Invulnerable tokens may exist. In the 21st century, we’re changing the way digital assets are owned and traded, but they’re managed in one important way compared to old-school physical assets: in many ways, they’re governed by a legal framework. 20th century.
One area, in particular, of uncertainty is the intersection of NFTs and intellectual property law. Federal copyright and trademark laws were not written with NFTs in mind, meaning that until revised federal laws are enacted, it is up to the courts to adjudicate 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 NFTs as an artistic statement
One of the most closely watched IP and NFT lawsuits currently being filed involves a lawsuit against artist Mason Rothschild, alleging that Hermès infringed on the trademark of 100 “MetaBirkin” NFTs – handbags – for the digital world.
Rothschild sought to dismiss the case by claiming that what he produced and sold (in the tens of thousands of dollars) were artistic expressions protected under the US Constitution’s First Amendment – just as Andy Warhol used Campbell’s soup labels in his. Art.
For NFT creators, it’s important to consider and document what IP rights they want transferred as part of the sale.
While this case still has a long way to go until it is finally settled — if not temporarily settled — the US District Court ruling on the case recently gave us some clues as to how courts will interpret trademark claims and defenses.
In rejecting Rothschild’s motion to dismiss Hermen’s lawsuit, the court found that while the creation of Rothschild’s bags may have been a form of artistic expression, there was insufficient reason to dismiss Hermen’s lawsuit. The case may go to trial.
The court relied on a well-established body of prior cases – excluding NFTs – to reach its decision. “The use of Rothschild NFTs to authenticate the images” does not change the way the art expression defense is analyzed under current law, as opposed to simply selling an unprinted digital image as an NFT.