By Kevin Seltzer, J.D. Candidate L’24
About a year ago, the term NFT appeared in headlines following the $69 million auction sale of a digital collage. Since then, NFTs have garnered more and more attention as artists and speculators seek to cash-in on the trend. NFTs – short for non-fungible tokens – are “digital assets” that use blockchain technology to establish unique ownership of anything from internet memes and JPEGs of cartoon monkeys, to the ownership right to a pair of sneakers in a warehouse. As a greater quantity and variety of NFTs have become available for purchase, legal questions about their status as securities and exactly what rights they confer have developed. Now, they even face challenges for intellectual property violations.
The spate of recent IP-related NFT suits kicked off in November 2021 with film production and distribution company Miramax filing suit against director Quentin Tarantino after he announced plans to auction off NFTs connected to the 1994 film Pulp Fiction. The NFTs grant the owner the ability to view certain unpublished portions of Tarantino’s original screenplay for the film along with other related content. Miramax took issue with this because, although Tarantino wrote the original screenplay and directed the film, he assigned the copyright and trademark rights to the film to Miramax in 1993. However, Tarantino maintained certain reserved rights during the assignment, which included the publication rights to the screenplay. So, the question arises: do the portions of screenplay which will be sold as NFTs fall under Tarantino’s reserved right to publish the screenplay or were the rights to minting the NFTs included in the assignment to Miramax? Commentators have also questioned whether the NFTs qualify as derivative works, in which case they could be considered the intellectual property of Miramax. Tarantino auctioned the first in a series of seven NFTs for $1.1 million. Potentially ominously, plans to sell the other six NFTs appear to have been put on hold.
In the months since Miramax filed its suit, additional trademark related suits have surfaced. In January, fashion designer Hermès International sued artist Mason Rothschild for creating a collection of NFT handbags dubbed MetaBirkins after the Hermès Birkin handbag. Hermès claimed trademark dilution in addition to other causes of action, and Rothschild has moved to dismiss the suit. In another suit filed in February, Nike brought an action against startup StockX for selling NFTs linked to Nike shoes that StockX would hold in a warehouse and allow users to trade without shipping the shoes themselves. Nike – who recently purchased digital sneaker company RTFKT in a move to potentially enter the NFT filed itself – claims the sale of NFTs based on Nike sneakers“are likely to confuse consumers, create a false association between those products and Nike” and dilute its trademarks.
Considering the expanding number of NFT-related suits, we may soon see courts weigh in on exactly how these digital assets interact with traditional IP rights.Scheduling forMiramax v. Tarantinohas gone forward with discovery set to conclude in late October 2022 and trial scheduled for February 2023.