Non-Fungible Tokens (“NFTs”) and Copyright Law

NFTs have been one of the most popular topics for copyright law during 2022. Discussions were widely held about whether NFTs could be considered copyrightable works, whether purchase of an NFT grants authorship rights to the buyer, which formal requirements are relevant for a valid copyright assignment for an NFT, and which particular rights associated with copyright could be infringed by unauthorized use.

Although we are yet to see legislation concerning these issues, many national and international court decisions have shed light on legal questions about NFTs over the past year.

The first preliminary injunction concerning NFTs has already been issued by a Turkish court. As we shared last year, the case pertained to the unauthorized exploitation of a portrait of Cem Karaca, an artist, songwriter and composer with a legendary reputation in the world of Anatolian rock music. His portrait was converted into an NFT and offered for sale on the Opensea NFT marketplace. The presiding Istanbul 3rd Intellectual Property Court, upon the plaintiff’s request, issued a preliminary injunction (“PI”) to prevent access to the websites hosting the infringing content and to cease the sale of the relevant portrait in NFT format on the Opensea platform. The defendant’s objection to the PIs and request for appeal were rejected. This decision is significant as it is the first court judgment in Türkiye related to NFTs, and it recognizes that NFTs can be subject to a PI. While the court did not elaborate on the legal aspects of NFTs, the decision is still noteworthy as NFTs were considered a valid “format” by the court for the purposes of infringement cases.

On the administrative side, the Digital Transformation Office of the Presidency of Türkiye defined NFTs as a “qualified intellectual property deed”. Some initiatives and institutions that are interested in NFTs have also created assessment reports dealing with NFTs from an intellectual property perspective.[1]

Some cases of international relevance have tackled the question of who owns the right to convert a work into NFT format. For instance, world-famous director Quentin Tarantino has announced that he would convert seven never-before-seen scenes from the movie Pulp Fiction and the original script thereof into NFTs and offer them for sale. Miramax, the movie’s production company, thereupon filed a copyright infringement case against Tarantino based on infringement of its right to communicate the work to the public. The parties settled in the subsequent phases of the case.[2]

In a similar case filed by ROC-A-FELLA RECORDS INC. against Damn Dash, a shareholder of the record label, due to Dash’s plan to offer Jay Z’s “Reasonable Doubt” album in NFT format. The record label requested that trading of the NFT cease. The court issued a PI to temporarily prohibit conversion of the album into an NFT and its trading on the ground that “Dash is not entitled to sell anything that he does not own”.[3] This dispute was amicably settled by the parties.

In addition, we observe that many courts across the world including courts in the United Kingdom[4], China, Singapore[5] and Spain, have concluded that NFTs could be deemed as “assets which may be subject to property rights” and ordered sanctions like ceasing the sale and transfer of NFTs to eater addresses  and the payment of compensatory damages. 

In another dispute arising from the unauthorized sale of NFTs of comics created by Artist Ma Qianli picturing a tiger getting vaccinated on the NFT marketplace called BigVerse, China’s Hanzhou Internet Court concluded that the platform was at fault for failing to check the right ownership chain and on that basis awarded the plaintiff damages.[6] In a different case between Mango and a Spanish collecting society a court in Barcelona rendered an innovative PI decision ordering that NFTs that allegedly infringe the right of member artists should be kept in a “wallet” under the court’s control. 

Although we see that both national and global courts are prepared to interpret existing rules in their respective systems in disputes arising from NFTs, it is still difficult to argue that a consistent legal opinion has been established regarding NFTs. Such certainty in this field may be achieved with future regulation and court decisions.

[1] https://bctr.org/wp-content/uploads/2023/01/NFTRaporV03.pdf
[2] https://www.lexology.com/library/detail.aspx?g=70a02ea5-c9c6-44f3-b265-b3b6d6fbd9b6
[3] https://www.lexology.com/library/detail.aspx?g=c298edf9-89dd-4ebe-b73c-e3add6aabeff
[4] Lavinia Deborah Osbourne v (1) Persons Unknown (2) Ozone Networks Inc Trading as Opensea decision
[5] Janesh s/o Rajkumar and Unknown Person decision
[6] Qice v. BigVerse decision

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