General Publications December 20, 2021

“‘Pulp Fiction’ NFT Lawsuit Presents New IP Battleground,” Law360, December 20, 2021.

Extracted from Law360

On Nov. 16, Miramax LLC filed a lawsuit in the U.S. District Court for the Central District of California against its longtime collaborator Quentin Tarantino and his wholly owned corporation.

The suit alleges that Tarantino's planned auction of seven "exclusive scenes" from the 1994 motion picture "Pulp Fiction" in the form of nonfungible tokens, or NFTs, threatened to breach an agreement in which Tarantino assigned to Miramax "all rights (including all copyrights and trademarks) in and to the Film."[1]

Miramax also brings claims for copyright infringement, trademark infringement and unfair competition. Beyond the famous parties involved, Miramax v. Tarantino is notable because it marks the first opportunity for a federal court to opine on intellectual property rights in the NFT context.

What Are NFTs?

NFTs have turned the art world upside down. Whether it is collaborating with Rolling Stone or selling for seven-figure amounts on fine-art auction platforms like Sotheby's, NFTs, like the Bored Ape Yacht Club, are revolutionizing the idea of what it means to be art.

Unlike the "Mona Lisa" or the Sistine Chapel, NFTs encompass digital art — they are not tangible. For example, although digital and physical copies of the "Mona Lisa" undoubtedly exist, the original work, painted by Leonardo da Vinci in 1503, is located within the Louvre Museum.

In contrast, NFTs reside in the digital world, and ownership of NFTs is digitally recorded on blockchains, which are basically a database and a transactions ledger merged into one and stored online on a decentralized network. Much like a watermark or initials on the bottom corner of a painting, a piece of blockchain data is something NFT holders can point to as evidence of ownership. When the NFTs are sold, the transfer of ownership is similarly recorded on the blockchain.

NFTs are based on real-world or digitally created images. For example, HENI, a self-described international art services business, created an NFT project, "Greetings from Giza," based on a photograph that artist JR took in front of the Great Pyramid of Giza and offered the minting — the process of recording an image on the blockchain — of fragmented images of the picture for sale to consumers.

Alternatively, graphic designers can create unique digital images. An NFT project is then recorded on the blockchain, which stores the data corresponding to the unique images — real or digital — that make up the individual NFTs belonging to that project. The data includes the artist who created the NFT project and the time it was created.

The NFT creators also program how consumers can mint one or multiple NFTs from the NFT project, most commonly by setting up transactions on their website where consumers pay a fee in cryptocurrency for the right to mint.

They also frequently use so-called "smart contracts" to charge a royalty fee from every subsequent sale of each minted NFT, whereby the creators automatically receive a commission whenever an NFT is sold to another person or is traded on the secondary market.

Although NFTs look, act and are sold like traditional, tangible art, the technology behind NFTs introduces new features, making it unclear whether and how intellectual property rights, including copyright and trademark rights, will apply.

These uncertainties, however, have not slowed down the widespread popularization of NFTs. What started as a digital art craze, made up of JPEG images that were mostly used as social media profile pictures and had little to no practical use, has morphed into a blossoming marketplace in which NFT possession unlocks tangible utility, including access to community, merchandise and music.

NFTs are now practically jumping out of computer screens and into the real world. But as they make their leap, intellectual property implications weigh more heavily. The growth of the industry dictates the importance of recognizing where potential issues lie.

Intellectual Property Rights in NFTs

Who owns the intellectual property rights in an NFT project and each NFT within that project: the NFT creator or the individual minter? Traditional notions of intellectual property law would suggest that NFT creators own the intellectual property rights because of the maxim that a copyright vests in the author of an original work from the time of its creation.

Indeed, NFTs are akin to blockchain-recorded copies or derivatives of another work — i.e., JR's original image or the digital artist's unique designs — and so, it can be argued, the copyright holder of the NFT project and each NFT under that project should be presumed to be the NFT creator.

On the other hand, it could also be argued that an NFT is only created for copyright purposes when it is minted or recorded on the blockchain. And the images that have yet to be minted in turn are nothing more than incomplete drafts. This ambiguity has left a gaping hole in an industry that is estimated to be worth more than $7 billion.[2]

Some creators, like Yuga Labs, the creator of the Bored Ape Yacht Club and the Mutant Ape Yacht Club, have proactively granted NFT holders commercial rights to their individual NFT illustrations. The transparency has led to music producer Timbaland and Universal Music Group NV launching separate virtual bands based on these NFTs.[3]

Universal Music Group's band consists of three Bored Ape Yacht Club NFT holders and one Mutant Ape Yacht Club NFT holder, called Kingship. Using the NFTs as their avatars in a way reminiscent of Gorillaz, Universal Music Group stated that Kingship will release music, its own NFTs, community-based products — likely merchandise — and activations and experiences in the metaverse.[4]

Yet most NFT projects are silent on intellectual property rights, making it increasingly likely that disputes will arise, including: (1) when an NFT project copies another NFT project; (2) when an NFT project copies a traditional work, as in the Miramax v. Tarantino case; or (3) when a traditional work copies an NFT project.

