Court of Appeal Approved the Injunction Regarding NFT

NFTs, defined as non-fungible digital assets, are possibly one of the most popular digital assets that have emerged in recent years. They have become prominent in the rapidly growing gaming industry, as well as health and art sectors. In this regard, NFTs are appealing to many artists, collectors and investors.

The rapid development and popularity of NFTs has led to the creation of a large worldwide market. NFTs’ popularity has rendered disputes inevitable. Legal systems, on the other hand, were unable to keep up with this rapid development. Thus, naturally, current regulations have fallen short of addressing many of the key legal issues regarding NFTs.

Even though there are no regulations fully regulating NFTs, existing disputes and jurisprudence regarding NFTs are guiding the practice. One of the most significant examples of this is the interim injunction decision within the dispute that we have been representing our client Emrah Karaca, at Istanbul 3rd Civil Court of Intellectual and Industrial Rights (Court) ruled on 21 June 2022 which was a first in Turkey. The parties of the dispute are the inheritor and the son of deceased Cem Karaca who is one of the most well-known artists in Turkey, Emrah Karaca and Yiğit Mohaç Yücel, an artist who illustrated a portrait of Cem Karaca and put it up for sale in the form of an NFT.

Plaintiff Emrah Karaca brought the relevant dispute to the Court, since the portrait of his father, Cem Karaca, was unlawfully offered for sale by various means, primarily through NFT, and had been shared and exhibited on social media platforms for commercial purposes. In this context, Emrah Karaca claimed that the display and sharing of this portrait with commercial purposes constitutes a violation of personal rights under the Turkish Civil Code and the Law on Intellectual and Artistic Work and demanded cease of the sale of this portrait and that be removed from the platforms where it was published. In order to prevent the NFT from being sold, and get a recording of evidence, plaintiff Emrah Karaca requested an interim injunction.

Upon reviewing an experts’ examination, the Court accepted the request for interim injunction, as it found that the request was well-founded. As a result, the Court decided to blockade access to the URL to the portrait on one of the most widely used NFT platforms on the Internet, OpenSea and the prevention of sale of Cem Karaca’s portrait on the same platform. Upon receiving the judgment, the portrait was taken down from the NFT platform OpenSea.

The interim injunction decision of the Court is crucial as it is a first in Turkey and since it could set a precedent for similar disputes in the future, as it shows that NFTs could be subject of enforceable decisions. Likewise, the removal of the portrait from OpenSea and halt of its sale, also shows how executable Turkish court decisions are on the matter and whether they can be enforceable or not.

Even though the technical details about the properties of NFT is not assessed in detail in this interim injunction, this decision is significant in the way that it shows how courts could examine rights violations under the relevant law. In this regard, although there is no regulation in Turkey regarding NFTs, this interim injunction is crucial as it shows NFTs can be subject to executable decisions by courts and that NFTs can also constitute rights violations under Turkish law.

The defendant Yiğit Mohaç Yücel however, objected to the decision of the Court and upon its rejection, brought it before Istanbul Regional Court of Appeal. The second instance court decided in favour of the court of first instance and approved the interim injunction. Thus, the first interim injunction related to NFTs became final.

The decision of the court of second instance is crucial as it is the first court decision regarding the legal status of NFTs in Turkey. However, how this decision will affect the legal status of NFTs in the upcoming regulations in Turkey in the near future is a matter of curiosity.

Tagged with: Gökçe, Görkem Gökçe, Aslıhan Kayhan, Technology & Telecoms