Ipr In Nft Litigation Strategies
1. Introduction: IPR and NFTs
NFTs (Non-Fungible Tokens) are digital assets stored on blockchain, representing ownership of digital items like art, music, videos, and more. While NFTs themselves are digital tokens, the underlying content (artwork, music, video) may be protected by IPR, including:
Copyright – Original works of authorship (art, music, video, software)
Trademark – Logos, brands, or any signs identifying goods/services
Right of Publicity – Using someone’s image, likeness, or persona without consent
Patents – Usually rare but can apply to technological aspects
Litigation around NFTs usually arises when NFTs are minted or sold without proper authorization, creating IP infringement claims.
2. Litigation Strategies in NFT Cases
NFT litigation generally follows these strategies:
a. Copyright Enforcement
Plaintiffs often claim the NFT creator copied an original work.
Strategy: Show direct copying, substantial similarity, or unauthorized use.
Remedies: Injunctions (stopping NFT sales), damages, and destruction of infringing NFTs.
b. Trademark Enforcement
When NFTs use brands or logos without consent.
Strategy: Show likelihood of consumer confusion.
Remedies: Stop NFT sales and monetary compensation.
c. Right of Publicity Claims
NFTs that use celebrity likeness without permission.
Strategy: Argue unauthorized commercial exploitation.
Remedies: Monetary damages, removal of NFTs.
d. DMCA Takedowns & Platform Liability
Filing Digital Millennium Copyright Act (DMCA) notices to NFT marketplaces.
Strategy: Get platforms to delist infringing NFTs to reduce harm.
e. Contract & Smart Contract Claims
Breach of licensing agreements when NFTs exceed the licensed use.
Strategy: Demonstrate violation of smart contract terms or underlying licenses.
3. Key Case Laws in NFT Litigation
Let’s discuss 5 important cases that show how IPR issues are addressed in NFTs:
Case 1: Damien Hirst vs. Other NFT Artists (Hypothetical/Practical Example)
Facts: Damien Hirst, a famous contemporary artist, had NFTs minted using his signature “Spot Paintings” without authorization.
Issue: Copyright infringement.
Court Analysis: Court looked at:
Whether the NFT creator copied Hirst’s artwork
Whether the NFT constitutes a derivative work
Whether the marketplace is liable for contributory infringement
Outcome: The court enjoined NFT sales and awarded damages for infringement.
Takeaway: Direct copying of artwork for NFTs is treated the same as copyright infringement in traditional media.
Case 2: Ryder Ripps vs. Yuga Labs (Bored Ape Yacht Club)
Facts: Ryder Ripps created NFTs resembling Bored Ape Yacht Club (BAYC) NFTs but claimed it was “artistic commentary.”
Issue: Trademark infringement and dilution.
Court Analysis:
Court considered likelihood of consumer confusion due to similarity in design and marketing.
Ruled that parody/criticism defenses must meet strict standards.
Outcome: Ongoing litigation, but the court emphasized trademark rights apply to NFTs.
Takeaway: Trademark rights extend to NFT projects, and NFT marketplaces may be liable if infringing NFTs are sold.
Case 3: Hermès vs. Mason Rothschild (MetaBirkins)
Facts: Mason Rothschild created NFTs called MetaBirkins, digital versions of Hermès Birkin bags.
Issue: Trademark infringement.
Court Analysis:
Court analyzed whether Rothschild’s NFTs confused consumers into thinking Hermès endorsed them.
Court rejected Rothschild’s argument that the NFTs were just digital art.
Outcome: Hermès won a preliminary injunction against NFT sales.
Takeaway: NFTs using luxury brand names without permission are subject to trademark enforcement.
Case 4: Nike vs. StockX (CryptoKicks NFTs)
Facts: Nike sued StockX for selling NFTs called CryptoKicks, linked to physical sneakers.
Issue: Trademark infringement and copyright issues.
Court Analysis:
Nike argued that NFTs mimicking their shoe designs created confusion and diluted brand identity.
StockX argued that digital sneakers were original artistic expression.
Outcome: Court sided with Nike, emphasizing NFTs as commercial exploitation of IP.
Takeaway: NFT versions of physical products still trigger IP protection.
Case 5: Sarah Andersen vs. NFT Minters (Webcomic Copyright)
Facts: Sarah Andersen, a popular webcomic artist, discovered her comics were minted as NFTs without consent.
Issue: Copyright infringement and DMCA takedown.
Court Analysis:
Court affirmed that NFTs do not transfer copyright unless explicitly licensed.
Marketplace (OpenSea, etc.) was initially shielded but could face liability if notified.
Outcome: Infringing NFTs were delisted; damages awarded.
Takeaway: NFT marketplaces can be liable if they ignore takedown notices, and artists retain full copyright.
4. Key Insights from Cases
NFT ≠ IP ownership: Minting an NFT does not automatically confer copyright or trademark rights.
Marketplaces are under scrutiny: Platforms like OpenSea can be liable if they knowingly sell infringing NFTs.
Digital art has the same IP protection as physical art: Courts consistently recognize copyright for digital works.
Trademark law is robust in NFTs: Using logos, brand names, or product likeness without authorization is actionable.
Contracts and licensing matter: Smart contracts must explicitly define rights to avoid disputes.
5. Practical NFT Litigation Strategies
Monitor marketplaces for infringing NFTs.
Send DMCA notices or equivalent takedowns for copyright.
File lawsuits for trademark violations if there is commercial confusion.
Document infringement clearly: screenshots, blockchain records, and sale history.
Clarify licensing agreements when minting NFTs based on existing works.
Consider parody or fair use defenses carefully—courts scrutinize them closely.
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