Can trademarks fight unauthorized NFTs?

Rothschild compares “Mita Perkins” to Andy Warhol’s famous painting of Campbell’s canned soup. (Photo: 123RF)

Amid the growing popularity of “NFTs,” these digital files are sold as certified unique tokens, and brands and artists battle over copyright and infringement issues, with huge amounts of money at stake.

The American brand, sparked by the unauthorized NFT marketing of Nike sneakers, filed a complaint Thursday in New York against online trading platform StockX, seeking damages.

Last month, luxury group Hermes also sued artist Mason Rothschild, who sold 100 MetaBirkins, NFT labels featuring the House’s iconic bag, raising tens of thousands of dollars.

Can these complaints work?

At this point, it’s still hard to know if brands can win the battle, particularly in the case of Hermès, estimates attorney Annabel Giberti of Crefovi Cabinet who specializes in the creative industries.

To defend Meta Perkins, Mason Rothschild actually relies on the First Amendment to the US Constitution, which guarantees freedom of speech and protects artists before the country’s courts.

The “fair use” argument, which grants copyright exceptions in the case of parody, for example, often wins the case in US or British courts, adds Me Gauberti.

However, she considers that Mr. Rothschild will find it difficult to convince a judge of the artistic merit of his work. “The message you are carrying is not easy to understand, other than the desire to raise large sums of money. His legal team will do a lot of work.”

The dispute between Nike and StockX sounds like a more classic business dispute, with the e-commerce platform never claiming that NFTs were works of art. It remains to be seen how trademark law can be digitalised.

Which system for NFTs?

In a response to Hermès posted on Twitter, Rothschild compared “MetaBirkins” to Andy Warhol’s famous painting of Campbell’s soup cans.

He defended “the fact that I sell art using NFTs does not change the fact that it is art”.

Edward Lee, who directs a program on intellectual property at Chicago-Kent Law School, disagrees with this comparison. In an article published on Bloomberg Law, he explained that the Campbell Soup brand had never expressed a desire to start selling artwork, while Hermès might one day decide to create its own NFT.

The fact that no physical business is exchanged during the transactions of these “non-fungible tokens” further complicates the possibilities of regulation.

Primavera de Filippi, co-author of “Le blockchain et la loi”, confirms in Business of Fashion.

Can brands protect themselves?

Hermès asked artist Mason Rothschild to destroy his “MetaBirkins”, which platform NFT OpenSea agreed to withdraw from sale.

“Even if the brands win their lawsuits, how will they sue a consumer who has already bought an NFT, or prevent them from reselling it at auction? In terms of application, digital technology is the Wild West,” however qualifies Me Gauberti.

According to her, brands should fight back by creating their own official NFTs. That’s what Nike did by acquiring RTFKT in December, a company that specializes in designing virtual sneakers.

“Attack is the best defense,” Mr. Guberti notes. “But for now, these brands are still cautious (about creating their own NFTs), because their core business remains hardware products, and they’re still watching to see if the metaverse really takes off.”

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