Non-fungible tokens (NFTs) associated with digital artwork, pictures, trading cards, music, and online gaming, have recently exploded in popularity. NFTs came onto the scene around 2021 and are continuing to grow in prominence within the Metaverse. A prime example of NFTs popularity, and value, can be found in the “Baby Birkin” NFT. For context, the “Baby Birkin” NFT was an animation of a baby growing in a Hermès Birkin bag. This NFT was recently sold in a basic space auction for the equivalent of $23,500, according to Vogue Business.
A notable aspect of this auction is the fact that the artistic NFT was not affiliated with Hermès. The NFT was created by two Los Angeles-based creatives Mason Rothschild and Eric Ramirez. Despite the NFT using the popular Birkin brand name and style, Hermès did not receive a portion of the auction proceeds. This has raised an array of important questions and concerns around the interplay between NFTs, copyright law, trademark law, and general protections for intellectual property.
Before we deep dive into some of these issues, let’s clarify some core concepts around NFTs.
Overview of NFTS
Non-fungible tokens (NFTs) are assets like artworks, digital content, or videos that have been tokenized via a blockchain, according to Investopedia. These tokens contain unique identification codes created from metadata via an encryption function. They are then stored on a digital ledger, while the assets themselves are stored in other locations. In effect, the link between the token and the asset is what makes them unique and provides a level of value.
NFTS and Digital Fashion
The use of NFTs is becoming quite common in the digital fashion sector. For example, users on digital fashion platforms have made and sold items that appear to be created by luxury brands, but without brand participation. This raises important legal questions around ownership and IP protections. Many people are concerned that such sales of branded digital items may violate intellectual property protections when a particular brand has nothing to do with creation and sale of the digital asset.
The rules and regulatory framework around physical counterfeits are relatively clear. However, the rules in the metaverse are not so clear. There are open questions around who actually owns the IP on a digitally created or mutated physical product.
Many companies operating in the physical world with manufactured physical products have legitimate concerns around the unauthorized use of their brand image and likeness within the metaverse.
Some brands, such as Gucci, have opted to proactively partner with digital platforms and creators to design digital clothing. Whether other brands follow suit or decide to take the position that such digital creations are effectively counterfeits remains an open question.
Contact an Experienced Trademark and Copyright Attorney in Los Angeles
As you can see, the legal issues around NFTS (including in digital fashion) are complex and novel. If you are concerned about protecting your IP, or have questions around launching an NFT, then now is the time to speak to an experienced and knowledgeable trademark and copyright lawyer in Los Angeles with the Omni Legal Group. Our legal team is ready and able to assist by assessing your specific situation, researching relevant regulations and case law, and developing a compliance roadmap. We will be there to help you and to answer your questions.
Schedule a consultation today, call us at 855.433.2226 or visit www.OmniLegalGroup.com to learn more.