NFTs, legal objects that must be handled with care

NFTs, these unique digital objects, are on the rise. Brands take the turn of NFT (Non Fungible Token) or non-fungible tokens, i.e. non-replaceable. With NFTs, they offer digital displays of their own products or digital objects inspired by their universe. Gucci, for example, is very active and has just released a new series of NFTs.

Process between Hermès and Mason Rothschild

However, these first NFTs raise many legal issues in property, copyright and trademark law that have not yet been resolved. This is evidenced by the ongoing lawsuit between the luxury house Hermès and Mason Rothschild, who presents himself as a digital artist and who has marketed bags under the Meta Birkin brand in NFT form, the Birkin brand is well known at Hermès.

Is the NFT an object, a copyrighted work, a link to an asset or a certificate?

This is an opportunity to see the exact nature of an NFT. Is it a separate object? Is it a copyrighted and trademarked work, or is it a title deed, a certificate of authenticity or a simple line of code and a link to a work or to a certificate? This is the subject that Arnaud Fournier, lawyer, founder of Consultantitrust, clarified during the event ” NFT and luxury brands organized by Adetem on 7 July.

There are 3 types of NFT in my opinion. This has a major impact on copyright and trademark law presents Arnaud Fournier. † The first type of NFT is one created directly in the blockchain he continues. † It consumes a lot of power and it takes time. But this is a real creation in the blockchainBut it is believed that it is not worth creating a work directly in the blockchain. This type of NFT is extremely rare he begins.

NFT is a smart contract in the case of Cryptopunks

The second type of NFT is one where the ownership rights to the work are part of the NFT or the NFT itself. he resumes. One can then use the NFT as a means of transferring ownership with each sale. † This is the case, for example, with Cryptopunkswhere the NFT is a smart contract that gives ownership of the work » he illustrates. However, for Arnaud Fournier, this type of contract is not proof of original ownership. † You can take any work from an NFT marketplace and declare that you own it and create your own smart contract for this work he explains.

The most common NFT is where we create a code that references an image

Creators make little use of this opportunity because they want to keep the copyright in their work. So they can generate other NFTs from the same work he explains. The third type of NFT is the best known and most widely used. † An NFT is made from a work, an image or a photograph. We just create some code that references this image and then we don’t create an object. These NFTs are certificates of authenticity, but they are distinct from the object itself he presents.

It is this type of NFT that we find, for example, in the lawsuit between Hermès and Mason Rothschild. † If we take the example of the Meta Birkin bag, Mason Rothschild is on trial with Hermès. The NFTs are simple codes that refer to a digital image. The NFT is not an image. It’s not like a painting. It is a certificate of authenticity of the painting. I can sell you the certificate of authenticity of a painting and remain the owner of the painting. This poses copyright and trademark issues warns Arnaud Fournier.

Businesses Confused When It Comes To Protect Themselves From Hacker NFTs

It should be noted that the development of NFTs conflicts with trademark law. Usually a company registers a brand for a category of products. † The Aubade brand can be registered for bras and by another company for bathrooms ‘ the manager illustrates. However, at the moment companies do not know how to register their trademark when it comes to NFT.

Companies choose different classes to hedge themselves when they need to protect their brands in virtual universes

Companies tend to expand the categories in which they list their brand to protect themselves. † So they choose Class 9 (downloadable virtual goods), Class 35 (retail sale of virtual goods), Class 41 (entertainment services providing non-downloadable virtual goods for use in a virtual environment) and also point to Classes 40, 42 and 45, and that’s why they pay more explains Arnaud Fournier.

However, an artist can use a well-known brand to create a work of art. † It’s called fair use he says. † Mason Rothschild Says He Made NFTs That Are Works Of Art the lawyer continues. † But when he promoted his NFTs, he used the Hermès brand and the Birkin brand. His defense argument would therefore fail ” he thinks. ” His second line of defense is that it’s just an NFT ie just a line of code and it’s not a counterfeit bag, and Hermès has registered its brand for a bag continues Arnaud Fournier.

In the case of Hermès, the sale involves a line of code

That being said, ” When a brand is known, it covers all product categories, but Mason Rothschild only sells one line of code. In order to counterfeit, there must be a category ‘code line’ he jokes. Ultimately, it will be necessary to review the details of the verdict that will be handed down between Hermès and Mason Rothschild. † I think Hermès will lose even if he risks winning on something like brand dilution. Mason Rotstchild is accused of using the Birkin brand, but it is not a counterfeit he concludes.

Buying an NFT means burning your wallet address into a database next to a reference to something

An article in Wired from last March addresses the same questions† He describes NFTs as typically containing links to an asset hosted elsewhere. The NFT gives no ownership of any copyright, storage or use of the asset itself. When someone buys an NFT, they have just paid to have their e-wallet address burned into a database along with a reference to something.

Another point, the Ethereum blockchain often used to capture NFTs makes no distinction between holding a token and owning it. You can own and not own a scooter. But in blockchain, whoever has a token becomes its owner. Moreover, an NFT is only unique in the blockchain where it was created. The same digital item can be registered in multiple blockchains. In addition, one can copy existing NFTs and sell them on the same blockchain or create NFTs from existing artworks that the creator does not want to make NFTs. The blockchain does not verify whether the person creating the NFT has the rights to do so.

Leave a Comment