Matters concerning intellectual property and NFTs
In a recent post, we examined the regulatory landscape of NFTs (see here). In our third of our series on NFTs, we will address the concerns about intellectual property rights that are often highlighted by NFT critics.
Intangible problems with NFTs
One of the key questions NFT raises is who owns the copyright to the asset, and who has the right to create an NFT? In addition, if NFT is only the record of the link to the work of art, is the act of tokenization (or “extraction”) an infringement of copyright? Problems related to copyright and NFTs are becoming more widespread, and we have seen several cases of disputes that raise difficult questions about copyright.
For example, Miramax filed a claim for copyright infringement in California against Quentin Tarantino after announcing his intention to auction off seven “exclusive scenes” from his original handwritten screenplay as NFTs. A lawyer for Miramax stated:
“Whatever the limited rights of Mr. Tarantino to publish scripts, they do not permit the stamping of unique NFTs associated with Miramax’s intellectual property, and his opposite position is the subject of an ongoing lawsuit.”
Miramax owns the rights to the film’s distribution while Tarantino owns the rights to the original script, Miramax claims that Tarantino does not have the right to create NFTs as they were awarded to Miramax, while Tarantino claims that he has the rights as an artist (see here). Despite legal issues, Tarantino’s first ‘Pulp Fiction’ NFT was sold for $ 1.1 million in January 2022 through this custom-built website.
In a reverse scenario, where the third-party distributor is sued by the original artist, the Art Wars initiative has been running since 2013, commissioning artists to create different versions of the Star Wars Stormtrooper helmet. Contributors to the project include photographer David Bailey, artist Damien Hirst and sculptor Anish Kapoor.
At the end of November 2021, the curator of the Art Wars initiative took pictures of the works and offered the pictures for sale as NFTs on the OpenSea platform. When it was taken down, the NFT collection had raised 1,600 ETH or $ 7.5 million.
David Bailey’s representative claimed that the artist had not given consent to the NFTs or received any royalties, and stated that the curator did not own the original works of art or had a license to create derivative works. The Curator has since stated that “All artists left in the project will” receive royalties in the usual way “(see here). subsistence in this case is unlikely to be a problem.We were surprised when a legal claim did not follow.
Marvel and DC have both addressed the NFT issue by issuing a strong warning to freelance artists that they should not sell NFTs that have their IP. Some artists have argued that this is contrary to the usual practice of selling their own original comics (see here). In addition, many independent artists, who should no doubt celebrate the creation of NFTs, complain that their work was stolen and turned into NFTs without their consent, and many have limited opportunities to prevent it from happening again.
In China, April 20, 2022, Hangzhou Internet Court recently ruled that an NFT platform is liable for copyright infringement for infringing NFTs traded on the platform. The case was about the illustration ‘Fat Tiger’. More importantly, the court found that the purchase and sale of a digital NFT work is the copyright holder’s right. The platform was required to pay compensation and to “burn” the NFT by sending it to an unavailable address (it is impossible to delete an NFT permanently). It will be exciting to see if other countries follow suit.
These issues are not just limited to copyright, Hermès recently defeated a proposal to dismiss the lawsuit against the creator of “MetaBirkin” NFTs in a lawsuit filed in New York. Hermès claimed that the person behind the collection of 100 ‘MetaBirkins’ NFT, which includes images of the iconic Birkin bag made with fur, has violated trademark law. Hermès had MetaBirkins removed from the NFT exchange OpenSea, but the creator claims that the NFTs are art and protected during the first US change and continue to sell them. We will follow this matter closely.
What’s next for NFTs?
It is safe to say that the problems involved in the intellectual property of NFTs are varied and complex, and to add to the complexity, different jurisdictions will have different rules and interpretations of these rules, which always makes things difficult in this internet age. As such, we see many more lawsuits on the horizon in this room.
So if you want to create, ask yourself the question who owns the copyright and what am I selling?
