Given the recent rise in popularity and profitability of non-fungible tokens (NFTs), celebrities have entered the market not only by buying NFTs, but also by minting their own. However, because NFTs often involve crossing multiple layers of intellectual property rights, celebrity NFT projects present various potential pitfalls. In particular, these NFT projects often involve trademark rights, copyright and name, image and likeness (NIL) rights.
The emergence of NFTs expanded the licensing landscape for both athletes and celebrities. An NFT is a non-fungible unit of data stored on a blockchain that can be sold and traded. Typically, NFTs are associated with digital files such as photos, videos, and audio. An NFT of Cristiano Ronaldo, a world famous Portuguese soccer player, sold for $289,920 on the Sorare NFT platform. This broke the record for the most expensive football card ever sold, physically or digitally.
While the owner of the NFT owns the right to use and own the NFT, the IP rights within the work remain with the respective property rights owners. Since NFTs can simultaneously include several types of intellectual property, such as copyrights, trademarks, and NILs, it is important to determine the ownership of each before mining an NFT.
Therefore, companies looking to join the proverbial gold rush to monetize NFTs in new ways must ensure that their new ventures comply with intellectual property law. This article presents several ways in which problems can arise for those looking to monetize NFTs, especially those involving celebrities.
In January 2022, rapper Lil Yachty filed a trademark infringement lawsuit against Opulous and Dito Music for “maliciously” using his name, trademark and likeness to successfully raise over $6.5 million in venture capital funds. According to the complaint, Opulous launched a press and advertising campaign that falsely linked Lil Yachty to the company’s NFT platform and said the rapper’s copyrighted works would be offered for sale. Essentially, the complaint alleges that Opulous failed to obtain licenses for trademarks, copyrights and NIL rights involved in its NFT platform. The ads include a picture of the rapper and his name and indicate that his music will be sold as part of the NFT drops. While Lil Yachty admitted that he had spoken with the company about a potential collaboration, the rapper said that ultimately no agreements were reached and the use of his name and likeness was unauthorized. The case is currently awaiting a decision on a motion to dismiss for lack of personal jurisdiction.
On the other hand, some companies have successfully licensed NIL rights to celebrity NFT projects. For example, the National Basketball Association partnered with Dapper Labs to create “TopShot,” a marketplace that digitizes licensed NBA clips and turns them into a limited number of NFTs advertised as “Moments.” Such licensing agreements require companies like Dapper Labs to enter into dual agreements with the NBA and the National Basketball Association. However, some popular players have leverage. Media reports of the so-called “cut” process indicate, for example, that Michael Jordan is among several players who have placed restrictions with the National Basketball Association on the use of their image, and those players typically bargain for a larger percentage of sales for each product using their NIL.
Entertainment company Miramax has filed a copyright infringement lawsuit against screenwriter Quentin Tarantino over his announcement of plans to auction off seven exclusive scenes from the 1994 cult classic. Criminal such as NFTs. According to the complaint, Tarantino granted Miramax all present and future rights in and to the film, reserving a limited set of reserved rights for himself in an original copyright agreement. Miramax has taken the position that Tarantino’s limited reserved rights do not give him the ability to unilaterally produce, market and sell Criminal NFT because they infringed Miramax’s broader exclusive rights in the film. In response, Tarantino’s lawyers argued that Miramax incorrectly assumed that the transfer of film copyright included the basic script for the film. On July 15, 2022, Tarantino’s motion for judgment on the pleadings—which, if successful, would dismiss the claims against Tarantino—was taken up by the court without oral argument.
While the National Collegiate Athletic Association allows student-athletes to monetize their NILs through opportunities such as marketing partnerships and media appearances, individual schools may have their own policies that prohibit student-athletes from using school trademarks without license approval. For example, in December 2021, Michigan running back Blake Corum launched an NFT collection, but was not allowed to use any of the university’s trademarks. Because Corum did not receive licensing permission, Corum is not pictured in the NFT wearing an official Michigan uniform. Instead, his helmet and jersey were styled to look more generic.
The popularity of NFTs has increased the attention of both celebrities and businesses looking to advertise their association with such digital assets. With this technological innovation, celebrities and athletes alike have a new opportunity to capitalize on their name and image and would like to exercise freedom through creative means like NFT. Nevertheless, while the playing field may change, the rules remain the same. Anyone entering the NFT business should continue to consider what IP rights are needed to make a potential project possible.
For further information on this topic, please contact Justin E Pierce, Calvin R Nelson or William Lawrence of Venable LLP by phone (+202 344 4000) or email ([email protected], [email protected] or [email protected]). Venable LLP’s website can be accessed at www.venable.com.
Oluwatobiloba Kalejaiye, summer associate, helped prepare this article.