Non-functioning tokens can will revolutionize the way we own and interact with digital assets in the 21st century, but they are no different from old-fashioned physical assets in one important way: they are governed by a legal framework rooted in many ways in the 20th century.
One area of particular uncertainty is the intersection of NFTs and intellectual property law. Federal copyright and trademark laws were not written with NFTs in mind, meaning it is up to the courts to resolve disputes based on existing laws until revised federal statutes are enacted.
In the meantime, let’s take a look at some of the most interesting and important intellectual property legal issues currently affecting the creation, transfer and use of NFTs.
Trademark Infringement and NFTs as Artistic Expression
One of the most widely followed IP and NFT cases currently being litigated concerns a lawsuit filed by Hermès against artist Mason Rothschild over a collection of 100 “MetaBirkin” NFTs – handbags for the digital world – that he created from which Hermès claims to infringe its trademark.
Rothschild filed for dismissal from the case, arguing that the NFTs he minted and sold (for tens of thousands of dollars) were merely a form of artistic expression protected by the First Amendment to the US Constitution — such as Andy Warhol’s use of Campbell Soup. labels in his art.
It is important for NFT creators to think carefully and document what IP rights they want to transfer as part of the sale.
While this case still has a long way to go to a final resolution—provided it isn’t settled in the meantime—the U.S. District Court that presided over this case recently gave us a glimpse of how courts can settle trademark claims and defenses related to NFTs. interpret.
By dismissing Rothschild’s request to dismiss Hermès’ lawsuit, the court explained that while Rothschild’s creation of the bags might have been a form of artistic expression, there was not sufficient reason to dismiss Hermès’ lawsuit. The case continues, possibly in court.
The court relied on a well-established set of previous cases – which did not involve NFTs – to reach a decision. It noted that “Rothschild’s use of NFTs to authenticate the images”, as opposed to merely selling a digital image that has not been minted as NFT, does not change the way the defenses of artistic expression should be analyzed under the existing legislation.