NFTs and Intellectual Property Rights

    The unique artifacts built on the blockchain are called Non-Fungible Tokens (“NFT”). The thing that makes NFTs so famous and important is that they are unique, that is, they do not have a duplicate. With the simplest expression; it means that there is only one of that NFT built on the blockchain.

    These works, which are made ready in digital environments, are secured with blockchain technology. NFTs are a topic that has been on the agenda of various sectors, especially in recent years. A study determined the total trading volume of NFTs in the market as 12.13 billion USD[1]. Nowadays, all kinds of things can be NFT if they also have certain conditions. However, it is seen that the most important works that have become NFTs are generally intellectual property products. Today, intellectual property, with a broad expression, refers to the works and products that people have created with their ideas. It is seen that intellectual property rights are protected by laws and international agreements in the laws of various countries.

    In this respect, NFTs, which have been in our lives for the last few years, has been the subject of much legal debate in the field of intellectual property, as in many different fields, and there have been well-known disputes in this field in the international arena. The biggest source of these discussions was the fact that there was no special legal regulation for NFTs until recently. This gap was tried to be filled by court case law. One of the most controversial disputes in terms of copyright is the case between Miramax and Quentin Tarantino, which has made a big noise in the world. In essence, this case involved a copyright dispute to summarize the case; In November 2021, Quentin Tarantino announced that he would sell seven scenes of Pulp Fiction, which he wrote and directed in 1994, as NFT.

    On the other hand, Miramax emphasized that it is illegal for Tarantino to make an individual profit on this work after this move and that it is necessary to obtain permission from them beforehand for Tarantino to take such an action. Thereupon, they sent a dunning letter to Tarantino and demanded that the sales of the NFTs in question be stopped. Another reason for the production company Miramax was that they would also release an NFT series for Pulp Fiction and that Tarantino's unannounced move would harm them. At the end of all these developments, things were moved to litigation. Of course, at the same time, "does the copyright ownership arising from the movie work belong to the producer or does it belong to the director?" the question has been raised. According to the widely accepted view today, the director already has these rights as the owner of the work. However, producers also have certain rights and powers that they hold as related rights holders. As a matter of fact, after all these events, Quentin Tarantino claimed that the director, namely himself, has the right to publish the things related to the script, and sold one of the NFT pieces in January 2022 for 1 million dollars. [2]

    After all these disputes, the legal struggle, which continued for almost 1 year in September 2022, ended with the agreement of the parties. Lawyers of the parties in connection with the incident; “The parties have agreed to leave this issue behind and look forward to cooperating on future projects, including possible NFTs.” they said.

    To make a brief assessment of the event; It was not the first time that the scenes of the movies were the subject of NFTs. It was seen before that many famous movie elements were sold in the form of NFT. However, the situation that made this event so exciting was the fact that two industry giants came face to face, and that it was a case that could set a precedent for the legal community. Because, especially at the time of this lawsuit, the locations of NFTs did not have a fully legal basis. Therefore, had the case continued and concluded, it would have set a precedent for other NFT cases that may arise in the future.

    In this way, the issue of the legal basis of NFTs, which started to appear frequently in legal disputes, has started to be a matter of debate in many countries around the world, and these discussions have begun to be reflected in court decisions. Because when talking about a work, one of the problems that come to mind is how to resolve a copyright dispute. Within the scope of this discussion, it was seen that NFTs did not have a stable place in Intellectual Property Law, and it was still a subject of discussion due to the lack of uniformity in line with many different opinions and different court decisions.

    With new developments, NFTs are now officially accepted for their classification by the World Intellectual Property Organization (“WIPO”). Nice Classification is an international classification format created to classify goods and services according to their differences at the registration stage of trademarks. Classes in the Nice Classification have class titles that change according to the content of these classes. With these headings, WIPO states that it generally indicates the areas to which goods and services mainly belong. There are 45 classes in total in the Nice Classification.

    In terms of NFTs and blockchains, the issue under discussion regarding this topic is which goods/service class should be evaluated according to the Nice Classification in cases where these digital works are subject to trademark registration. They mentioned NFTs in the guide prepared by the European Union Intellectual Property Office (“EUIPO”) on this subject and stated that NFTs should be in the 9th class under the Nice Classification.

    Ultimately, WIPO included NFTs in the Nice Classification. WIPO has recently announced the newly enacted 12th classification list of the Nice Classification for the International Classification of Goods and Services for Registration of Trademarks, which will enter into force on 01.01.2023.

    In Class 9:

    • New goods: “downloadable digital files authenticated by non-fungible tokens [NFTs]”, “computer network routers”, “portable document scanners”, and “cases for smartphones incorporating a keyboard”.
    • Amendment of the goods: “downloadable computer software for managing cryptocurrency transactions using blockchain technology” to “downloadable computer software for managing crypto asset transactions using blockchain technology”.

    With the new classification, brand protection can now be provided for NFT products. NFTs will now officially start in Class 9 of the Nice Classification from 1 January 2023.




    Tagged with: NFTs, EUIPOWorld Intellectual Property OrganizationWIPO, Intellectual PropertyNon-Fungible Tokens, Blockchain, Copyright, Digital Works

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