Non-Fungible, But Also Non-Official

Using a blockchain—a decentralized, shared database—to track the history of a digital or real-life item creates a secure timeline of where that item has been throughout its lifespan, giving purchasers confidence about its legitimacy. As such, blockchain technology is a tool for everything from ensuring the authenticity of collectibles and luxury goods to demonstrating an unbroken chain of custody for an organic tomato.

However, as recent events in the NFT and cryptocurrency space have shown, there may be disputes about the legality of the data originally uploaded to the digital ledger. The human beings providing the content or information can make mistakes, copy something as a political statement or parody, purposely mislead fans into thinking an NFT or cryptocurrency is associated with a certain property owner and/or one of its licensees when it is not, or simply believe that they have the right to create the content. All of these can raise the ire of the owner of the IP that is seemingly associated with the project.

As a result, more and more accusations of infringement and counterfeiting have emerged in the crypto and especially the NFT sector in past few months. Some examples:

  • An NFT collection called Art Wars, by British curator and artist Ben Moore, includes images based on existing works by a variety of artists. Specifically, several artists created unique versions of the Original Stormtrooper helmet, designed by Andrew Ainsworth (which is licensed separately from Star Wars in the U.K.) for a real-life charity art exhibit Moore put together in 2013. Moore recently repurposed those images as NFTs in a collection named after the original exhibit. But the artists, including Damien Hirst, Anish Kapoor, and others, claim Moore was not authorized to use those images in the form of NFTs without their permission. The NFT platform OpenSea removed the collection from its offerings after receiving a copyright notice.
  • Hermès sent a cease-and-desist letter to Mason Rothschild, an artist who created more than 100 NFTs called MetaBirkins, each depicting a different digital version of Hermès’ most famous product, the Birkin bag. Each NFT consists of an image of a bag customized with different colors, graphics, and textures. Before being removed from OpenSea due to Hermès’ complaint, the MetaBirkins had achieved a trading value of $1.1 million, according to published reports. Rothschild believes he is protected by the First Amendment.
  • The estate of author J.R.R. Tolkien blocked a cryptocurrency called the J.R.R. Token, which featured iconography and phrases from The Hobbit and The Lord of the Rings without authorization. The estate took its trademark infringement complaint to the World Intellectual Property Organization and won its case.
  • A collection of about 2,000 Squid Game tokens, seemingly attached to the globally popular South Korean TV series on Netflix, turned out to be an unauthorized project from an anonymous creator. The tokens were positioned as allowing the purchaser entry into a digital version of the Squid Game, with the promise of financial rewards. The Korean Copyright Commission began an investigation into whether this was a case of copyright infringement, but it was soon discovered that the tokens were not only unofficial but seemed to be a scam—sleuths could not verify the existence of a game or monetary winnings—and their value plummeted.
  • Quentin Tarantino announced that he planned to sell NFTs of bits of his original, hand-written and hand-edited script for the film Pulp Fiction. But Miramax, which released the film, filed suit, saying he did not have the right to do so and alleging trademark infringement and breach of contract. Tarantino disagrees and put the NFTs up for auction despite the suit, saying he never handed over publishing rights for the script itself and arguing that the NFTs are a published spin-off of the original, for which he retains ownership.
  • Artist Damien Hirst, who was part of the Art Wars exhibit mentioned above, has collaborated with a number of companies to create products featuring his well-known multi-colored polka dots. A digital artist going by the name of Loafgren created a pair of physical Crocs for auction, using the same pattern and colors but not authorized by Hirst. Loafgren then mined and sold an NFT on the Foundation platform depicting the shoes, which he also has been using as his profile picture on Twitter, and another NFT of Hirst’s tweet objecting to the original use, with commentary.

Note that cryptocurrencies are related to NFTs in that both are blockchain-enabled. The difference is that NFTs (non-fungible tokens) are unique representations of real-world goods that are not interchangeable, while cryptocurrencies are “fungible tokens” that can be exchanged (like currencies in real life). Both can be involved in conflicts such as those described above.

It is true that putting an NFT or cryptocurrency into circulation on a blockchain (known as mining) creates a secure record of who purchases it and what happens to it otherwise throughout its lifespan. But as these situations show, nothing is preventing infringing or counterfeit data from being turned into an NFT or coin in the first place. No one knows yet exactly what will happen with these and other similar cases that are just starting to emerge, if and when they proceed through the courts. As with all licensed products, services, and experiences, licensors and licensees must be vigilant to ensure that their trademarks and copyrights are being used legally in the world of crypto and NFTs.

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