NFTs, legal objects to be handled with care

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

Trial between Hermès and Mason Rotschild

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

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

This is an opportunity to look at the exact nature of an NFT. Is it a separate object? Is it a work that is protected by copyright and trademark law, or is it a deed, a certificate of authenticity or a simple line of code and a link to a work or to a certificate? This is the topic that Arnaud Fournier, lawyer, founder of Consultantitrust, clarified on the occasion of the event ” NFT and luxury brands organized by Adetem on 7 July.

There are 3 types of NFT in my opinion. This has a huge impact on copyright and trademark presents Arnaud Fournier. ” The first type of NFT is one created directly in blockchain he continues. ” It uses a lot of power and it takes time. But this is a real creation in blockchain. But it is believed that it is not worth creating a work directly in 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 in which the ownership of the work is either part of the NFT or the NFT itself. he resumes. One can then use NFT as a means of transferring ownership at every sale. ” This is the case with Cryptopunks, for examplewhere NFT is a smart contract that gives ownership to the plant He illustrates. For Arnaud Fournier, however, this type of contract is not proof of the original ownership. ” You can take any job from an NFT marketplace and declare that you own it and create your own smart contract for this job he explains.

The most common NFT is the one where we create a code that refers to an image

Creators do not make much use of this opportunity because they want to retain the copyright to their work. They can thus generate other NFTs from the same work he declares. The third type of NFT is the best known and the most widely used. ” An NFT is created from a work, an image or a photo. We just create a code that refers to this image, and we do not then create an object. These NFTs are certificates of authenticity, but they are different from the object itself he presents.

It is this type of NFT, we e.g. finds in the trial between Hermès and Mason Rotschild. ” If we take the example of the Meta Birkin bag, Mason Rotschild is on trial at Hermès. Its NFTs are simple codes that refer to a digital image. NFT is not an image. It’s not like a painting. It is a certificate of authenticity for the painting. I can sell you a painting’s certificate of authenticity and remain the owner of the painting. This causes copyright and trademark issues warns Arnaud Fournier.

Companies are confused when it comes to protecting themselves from hacker NFTs

It should be noted that the development of NFTs comes into conflict with the Trademark Act. Usually a company registers a trademark for a category of products. ” The brand Aubade can be registered for bras and by another company for bathrooms ”Illustrates the leader. But at the moment, companies do not know how to register their brand when it comes to NFT.

Companies choose multiple classes to cover themselves when it comes to protecting their brands in virtual universes

Companies tend to expand the categories in which they declare their brand in order to protect themselves. ” Thus, they select Class 9 (downloadable virtual goods), Class 35 (Virtual goods retail services), Class 41 (Entertainment services that provide non-downloadable virtual goods for use in a virtual environment), and they also point to class 40, 42 and 45, – and therefore 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 Rotschild 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 should therefore not be held ” Does he think. ” His second line of defense is that it is only an NFT, i.e. just a line of code and it is not a counterfeit bag and that Hermès registered his mark for a bag continues Arnaud Fournier.

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

That said, ” Once a brand is known, it covers all product categories, but Mason Rotschild only sells one line of code. To counterfeit, there must be a ‘code line’ category he jokes. Ultimately, we will have to take a closer look at the details of the verdict that will be handed down between Hermès and Mason Rotschild. ” I think Hermès will lose even if it risks winning on an aspect like fire dilution. Mason Rotstchild will be accused of using the Birkin brand, but it is not counterfeit he concludes.

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

A Wired article from March last year addresses the same issues. He describes NFTs as typically containing links to an asset hosted elsewhere. NFT does not transfer ownership of 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 pointer to something.

Another point, the Ethereum blockchain, which is often used to record NFTs, does not distinguish between having a token and possessing it. You can own a scooter and not own it. But in blockchain, whoever has a token becomes its owner. Furthermore, an NFT is only unique in the blockchain in which it was created. The same digital item can be registered in several blockchains. In addition, one can copy existing NFTs and sell them on the same blockchain or create NFTs from existing works of art if the creator does not want to make an NFT. In fact, the blockchain does not verify that the person creating the NFT has the rights to do so.

Leave a Comment