Welcome to the monthly NFT proceedings summary.
As the rise of non-fungible tokens (NFTs) continues to skyrocket, so do the questions, legal issues, and disputes that surround them.
When faced with such a high-growth phenomenon, the law can take some time to catch up. Boodle Hatfield closely monitors development and provides a monthly summary of key NFT disputes to watch out for.
HMRC seizes NFT for the first time
HMRC seized crypto assets and three NFTs as part of an investigation into alleged £ 1.4 million VAT fraud.
Nick Sharp, Deputy Director of Economic Crime, HM Revenue and Customs, said: “The first foreclosure of non-fungible tokens serves as a warning to those who think they can use crypto assets to hide money from HMRC. We are constantly adapting to new technologies and criminals and evaders. Is responding to the situation where is trying to hide its assets. “”
Investigation is ongoing.
London-based artist and curator Ben Moore launched Art Wars at Saatchi Gallery in 2013, using life-sized storm trooper helmets custom-painted by the artist. Moore has now transitioned to selling helmet NFTs without the permission of the artist.
After receiving the notice of copyright infringement, OpenSea removed the Art Wars NFT page.
DAC tells Artnet News: “As the art market evolves with new technologies such as NFTs, we need to ensure that both the creative, intellectual and moral rights of artists are protected. Creating NFTs without the permission of artists is our society. Emphasis on creativity, in which it ensures that artists are protected through mechanisms such as existing intellectual property laws and the artist’s resale rights. “
The owners of the Art Wars NFT have asked for an explanation of the next steps, and the project has been moved to an alternative platform, Looksrare.
Sotheby’s and Kevin McCoy have filed a proceeding over the “first-ever” NFT sale of $ 1.47 million.
Free Holdings, a Canadian-based company, claims Kevin McCoy’s rights. quantum (2014), this is considered by some to be the first NFT.
June 2021 quantum Sold by Sotheby’s for about $ 1.5 million. The controversy over ownership soon continued. quantum It was originally “built” (that is, turned into a digital asset to make it available for purchase) with blockchain software called “NameCoin”. NameCoins must be collected by the owner every 250 days. After creating the NFT in 2014, McCoy did not update Quantum, perhaps allowing others to claim it freely. In April 2021, Free Holdings claimed that the owner registered himself as the owner. quantum..
Nameless (the company that runs NameCoin) has also been nominated as a defendant. They provided Sotheby’s with an NFT status report prior to the auction.This particular Namecoin entry was removed from the system after it wasn’t updated and was effectively burned out of the chain.“(In other words, the ownership could not be re-registered.) Colin Woodard, Legal Adviser of the Unknown State.”I can’t comment further on the proceedings, but the great thing about NFTs is that the blockchain keeps track of past history, so it’s easy to prove ownership... “
A Sotheby’s spokesman said:The proceedings are groundless and Sotheby’s is actively ready to protect itself... “
The proceedings provide insights into how courts view ownership in the territory of the blockchain.
Nike sues StockX to sell NFT based on Nike shoes
Nike has filed a complaint against StockX, an online trainer reseller, for trademark infringement.
In January, StockX launched the “Vault NFT”. These Vault NFTs can be replaced digitally or with a corresponding physical trainer. However, NFTs can be sold to more people than physical trainers. The NFT contains the name and image of the Nike trainer, and Nike claims that this is (especially) a trademark infringement.
The question is whether the NFT is a product in itself or just an extension of the normal sales process (like a digital receipt). Jeff Trexler of the Fashion Law Institute said, “It’s not just a reseller that uses the brand mark on second-hand goods.Nike says this is a trademark abuse to sell others … this is an important issue for the future of the NFT market in fashion... “
Nike claimed that this was affecting its reputation and legitimacy, and requested the court to ban Stock X from continuing to sell NFTs bearing the Nike mark.
Hermes sues the creator of an NFT that resembles a Birkin handbag
Mason Rothschild designed 100 NFTs that resemble the iconic Hermès Birkin handbag. Rothschild began selling MetaBirkins NFTs last December, with initial sales of $ 42,000. Later that month, the cumulative value of 100 MetaBirkin NFTs reached approximately $ 450,000.
Hermès filed a 47-page complaint with the Southern District Court in New York, and Rothschild said:Strip the famous Hermès Birkin trademark by adding the generic prefix “meta” “Say”There is no doubt that this success stems from his confused and dilute use of Hermès’ famous trademark... Hermes is seeking injunctive relief, and the court has demanded that the Rothschilds suspend his activities and pay his interests in damages. They also want to give him the MetaBirkins.com domain name.
Rothschild claims that his work is protected by the First Amendment (guaranteeing freedom of speech), and MetaBirkins simply says “A playful abstraction of existing fashion culture landmarks.. “
The proceedings cast important issues in the spotlight, such as how the trademark of the actual item will be enforced in the digital world and the impact on MetaBirkin NFT owners if Hermès succeeds in the proceedings against Rothschild. ..
Cryptopunks-V1 v V2
Cryptopunks is an NFT collection of characters on the Ethereum blockchain that started as an experiment in 2017, and Larva Labs is creating a software program to generate thousands of different “Cryptopunk” characters.
When Larva Labs distributed the original (V1) Cryptopunks in 2017, the smart contract was incorrect and the buyer, not the seller, was able to withdraw money after the transaction-that is, the buyer bought the Cryptopunk and NFT. I was able to get it, and get that money back.
Larva Labs has abandoned the V1 contract and released a series of updated versions of V2. V2NFT eventually became world famous.
However, V1 Cryptopunks still existed on the blockchain. Originally banned by Open Sea, there was no market to trade, but new platforms arrived and each could reappear with a different color background than V2 Cyrptopunks. This means that there are two sets of Crytopunks, V1 and V2.
The situation so far:
Larva Labs claims that it maintains a license for V1 tokens and does not want to trade tokens because it undermines the current value of V2.
The owner of Cryptopunk V1 has filed a DMCA opposition notice to overturn Larva Labs’ request to exclude collections from OpenSea.
The V1 community claims that the community holds at least some ownership of the property, as nearly $ 50 million is spent on V1.
If V1 is considered legal, it will double the supply of Cryptopunks and potentially reduce their value.