Legal disputes at the intersection of IP and NFT – TechCrunch
Non-fungible tokens can revolutionize the way we own and trade digital assets in the 21st century, but they’re no different from old-school physical assets in one important way: They’re governed by a legal framework that is, in many ways, rooted in the 20th century.
One area in particular characterized by uncertainty is the intersection between NFTs and intellectual property law. Federal copyright and trademark laws were not written with NFTs in mind, meaning that until revised federal statutes are enacted, it is up to the courts to decide disputes under existing laws.
In the meantime, let’s review some of the most interesting and important IP legal issues currently affecting the creation, transfer and use of NFTs.
Trademark infringement and NFT as artistic expression
One of the most closely followed IP and NFT cases currently litigated involves a lawsuit brought by Hermès against artist Mason Rothschild over a collection of 100 “MetaBirkin” NFTs – handbags for the digital world – he created that Hermès claims infringes the trademark.
Rothschild sought dismissal of the case, arguing that the NFTs he minted and sold (for tens of thousands of dollars) were merely a form of artistic expression protected under the First Amendment of the US Constitution – like Andy Warhol’s use of Campbell Soup labels in his Art.
For NFT creators, it is important to think through and document which, if any, IP rights they want transferred as part of the sale.
While this case still has a long way to go to a final decision—assuming it isn’t settled in the meantime—the US District Court presiding over it recently gave us some insight into how courts might interpret trademark claims and defenses involving NFTs.
In denying Rothschild’s motion to dismiss Hermès’ lawsuit, the court explained that while Rothschild’s creation of the bags could constitute a form of artistic expression, it was not sufficient grounds to dismiss Hermès’ lawsuit. The case continues, possibly to trial.
The court relied on a well-established body of prior cases—which did not involve NFTs—to reach its decision. It noted that “Rothschild’s use of NFTs to authenticate the images,” as opposed to simply selling a digital image that is not embossed as an NFT, does not change the way the artistic expression defense should be analyzed under existing law.