NFT Versus NFT

Scammers and copying are already prevalent in the NFT marketplace. There are no barriers stopping a person from launching his or her own project that copies every detail of an already-existing NFT project.

For example, if a person is so inclined, one can copy all 10,000 Bored Ape Yacht Club NFTs — the cheapest of which is currently listed for sale at 50 ether, or $201,535 — and create his or her own, separate NFT project on the blockchain.

Because NFTs appear as nothing more than digital images, copycat NFTs are identical to authentic NFTs, at least in terms of the images themselves. Similar to an identical counterfeit product, the main difference between an authentic NFT and a copycat NFT is the relationship to the authentic NFT project.

Like a brand name good, an authentic NFT project comes with certain privileges and perks. But instead of access to a customer warranty or a customer service representative, an authentic NFT project provides holders membership in an online community and the opportunity to purchase official merchandise, among many other benefits. Copycat NFT holders do not have access to these privileges, making them inauthentic.

Popular NFT-purchasing platforms are currently riddled with copycat NFTs, which leaves open the question whether these copycat NFTs infringe on the intellectual property rights of the authentic NFT projects. If intellectual property rights protect NFTs, there can be no reasonable dispute that copycat NFTs infringe on the works that they intentionally copy.

But the question becomes harder when the potentially infringing NFT merely possesses similarities to the authentic NFT. Many NFT projects use apes or pixelated animals/humans as foundational images for their NFTs, undoubtedly drawing inspiration from two of the most popular NFT projects, the Bored Ape Yacht Club and CryptoPunks. However, the use of apes and pixelated humans alone would not constitute infringement.

The Copyright Act prohibits works that are "substantially similar to protected aspects of the plaintiff's work,"[5] and the Lanham Act employs the likelihood of confusion standard for trademark infringement.[6] Regardless of which intellectual property right is implicated by the act of copying, the issues should be decided on a case-by-case basis, and courts should consider the relevant factors depending on the particular facts and circumstances involved.

Traditional Work Versus NFT


Other foreseeable disputes will ensue when an NFT project is derived from traditional copyrighted works that are often subject to trademark rights too. This is what Miramax alleges in its case against Tarantino. It also occurs when copyrighted images are transformed into NFTs and then manipulated or altered.

For example, an NFT project that copies and pixelates stock images of a famous car or watch brand would be such a case. Since traditional works are protected by intellectual property laws, these cases will likely proceed as any intellectual property case normally would, with prominent questions of substantial similarity/confusion, derivative works and licenses.

NFT Versus Traditional Work


The third situation, when a traditional work copies an NFT project, is particularly important in light of the increased popularity of NFTs.

For example, what would have happened had Universal Music Group signed Kingship without the NFT holders unequivocally owning the commercial rights to their NFTs?

Would Yuga Labs have had a claim for copyright or trademark infringement against these parties if they sold merchandise displaying those NFTs?

Would Yuga Labs have been entitled to share in any proceeds stemming from the use of these NFTs, including ticket sales to online or metaverse concerts in which animated versions of the NFTs perform?

As stated earlier, the answers to these questions may rest on whether intellectual property rights attach at the time of creation of the underlying images or the minting of NFTs.

As with all new, rapidly growing technologies, the legal implications of NFTs are only beginning to be understood. The scope of intellectual property rights associated with NFTs will expand as their real-world, metaverse and online functionalities grow. Court guidance is necessary to define the scope of these rights. Legislation may also be needed for the law to catch up to the evolving industries.

Until that time comes, NFT creators should explicitly define in terms and conditions whether they retain intellectual property rights to NFTs or whether these rights transfer along with NFT ownership.

A holding in Miramax's favor could also put NFT creators, many of them young computer-savvy entrepreneurs, on the wrong side of intellectual property laws, which could lead to them unknowingly infringing upon intellectual property rights and potentially facing significant liability.


[1] The case is Miramax, LLC v. Quentin Tarantino, et al., No. 2:21-cv-08979-FMO-JC (C.D. Cal.).

[2] Matthew Fox, The NFT market is now worth more than $7 billion, but legal issues facing the nascent sector could hinder its growth, JPMorgan says, Markets Insider (Nov. 19, 2021, 10:03 AM), https://markets.businessinsider.com/news/currencies/nft-market-worth-7-billion-legal-issues-could-hinder-growth-2021-11.

[3] 10:22PM Form KINGSHIP, the first ever group consisting of NFT characters from Bored Ape Yacht Club, Universal Music Group (Nov. 11, 2021), https://www.universalmusic.com/1022pm-forms-kingship-the-first-ever-group-consisting-of-nft-characters-from-bored-ape-yacht-club/.

[4] Andrew Hayward, CryptoPunk Owner Explains Why IP Dispute Led to $10M Ethereum NFT Sale, Decrypt (Dec. 10, 2021), https://decrypt.co/88041/cryptopunks-ip-complaints-punk4156-10m-ethereum-nft-sale.

[5] Feist Publ'ns, Inc. v. Rural Tel. Serv. Co. Inc. , 499 U.S. 340, 361 (1991).

[6] 15 U.S.C. §1125(a) ("Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which … is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person … shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.").

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