NFT – Attorney Evan Brown

March 18, 2024 Blockchain, Trademarks

MetaBirkins defendant denied of opportunity to exhibit NFT artwork in Swedish museum

metabirkins museum
In February 2023, Sonny Estival, known by his pseudonym “Mason Rothschild,” was found liable by a jury on a number of claims, including intentional trademark infringement, trademark dilution, and cybersquatting against luxury brand Hermès. The court ordered Estival to pay $133,000 in damages to Hermès and issued a comprehensive permanent injunction against him and his associates. This injunction specifically prohibited the production, distribution, and promotion of “MetaBirkins” non-fungible tokens (NFTs) and related merchandise, aiming to prevent any association or confusion with Hermès’s “Birkin” trademark.

In January 2024, Estival sought clarification from the court regarding the scope of the permanent injunction, particularly whether it would prevent him from allowing a Swedish museum to exhibit his MetaBirkins artworks as part of an exhibition on Andy Warhol and Business Art. Despite his claims that the museum’s display would not imply any association with Hermès and would even include mention of the lawsuit and its outcome, Hermès opposed this motion. The court held an evidentiary hearing, and after considering submissions from both parties and testimony from museum representatives, denied Estival’s motion. The court could not conclude that the proposed exhibition would comply with the injunction’s terms, given the lack of detailed information about the nature of the permission Estival would be granting to the museum, especially concerning the promotion of the exhibit and potential merchandising.

The court’s decision was heavily influenced by the context of Estival’s previous actions and the jury’s findings, which characterized him as intentionally misleading the public to associate his NFTs with Hermès’s Birkin brand. Despite the museum’s assurance that the exhibit would not suggest any affiliation with Hermès, the court remained unconvinced, especially given discrepancies in the museum representatives’ testimonies regarding how the lawsuit and Estival’s infringement would be presented to the public.

Hermès Int’l v. Rothschild, 2024 WL 1089427 (S.D.N.Y. March 13, 2024)

See also:

March 12, 2024 Blockchain

Key takeaways from the USPTO and Copyright Office joint report to Congress on NFTs

On March 12, 2024, the United States Patent and Trademark Office and the Copyright Office released a joint report from a study they did exploring the impact of NFTs on Intellectual Property law. The study aimed to assess how innovations in digital art ownership and authenticity verification align with existing intellectual property frameworks.

The report emphasized that NFTs present novel opportunities for intellectual property owners, possibly enhancing licensing avenues and offering creators greater control over their works and a larger share of the resulting revenues. On the other hand, the immutable and decentralized nature of blockchain and the underlying technology of NFTs, introduce big challenges in enforcing intellectual property rights, amplifying concerns around online piracy and counterfeiting.

A significant issue that the report highlighted is the widespread confusion around the scope of rights obtained in an NFT transaction, often leading to misconceptions about owning intellectual property rights in the associated digital assets. Despite these challenges, the study found that current intellectual property laws are generally adequate to address the complexities introduced by NFTs, with both the Copyright Office and the USPTO favoring educational initiatives over legislative changes to clarify the nature of rights involved in NFT transactions. So it is not likely we will see new NFT legislation – at least the Copyright Office and the USPTO are not pushing for it.

To conclude the report, the USPTO and the Copyright Office committed to further exploring the use of emerging technologies to improve agency operations and to ongoing engagement with stakeholders to enhance understanding of NFT-related intellectual property issues.

All in all, there is nothing too surprising or revealing in the report, but it does provide a great summary of the various issues. Below is the full text of the report.

Joint-USPTO-USCO-Report-on-NFTs-and-Intellectual-Property

January 9, 2024 Blockchain, Litigation, Service of Process

Court says lawsuit can be served via blockchain

Plaintiff sued multiple defendants, including parties located in foreign countries, for claims related to trade secrets misappropriation, unfair competition and other business torts. Plaintiff sought court permission to serve the summons and complaint on these overseas defendants through alternative means, marking a significant adaptation of legal procedures to modern communication technologies.

The court, considering the Federal Rules of Civil Procedure and international agreements, allowed plaintiff to use unconventional methods for serving legal documents. These methods included email, social media direct messaging, messaging via Telegram and Signal, text messaging, online publication, delivery to the foreign defendants’ attorneys, and a particularly innovative approach — service via NFT.

The court’s decision was based on several key considerations:

International Agreements and Due Process: Defendants were located in the United Arab Emirates, Singapore, and Cyprus. The UAE and Singapore, not being signatories to the Hague Convention, had no international agreement prohibiting such alternative service methods. Cyprus, a signatory, had not objected to alternative service forms like email under Article 10 of the treaty. The court also ensured that these methods complied with constitutional notions of due process.

Efficiency and Practicality of Modern Communication: The court acknowledged the practicality and growing acceptance of digital communication methods in legal proceedings. It found email to be a viable option, especially given that defendants were associated with a website that discussed the litigation. Signal, Telegram, and text messaging were also considered effective, given the defendants’ active presence and communication on these platforms.

Service Through U.S.-Based Counsel and Online Publication: The court also approved service to defendants’ U.S.-based legal counsel and publication in online media outlets in Singapore, Cyprus, and the UAE. It saw these methods as traditionally acceptable and likely to inform the defendants of the legal action.

