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NFT Lawsuits and the Problem with Trademark

Protect your brand from trademark infringements

Regardless of their often playful nature, trademarking brand names and designs is a serious matter to consider in the world of Non-Fungible Tokens (NFTs). Trademark laws, though not fully clear yet, will still apply to these considerably new technologies as they do to any other asset. Here are a few cases of trademark infringement of NFTs against more traditional products, NFT versus NFT conflicts, and ways to control and prevent more of these cases from happening.

Furry handbags and freedom of speech: Hermès Int’l v. Rothschild 

Luxury brand Hermès is suing an artist for selling digital Birkin bags as NFTs.

Artist Mason Rothschild caused controversy earlier this year by releasing MetaBirkins, a series of 100 NFTs inspired by Hermès’ famous Birkin bag. This soon resulted in the French fashion house filing a lawsuit under several clauses including trademark infringement, federal trademark dilution, cybersquatting, injury to business reputation, misappropriation and unfair competition. Rothschild dismissed the lawsuit twice, relying on the Rogers v. Grimaldi test, comparing himself to pop artist Andy Warhol and explaining that his furry renditions of the famous bag are “artistically relevant and do not explicitly mislead about their source or content”. Due to Rothschild identifying himself as the creator of the MetaBirkins and being explicit about the imaginary interpretation in both name and design, including using the term “Meta” as part of the concept, the judge ruled that Rothschild’s work was protected by the First Amendment as a matter of artistic speech.

Cross-format infringements: Nike, Inc. v. StockX LLC

E-commerce resale platform StockX got in trouble with Nike not once, but twice, in a series of digital and physical trademark infringements.

E-commerce resale platform StockX got in trouble with Nike not once, but twice, in a series of digital and physical trademark infringements.

Nike’s initial statement came in February this year, accusing the retail company of selling unauthorized NFT versions of its shoe-wear. StockX’s defense was that each digital item was not a stand-alone product, but a receipt tied to a specific “verified authentic” pair of physical Nike shoes, and that they were not trying to compete with Nike’s own NFT collection.

However, Nike amended its complaint in May after buying four pairs of its own brand of sneakers from StockX and allegedly discovering that the physical products were also counterfeit. The online shop has built a bad reputation within the world of sneaker aficionados, with several YouTube reviews complaining about “fake shoes” and non-existent return policies. Thus, this is a notable case where a company allegedly adapts its traditional trademark infringement practices for the field of Web3 products.

Miramax v. Tarantino, Et Al. or Companies v. Creators

Quentin Tarantino and his company Visiona Romantica Inc. were sued by Miramax LLC after he minted original handwritten pages for his 1994 film Pulp Fiction and released them as NFTs.

Original creators may try to make NFT versions of their legacy work. They also need to be careful about any pre-existing IP contracts related to this work. In particular, those signed and released before the existence of NFTs. Miramax LLC sued Quentin Tarantino and his company, Visiona Romantica Inc., after he minted original handwritten pages for his 1994 film Pulp Fiction and released them as NFTs in late 2021. 

In 1993, the director signed a contract granting all film rights to the production company, including copyrights and trademarks. However, he reserved his rights to elements like unlimited publication of print material. These include novelizations, comic books, and, very pertinent to this case, the screenplay. Tarantino uses this last factor as a justification for his NFT collection. Miramax still contends the author is guilty of breach of contract, unfair competition, and infringement of both copyright and trademark.

Battle of the (Bored) Apes: Yuga Labs v. Ryder Ripps

Yuga Labs, the company behind the famous Bored Ape Yacht Club (BAYC) series, sued artist Ryder Ripps for minting five thousand Bored Apes NFT copies.

Trademark infringement in NFTs is not limited to digital adaptations of legacy and physical products. Digital token creators are also encountering branding issues from other NFT artists.

In early June, Yuga Labs, the company behind the famous Bored Ape Yacht Club (BAYC) series, sued artist Ryder Ripps for minting five thousand Bored Apes NFT copies. Yuga Labs’ team is suing Ripps for trademark infringement, cybersquatting, and falsifying origin. Also, for falsifying “the very same trademarks that Yuga Labs uses to promote and sell authentic BAYC NFTs”. Ripps sold the replicas at the same marketplaces used by Yuga Labs, such as OpenSea.

Ripps tries to justify his project, known as RR/BAYC, citing “parody” and “satire” as his defense. He also suggests NFTs cannot be copied per se. Each one of them has a unique, non-replicable token code.

Protecting your brand from NFT trademark infringements

A fast-changing market needs fast-changing laws to cover all the nuisances involved in the production and distribution of NFTs compared to more traditional assets. In the meantime, there are ways to protect your brand, digital or otherwise.

The best way for brands to prevent NFT plagiarism is to revise their existing trademarks. They could also apply for additional trademarks to cover virtual NFT goods, digital assets and crypto-assets. Brands like Mastercard and Panera Bread, Mattel, Marvel Characters Inc., and, unsurprisingly, The Andy Warhol Foundation, have done this. However, this is no guarantee that NFT minters will not try to steal your branding. The Nike vs. StockX case proves so.

What can you do if you discover your brand’s name and likeness are illegally recreated in NFT form? You can initially file a report for trademark infringement on the marketplace(s) where these items are for sale. Then, ask for removal from the platform’s listings. To take a more official path, you can file two or more different clauses. This has been the case in all lawsuits mentioned in this article. When in doubt, speak to the trademark office of your jurisdiction for more specific guidance.

NFT Trademark Sources:

https://www.cnbctv18.com/cryptocurrency/yuga-labs-inc-vs-ryder-ripps-a-landmark-case-for-intellectual-property-rights-14120532.htm

https://www.forbes.com/sites/legalentertainment/2022/07/25/pulp-fiction-nft-lawsuit-miramax-v-tarantino-et-al-a-preview-of-coming-attractions/?sh=324038256ca2

https://www.morganlewis.com/-/media/files/publication/presentation/webinar/2022/trademark-and-copyright-issues-for-nfts-and-the-metaverse.pdf

https://www.forbes.com/sites/haileylennon/2022/07/05/a-landmark-nft-lawsuit-seeks-to-determine-how-creators-owners-and-investors-can-protect-their-intellectual-property-and-monetize-assets-moving-forward/?sh=99a85b161ec4

https://www.mekiplaw.com/nfts-and-trademarks-the-ultimate-guide/

https://www.reuters.com/legal/legalindustry/demystifying-nfts-intellectual-property-trademark-copyright-concerns-2022-06-17/