovation vs. legal protection debate. They help untangle ownership and rights in the quickly expanding NFT space. The total value of the NFT market peaked at $24.9 billion in 2021, as reported by DappRadar’s 2021 Year in Review. This increase has a profound effect on artists and brands alike. Companies of all sorts need to take a hard look at their IP strategies in the digital age.
Trademark Infringement and Artistic Expression
Hermès’ case against Rothschild represents an important crossroads where NFTs intersects with trademark law. It’s the major test case of its kind and a perfect demonstration of how these two worlds collide. The luxury fashion house Hermès came down hard on Mason Rothschild. They successfully sued him for trademark infringement over his MetaBirkins NFTs, which displayed digital renditions of fur-adorned Birkin handbags. For the first time, the court acknowledged Rothschild’s NFTs as artistic creations. In the end, the Court sided with Hermès, finding a likelihood of confusion among consumers due to the high degree of association with the Hermès brand.
First, the court addressed a critical question. The question then became whether Rothschild’s works amounted to artistic expression deserving of First Amendment protection, or whether they constituted trademark infringement. This ruling highlights the importance of balancing artistic freedom with the protection of established brands and trademarks in the digital space. It further emphasizes the danger of consumer confusion when NFTs use widely recognized trademarks without permission.
Now is the time for companies to rethink their IP strategies to mitigate the impact of NFTs. NFTs Artists’ works tokenised and sold as NFTs without their consent would lead to an exploitation of these works, with no control or financial return to the artist. Digital artist Krista Kim found her works being minted and sold as NFTs without her authorization.
Copyright Ownership in the NFT Space
A handful of subsequent cases have delved even more into the subtle complexities of copyright ownership as they pertain to NFTs. In Miroslav Dimitrov v. Frank Ape LLC, the court addressed the distinction between purchasing NFTs and owning underlying copyright. This is an important distinction that became pivotal in the court proceedings. As the court in Rosenfeld v. Second among these was the question of whether a sale of an NFT even includes copyright for the underlying artwork.
These cases highlight a crucial point: a sale of an NFT does not transfer copyright unless specified in the contract terms. It’s important for both creators and collectors to grasp this difference. This is useful for getting a sense of what rights (if any) NFT ownership conveys. NFTs played a central role in Miroslav Dimitrov v. Frank Ape LLC and Rosenfeld v. Bittrex.
The Pulp Fiction NFT Dispute
The Miramax v. Tarantino case was Miramax’s lawsuit against filmmaker Quentin Tarantino for selling his Pulp Fiction NFTs. The film studio countered that Tarantino’s NFT sale violated their exclusive copyright of the film Pulp Fiction.
This case presented some very complicated issues. It focused on the ways creators can incorporate their previously created works into the NFT marketplace without infringing on their copyright holders’ rights. The actual terms of the settlement are to be not disclosed. Yet, as the above case demonstrates, the need for clear contractual agreements and knowledge of copyright law has never been more important to the NFT space.
