Recent Legal Updates Regarding NFTs First Preliminary Injunction Regarding NFTs Issued by a Court in Turkey

Non-Fungible Tokens (NFTs), which are among the hottest topics as of 2021 are discussed at court decisions in various jurisdictions, and similarly in Turkey, Istanbul 3rd Civil Intellectual Property Court (“IP Court”) rendered a preliminary injunction regarding NFTs on June 21, 2022.

The subject of the dispute pertains to exploitation of the portrait of the late Cem Karaca, who is an artist, songwriter and composer with a legendary reputation in Anatolian Rock music.

In the case brought before the Istanbul 3rd Civil IP Court by Cem Karaca’s heir, in requesting  preliminary injunction, claimed that the portrait of Cem Karaca was unlawfully used both physically and in NFT form and communicated to public, exhibited online on various social media accounts and listed and offered for sale on globally-known marketplace OpeanSea, which led to infringement of Article 86[1] of Law on Intellectual and Artistic Works numbered 5846 (“LIAW”) that grants legal protection to pictures and portraits and Article 24[2] of Turkish Civil Code (“TCC”) numbered 4721 that regulates personal rights.

The Plaintiffs requested from the Court, inter alia, to make a determination of evidence in order to detect the alleged unauthorized use of depicting Cem Karaca’s look, then block access to the respective contents and declare a preliminary injunction to cease sale of the relevant portrait in NFT format on the “OpenSea” NFT marketplace.

Intellectual property proceedings in Turkey rely heavily on the report of an expert(s) appointed by the court to provide an assessment on relevant aspects of the dispute. Here, the Court appointed an expert report regarding the use of the portrait and communicating to public. The expert report identified such uses together with the opinion that portraying and ordering for sale as NFT of Cem Karaca’s look for commercial purposes constitute infringement within the scope of Article 86 of LAIW and Article 24 of TCC.

Having regard to the expert opinion, the court accepted the request for preliminary injunction, ordered that the access to those platforms where such portrait is exploited in an unauthorized manner be blocked, and the sale of “Cem Karaca” portrait in NFT format on the platform of Opeansea be precluded. Access to the relevant infringing websites inTurkey has been blocked through the Access Providers Union in order to secure the execution of the above court order. The trial phase of the dispute is still pending before Istanbul 3rd IP Court.

This decision has a significant importance due to being the first ever court decision rendered related to NFTs in Turkey and recognizing that NFTs could be subject to a preliminary injunction.

Even though the Court did not elaborate on the technical features of the NFTs and not comment on the legal definition of the same while rendering this decision, it is still remarkable given that the Court took the existing legal provisions into consideration in determining the infringing use, concluding that NFTs are “format” for purposes of infringement.

On the other hand, it is controversial whether such preliminary injunction deciding for the prevention of NFT sales on Opensea platform can be enforced against this party considering the jurisdiction for enforceability of the decision is Turkey, while at Opensea is neither located nor registered in the jurisdiction Even so, this decision can be viewed as a positive step in favor of the right owners. Although this decision approaches NFTs as a “format” in terms of infringement issues and did not elaborate on the technical features of NFTs, it still suffices to indicate that there is no legal barrier that would preclude owners of intellectual property rights from enforcing their rights against this sort of unauthorized use of NFTs, even in an environment lacks an explicit legal framework for addressing such issues and the legal uncertainties that this entails.

European Union Intellectual Property Office published guidance on classification of NFTs

One highly-debated topic with respect to NFTs is in which goods/service class these digital assets should be classified when subject to trademark registration. European Union Intellectual Property Office clarified this issue publishing the Guidance on Virtual Goods, NFTs and Metaverse, and stated that NFTs should be classified in Class 9 within the scope of NICE Classification System.

On the other hand, the guidance states that “virtual assets” or NFTs cannot be registered independently, but can be registered only if the type of the virtual asset or the digital element verified by NFT is specified.

Given the increasing number of trademark registration applications filed for NFTs, publication of such guidance is quite helpful for clarifying ambiguities. However, there is no guidance on the principles of testing similarity and likelihood of confusion between NFTs which will be all classified in Class 9 but will represent physical goods. There is no doubt that future disputes will lead to deeper thoughts and discussions on this topic.

We stay tuned for updates regarding the relation of NFTs and intellectual property rights and will continue sharing them with you.

[1] Article 86 of LIAW numbered 5846 states that “Even if they do not qualify as works, pictures and portraits may not be exhibited or disclosed to the public in any other way without the consent of the person depicted in such picture or portrait or, in case of his death, without the consent of the persons referred to in the first paragraph of Article 19, unless 10 years have elapsed after the death of the person depicted. The provisions of Article 24 of Turkish Civil Code shall be reserved in cases where publication is permitted under the provisions of the first 46 and second paragraphs”.
[2] Article 24 of TCC numbered 4721 with title of Protection of Personality and with subtitle of protection against infringements states that “Any person whose personality rights are unlawfully infringed may petition the court for protection against all those causing the infringement. An infringement is unlawful unless it is justified by the consent of the person whose rights are infringed or by an overriding private or public interest or by law.”

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