Boodle Hatfield’s August / September NFT Litigation Roundup

Welcome to our monthly NFT litigation roundup.

Non-Fungible Tokens (NFTs) are the topic of much debate, and the disputes around them continue to raise interesting legal questions and challenges.

When faced with such a high growth phenomenon, the law can take time to catch up. Boodle Hatfield is closely monitoring the developments and each month will bring you a roundup of the key NFT disputes to be aware of.

Interested in hearing more? You can sign up to future roundups and other content from Boodle Hatfield by following our subscription link here.

United States 

Hermès v Mason Rothschild

The background details of this case are covered in our February, April and May roundups.

• In the "MetaBirkins" lawsuit, where Hermès accused Rothschild of "attempting to capitalise on the goodwill of a leading luxury brand [and] one of its most iconic trademarks and products", Hermès is now seeking summary judgment (i.e. an early decision on the claim, without it progressing to trial).
• Hermès' arguments for summary judgment being awarded include:
  • The similarity of the "Birkin" trademark and the "MetaBirkins" trademark, in particular the NFT of the digital handbag looking exactly like a "Birkin" physical handbag;
  • The proximity and marketing of both as luxury handbags;
  • Evidence of Rothschild causing confusion to commentators and consumers, which Hermès contends is "precisely" what Rothschild "intended". Hermès stated that following a survey, it had found "net confusion among the NFT audience of 18.7%;
  • Rothschild's bad faith in "replicating" their brand and trying to "capitalise on the goodwill associated with Hermès"; and
  • The level of sophistication of consumers in the marketplace who may not be able to determine whether the "MetaBirkins" was Hermès itself expanding into the digital goods marketplace, or Rothschild.
• This follows the opinion and order of Judge Rakoff dated 30 September, in which he sided with Hermès and rejected Rothschild's appeal of a decision which refused to dismiss Hermès' claims in May. Judge Rakoff determined that Rothschild's issues were not so "extraordinary" to require immediate review - "no argument provides a persuasive basis to substantiate an urgent appeal".

Miramax v Tarantino

• According to a Court filing, Quentin Tarantino and Miramax have decided to settle their long-standing NFT lawsuit over the "Pulp Fiction" NFTs.
• Discussed in further detail in our July roundup, Miramax sued Tarantino over his plans to release an NFT collection using footage from the 1994 film he directed, Pulp Fiction, which Miramax claimed it owned the distribution rights to. Tarantino's legal team filed a motion for judgment, arguing that the case should be thrown out because the NFTs were solely based on the screenplay of Pulp Fiction, which he believed was covered by a separate copyright.
• Both parties have now agreed to dismiss the lawsuit, releasing a joint statement: "The parties have agreed to put this matter behind them and look forward to collaborating with each other on future projects, including possible NFTs". The case was one of the first intellectual property disputes over NFTs, and had the case gone to trial, would likely have set a precedent for future NFTs based on films and other media.

LCX AG v Joe Doe Nos 1-25 

• The Supreme Court of New York has airdropped an NFT to effect service of a temporary restraining order on a defendant accused of conducting a hack.
• The defendant is accused of hacking the claimant, a cryptocurrency exchange company, for almost $8m in cryptoassets, with the claimant hoping to freeze $1.3million of the stolen digital assets.
• The Court agreed to the method of service because the identity of the defendant remained unknown and there was no other means by which to effect service.
• The defendant's crypto wallet address was uncovered via algorithmic forensic analysis, then the NFT was minted on the blockchain and sent to the wallet address. The NFT links a copy of the order on the law firm's website in (along with other papers) and a method of tracking when the defendant opens the link.
• This case and the case of D'Aloia v Persons Unknown and others in the High Court of England & Wales have sparked new opportunities to pursue defendants by using their digital wallets. Providing for service by NFT is a development towards protecting victims of cybercrime. It will be interesting to see whether service via an NFT could become the "norm" for victims of crypto fraud where the identity of the fraudster is unknown.
• The claimant's legal representatives commented "Having a judge, in this case, recognise that a fair method of delivering information to a defendant is through a blockchain address when that's the only trace they've left is just a leap forward, really, in allowing us to bring an appropriate remedy in the right cases for the right clients".

Turkey 

Emrah Karaca 

• The 3rd Civil Intellectual Property Court in Istanbul, Turkey, has granted a preliminary injunction in relation to an NFT.
• The claim is based on a portrait of late artist, songwriter and composer Cem Karaca. Karaca's son, Emrah Karaca, brought the claim, arguing that the portrait was unlawfully used both physically and digitally (as an NFT), by being exhibited online, and listed and offered for sale on marketplace OpenSea.
• The claimant asked the Court to grant a preliminary injunction to prevent the sale of the portrait as an NFT on OpenSea, amongst other requests.
• The Court granted the claimant's requests and ordered a preliminary injunction to prevent the sale. The decision is the first of its kind relating to NFTs in Turkey, recognising that NFTs can be the subject of an injunction (as was found by the High Court of England & Wales in Lavinia Osbourne v (1) Persons Unknown (2) Ozone earlier this year).
• Karaca's lawyer commented "This decision is the first preliminary injunction regarding NFTs in Turkey […] Because although there are still some legal uncertainties about NFTs all over the world and there are very few examples in this regard, the court's decision shows that the judiciary has a strong reflex on such issues […] Although the legal nature of NFTs is highly controversial, with this decision, the Court accepted that NFTs have an asset value that can be subject to enforcement law".

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