Lessons We Can Learn From NFT IP Cases for the Entertainment Industry

With the development of NFTs in the world’s most popular games, it is clear that this technology will change how we play games forever. There are many lessons to be learned in these cases for game developers and lawyers alike.

The Entertainment industry is a major player in the crypto space, but it has not been immune to the volatility of crypto. This article will discuss some lessons learned from NFT IP cases for the entertainment industry. Read more in detail here: nfts art.

Many of the talks that took place around Denver after ETHDenver 2022 ended were around the subject of what it means for a current/potential NFT holder to “own” an NFT.

According to DappRadar, global NFT sales were valued at $25 billion last year, with the most expensive digital artwork selling for only $69 million at Christie’s. 

Only 360,000 persons owned the 2.7 million NFTs that existed between February and November 2021, according to a research done by Chainalysis in January. This brings us to the subject of “ownership.” 

Individuals must understand precisely what they are purchasing when they buy an NFT as a community, since the rights you are granted are totally dependent on the underlying smart contract of that NFT. 

In most cases, a person is not purchasing the intellectual property’s underlying rights, since such rights remain with the issuer/original artist – as the industry just experienced with SpiceDAO’s $3 million Dune acquisition.

While NFTs continue to consume pop culture and entertainment, they are also reshaping the entertainment industry’s conventional pyramid, which includes TV, cinema, and nonlinear programming. Without fully acknowledging the importance of intellectual property law in the world of NFTs, industry players risk setting a dangerous precedent for other creators who believe they have the right to exploit other creators’ (or intellectual property) works at the expense of legitimate IP rights reserved by owners.

Recapping Copyright Law in the United States

In actuality, the smart contract, as well as any additional permissions that the issuer/seller has openly and/or expressly connected to that specific token, dictate the rights most NFTs on the market provide to their future owners. 

Creators of original works are granted a number of “exclusive rights” under the United States Copyright Act (18 USC 106), which allow an owner to (1) reproduce, (2) prepare derivative works, (3) distribute, (4) publicly perform, (5) publicly display, and (6) digitally transmit that work for public performances.

Derivative Works: The Right to Create

The question in the case of SpiceDAO was whether the DAO had the “right to prepare derivative works” of the 1974 concept art adaptation of the Dune-related project that never took off, to which the answer was no, because they never actually purchased the underlying rights to Frank Herbert’s original 1965 novel Dune. 

Is there a link between what consumers purchase and the brands to which they are loyal?

The problem of being allowed to distribute, publicly exhibit, and digitally transmit shoes that use both Nike variants of sneakers such as Nike Dunks and Air Jordans, as well as leveraging its famed “swoosh” trade dress, is at the center of Nike’s ongoing litigation against online shoe retailer StockX.

In this situation, Nike thinks the Detroit-based resale site would “certainly cause customer misunderstanding” and “establish a false relationship between those items and Nike.” 

Simultaneously, Hermès, a French luxury brand, is suing MetaBirkins creator Mason Rothschild for infringing on the company’s long-established “Birkins” handbag name. 

In the end, these two lawsuits will likely set the bar for what is admissible in trademark infringement cases involving NFT initiatives, especially whether customers may think there is a link between what they’re buying and the brand to which they’re loyal.

Studios Taking Steps to Safeguard Their Most Iconic Works

Miramax sued legendary filmmaker and producer Quentin Tarantino in November after he revealed his plan to auction off seven sequences from the 1994 classic Oscar-winning picture Pulp Fiction as NFTs at NFT.NYC 2021.

Tarantino’s NFTs would comprise seven scanned digital versions of his original handwritten screenplays, as well as audio commentary. The issue of “distribution,” which refers to Tarantino’s contract with Miramax, lies at the core of the continuing lawsuit. 

Tarantino’s contract with the studio was terminated in 1993, according to the studio, and thus would be a breach of contract, copyright infringement, and a risk of confusion that Miramax was both involved in Tarantino’s offering, as well as sending a false message into the space that others would have the legal rights to pursue similar endeavors. 

“Tarantino’s conduct has forced Miramax to bring this lawsuit against a valued collaborator in order to enforce, preserve, and protect its contractual and intellectual property rights relating to one of Miramax’s most iconic and valuable film properties,” the studio claims in a 22-page complaint filed by its legal counsel. 

The studio notably mentions Tarantino’s assertions that the original contract “did not embrace any rights or media that were not known at the time of the original rights deal,” implying that the contract was either faulty or unenforceable under a close scrutiny interpretation. 

Tarantino’s attorneys, on the other hand, contend that this right to “screenplay publishing” is covered by his contract. Samuel Jackson, John Travolta, Uma Thurman, Ving Rhames, Tim Roth, and Bruce Willis featured in the 1994 cult favorite.

This lawsuit will show the importance of contract drafting and acknowledging new, emerging technologies when determining what rights a studio, broadcaster, or other distribution channel has with respect to the underlying work – as well as the wiggle room other creators like Tarantino may have if they have a similar interest in exploiting the NFT space with their own endeavors.

It’s time to step up and do…and be…better.

Web3 is forcing our entertainment industry to evolve and improve, positioning leaders to leverage the power of blockchain technology and use it to help better preserve intellectual property while also allowing it to breathe new life into the world of creators and consumers, whether we’re on the legal battlefield or in the building phase. 

Web3 is an opportunity for us all to start again and do things properly, and it all starts with leveling the playing field between major tech firms and artists.

 

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