Who controls crypto? Digital assets and Web3 are testing the limits of intellectual property
Edward Berthelot—Getty Images
When the Internet went mainstream in the mid-1990s, it created a wave of new intellectual property rights (IP) issues that forced courts to decide how rules designed for the era of books and industrial machines should apply to things like web domains, online mash- ups and smartphone technology. The IP rules on the internet gradually became a little clearer, but it often took years of waiting before the Supreme Court could get involved.
Now something similar is playing out in the world of crypto and Web3. The latest example is a high-profile case in the news this week involving Hermès, which claims an entrepreneur selling versions of its iconic Birkin bags infringed on the fashion house’s trademark rights. The entrepreneur argued that he should be off the hook since his digital goods were protected by free speech in the same way that Andy Warhol’s paintings of Campbell’s soup cans were. But the judge didn’t buy it — in part because text messages described him telling others the plan was to “pump” and “drop” the bags to “whales.”
The Hermès case revolves around trademark law, which is meant to protect brands, but the other two main pillars of IP law – patents and copyright – have also become battlegrounds as crypto players fight over who will own and control other aspects of the Web3. In the case of patents, which provide a 20-year monopoly for new inventions, banks and others seek to own aspects of blockchain technology. And recently, a key player in the emerging Web3 domain name industry said they fear a rival is trying to abuse patent rights to prevent competitors from using common technology—a valid fear for anyone familiar with patent trolls or the destructive multibillion-dollar industry. patent lawsuit between Apple and Google over the iPhone.
Then there is copyright, which protects artistic expression and, thanks to lobbying by Disney, can now last for over a century. Anyone who follows the NFT scene has likely heard about the ongoing lawsuit between Yuga Labs and an artist over who controls the rights to thousands of Bored Apes. Yuga claims that it owns the underlying copyrights, although it allows Ape owners to engage in a wide range of commercial activities through a broad licensing arrangement. But the artist claims the company didn’t use the necessary level of creativity to qualify for copyright when it stamped the Monkeys, while Yuga also faces the problem that it never registered the digital creatures – a prerequisite if you want to sue someone.
I have only given the most basic description of all these cases – there are obviously other legal subtleties at play. But the bottom line is that the crypto world, which is barely a decade old, is slowly being engulfed by IP issues in the same way that previous eras of the internet did before. As a casual observer, I can only chalk it up to the fact that it wasn’t long ago that I could count the number of crypto lawyers on one hand, but now there are hundreds – and at this rate, it won’t be long before lawyers start building their practices around crypto IP. There is already no shortage of work.
Jeff John Roberts
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@jeffjohnroberts
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