Can Non-Fungible Tokens (NFTs) be protected by trademarks?
In the ever-evolving world of non-fungible tokens (NFTs), the question of trademark protection has become a hot topic. As NFTs continue to gain popularity, courts around the globe are testing traditional trademark laws to see how they apply to these digital assets.
United States: U.S. courts have confirmed that NFTs qualify as “goods” under trademark law protection, specifically under the Lanham Act. A significant ruling by the Ninth Circuit in Yuga Labs, Inc. v. Ripps confirmed that NFTs can be protected trademarks and that trademark rights do not automatically transfer when an NFT is sold. The court rejected defenses based on artistic expression if the NFT causes consumer confusion or is used as a source identifier to infringe trademarks. Another notable case involved Hermès winning against NFT creator Mason Rothschild for “MetaBirkins” NFTs, reinforcing that digital assets can infringe trademarks if they confuse consumers about origin or sponsorship.
European Union: While specific recent rulings are less documented, the EU trademark system generally requires use in commerce and consumer confusion analysis similarly to the U.S. However, the evolving nature of NFTs challenges EU trademark law as courts and authorities adapt to digital tokens as virtual goods. European brands involved in NFT disputes tend to rely on existing principles aiming to prevent brand dilution and consumer deception, but detailed case law remains emerging.
China: China shows growing interest in integrating blockchain with intellectual property (IP) management, recognizing the importance of stable ownership records and transaction histories on blockchain for IP assets. This suggests a regulatory openness to NFTs as digital IP assets, though the exact state of trademark protection for NFTs is still evolving. Studies indicate efforts to leverage blockchain to strengthen China’s IP trade and enforcement practices rather than direct landmark trademark cases for NFTs yet.
The ongoing legal battle between Yuga Labs and artist Ryder Ripps, and the case between Hermès and Rothschild, have set important precedents. They warn creators that using famous trademarks for digital products could lead to legal trouble. Meanwhile, the outcome of the Nike vs. StockX case could set a major precedent for how digital marketplaces handle NFTs connected to physical goods.
Applying trademark laws to NFTs, which are strings of code on a blockchain, is proving to be a legal challenge. As the rulebook for trademarks in the metaverse is still being written, mostly by judges in real time, it's clear that the landscape of trademark protection for NFTs is still in its infancy.
One thing is certain: the current state of trademarking NFTs shows that these digital assets are increasingly recognized as eligible for trademark protection. However, courts continue to test how traditional trademark laws apply to these digital assets across different jurisdictions. As the metaverse expands, it's likely that we'll see more cases testing the boundaries of trademark law and NFTs.
- In the US, NFTs have been confirmed as "goods" under trademark law protection, such as the Lanham Act, yet the issue of trademark rights not automatically transferring when an NFT is sold is being addressed.
- The EU trademark system generally requires use in commerce and consumer confusion analysis similar to the US, but the evolving nature of NFTs poses challenges to EU trademark law as courts and authorities adapt.
- China is showing an interest in integrating blockchain with intellectual property management, suggesting a regulatory openness to NFTs as digital IP assets, although the exact state of trademark protection for NFTs is still evolving.
- As courts around the world test traditional trademark laws to see how they apply to NFTs, it's clear that the landscape of trademark protection for NFTs is still in its infancy, with more cases expected as the metaverse expands.
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