Innovative Use of Blockchain Technology: Notably, the court permitted service via blockchain technology, where a non-fungible token (NFT) containing a link to the legal documents would be dropped to the defendants’ digital wallets. This method was considered particularly appropriate due to defendants’ involvement in blockchain technology and their familiarity with its use.

This decision illustrates the legal system’s evolving approach to international service of process, adapting to the realities of global communication and digital technology. It highlights the judiciary’s willingness to embrace new methods that align with both legal standards and the practicalities of communicating across borders in the digital age.

CipherBlade, LLC v. CipherBlade, LLC, 2024 WL 69164 (D. Alaska, January 5, 2024)

How do we attribute value to an NFT?

How do we attribute value to an NFT? We can analyze this question from a number of perspectives. To start, we could draw a line of demarcation between categories of possessions that exist physically and those that exist intangibly. One intuitively understands how tangible things get value. This is often tied to the item’s usefulness. For example, a car has value because it transports. A knife is useful for cutting. A pen enables writing. We move out one level of abstraction and see that pieces of physical money (coins and bills) have value in how they are used to transact in goods and services.

Empty intangibility?

The value of intangible possessions requires more abstract thinking, but the reasonable person has no difficulty in grasping how that valuation works. One may possess a right or privilege even though he can’t hold it in his hands. Another may possess a digital good – think about premium skins in video games – but she cannot physically touch it. Understanding the value in these kinds of intangible things is not too challenging. So we can reject the notion that an NFT’s intangible nature means it has no value. But where do we go from here in exploring where an NFT’s value is derived?

Ain’t she a beauty?

Consider a digital work of art (as a .jpg, for example) that is transacted as an NFT. The underlying work of art – whether seen as bits on a screen or printed out as ink-on-paper – can hold the viewer in aesthetic arrest. But the NFT itself – data within the blockchain – does not so stimulate the human soul. It seems, therefore, that we have eliminated the notion that beauty or some similar concept gives value to an NFT.

There’s something about Mona Lisa

But let’s not yet move away from thinking about characteristics of works of art in seeking to answer our question about attributing value. The ability to hold its viewer in aesthetic arrest is only one way a physical piece of art can have value. Consider the Mona Lisa – the actual physical painting hanging on a wall this very moment at the Louvre in Paris. I could fly to Paris, take the Metro to the Louvre, buy a ticket and make my way to the hall where the Mona Lisa is displayed. I could look at it there and behold its beauty. But I could also behold that beauty by doing a Google Image search on my computer in the basement. Or I could go to Target and buy a Mona Lisa print to hang on my own wall. The fact that I could enjoy the Mona Lisa without going to Paris shows that the ability to induce aesthetic arrest does not come only from the original. One can get the same thrill from seeing a copy. Yet there remains a thrill one can get only by beholding the actual physical painting in Paris. There’s a “something more” arising from seeing the actual materials assembled as they were by da Vinci’s own hand. There is a value in being in the presence of and perceiving the actual corporeal stuff that da Vinci saw and manipulated.

There is only one original Mona Lisa. It is irreplaceable. That is, it is non-fungible. The original Mona Lisa in Paris connects us to da Vinci in time and space. When we are in the presence of the original Mona Lisa, we are in the presence of the actual stuff (wood, pigment) that da Vinci handled. That ability to give the viewer an experience of presence – one more than mere aesthetic arrest – contributes substantially to the painting’s value. So it must be, then, that these particular molecules comprising the original Mona Lisa, and one’s being in proximity to them, are what gives the original painting a special value? Well, no.

Love at the molecular level

The actual molecules comprising the Mona Lisa – the carbon in the poplar board, the material in the pigment, etc. – compared in terms of chemical structure and behavior – differ none from all the other like category molecules in the universe. The Mona Lisa’s molecules are not special in themselves, but instead are valuable because they were worked in accordance with da Vinci’s intention.

Being intentional

Here we may have reached a good place from which to jump back over to NFTs. We know that intangibleness does not disqualify NFTs from having value. And we know that NFTs do not induce an aesthetic experience. But they do carry some specialness due to their uniqueness. In a certain respect, Jack Dorsey’s NFT of the Very First Tweet carries the same flavor of specialness as the Mona Lisa in the Louvre, even though – unlike the Mona Lisa – the Very First Tweet NFT does not portray beauty. And, unlike the original Mona Lisa, the Very First Tweet NFT, being intangible, does not contain any particular molecules that Dorsey put there (because of course the bits stored that embody the tweet or the NFT are not tied to a particular memory substrate that he dealt with back in March 2006). But what does remain is the fact that the content of the Very First Tweet has now become inextricably (even if only symbolically) linked to the NFT because of Dorsey’s intention.

We have now arrived at a point where we can at least preliminarily posit some statements articulating how an NFT gets value: Value attaches to an NFT because of the uniqueness of its digital structure having come into existence as the particular effect of an act of its author’s intention. More simply: One may want an NFT because there is something abstractly intriguing about its creation and existence, even though there is nothing one can touch that corresponds with that intrigue.

Evan Brown is a technology and intellectual property attorney in Chicago. Follow him on Twitter at @internetcases. This content originally appeared at evan.law.