For many, cryptocurrency is a vague concept that merely crowds their social media feeds with promises of endless opportunities to get rich quick in a new and booming market. NFTs, or non-fungible tokens, are the latest in this sweeping trend, seen as a burgeoning part of the new digital economy which empowers creators and artists.[1] Amidst general confusion about what NFTs actually are, and closely following the hype around recent large sales, a new question is arising: how do NFTs relate to copyrights?
NFTs are distinct from bitcoin and other popular cryptocurrencies in that they transfer one-of-a-kind ownership over a unique item, whereas other cryptocurrencies are merely fungible, or non-unique, items classified by their financial value.[2] Part of the Ethereum Blockchain,[3] NFTs parallel copyrights in a few important ways: NFTs are one-of-a-kind tokens with only one official owner, NFTs cannot be copied and recreated as a new NFT,[4] and NFT ownership history is traceable in blockchain records which is similar to assignment records with the U.S. Patent and Trademark Office or U.S. Copyright Office.[5]
However, the sales of NFTs do not actually transfer any underlying copyright in the tokens sold.[6] Rather, NFTs are minted, unique pieces of digital data which represent either digital or non-digital assets.[7] Because creating an NFT is as simple as generating a line of metadata in relation to a work, anyone could hypothetically create an NFT that doesn’t belong to them, and that NFT may not be considered a reproduction of the original copyrightable work.[8] This elusive nature behind the creation of an NFT has opened the door to a new and dynamic world of copyright litigation.
This new world of copyright litigation is already beginning – the new dispute between Quentin Tarantino and Miramax, LLC is a key example.[9] This case hinges upon whether the creation of an NFT, or rather the creation of minted metadata that represents the screenplay scenes, falls within Tarantino’s reserved right over screenplay publication. The breach of contract and trademark and copyright infringement suit, filed by Miramax in California Federal Court on November 11, 2021, alleges that Tarantino violated his 1993 Original Rights Agreement with Miramax Film Corp by advertising and planning the auction of seven “Iconic Scenes” from the 1994 film Pulp Fiction,[10] paired with personalized audio commentary from Quentin Tarantino, as NFTs.[11]
In their complaint, Miramax alleged that Tarantino “granted and assigned nearly all of his rights to Pulp Fiction”[12] to Miramax in their 1993 contract, and accordingly “Miramax holds the rights needed to develop, market, and sell NFTs relating to its deep film library.”[13] Miramax characterized Tarantino’s actions as a money-grab and alleged he was attempting to unilaterally circumvent Miramax’s rights to Pulp Fiction.[14] Further, Miramax expressed concerns that Tarantino’s actions devalue the NFT rights to Pulp Fiction and may lead to more parties violating Miramax’s copyrights in similar auctions.[15]
Tarantino’s lawyers contend that the contract upheld Tarantino’s rights to screenplay publication, which they argue allows for the auction of digital scans of his original hand-written screenplay as NFTs.[16] On December 9, 2021, Tarantino responded by claiming Miramax was merely a “shell of its former self” and described the lawsuit as “offensively meritless,” claiming that “Miramax implausibly attempts to use the concept of NFTs to confuse the public and mislead this Court in an effort to deny artists such as Tarantino their hard earned and long-standing rights.”[17]Miramax argued that Tarantino’s reserved rights do not contain forward-looking language and thus do not encompass rights not known at the time of the Original Rights Agreement.[18] However, underlying this claim is a more interesting question: is an NFT, a simple line of code, a substantial-enough reproduction of the original copyrightable work that it can infringe upon existing copyrights?[19]
Despite Miramax’s suit, Tarantino announced that auctions would begin on January 17, 2022[20] through SCRT Labs.[21] The first Auctioned Pulp Fiction NFT winning bid was announced on the @TarantinoNFTs twitter account, with one of the NFTs selling for $1.1 million on January 24, 2022.[22] However, four days later, the account posted an update stating the remainder of the auction would be postponed “in light of extreme market volatility.”[23]
The implications of the Miramax, LLC v. Tarantino trial, which is scheduled to begin on February 28, 2023,[24] may open the door to an entirely new market for copyright registration and intellectual property contracts. If Tarantino successfully distinguishes his NFT auctions from the 1993 copyright with Miramax,[25] copyright holders across the world may find themselves losing out on what has already proven to be an extremely lucrative market. Artists, on the other hand, may find themselves empowered to escape the strict confines of restrictive copyright agreements, taking advantage of the booming NFT market and expanding control over their intellectual property rights. Either way, this case is certainly one to watch, and is likely only the first of many to come.
[1] See Non-fungible tokens (NFT), Ethereum, https://ethereum.org/en/nft/ (last visited Feb. 17, 2022).
[2] Id.
[3] Id.
[4] Id.
[5] See Gregory J. Chinlund & Kelley S. Gordon, What are the copyright implications of NFTs?, Reuters (Oct. 29, 2021, 11:41 AM), https://www.reuters.com/legal/transactional/what-are-copyright-implications-nfts-2021-10-29/.
[6] Id.
[7] See Non-fungible tokens (NFT), Ethereum, https://ethereum.org/en/nft/ (last visited Feb. 17 2022).
[8] See Andres Guadamuz, Non-fungible tokens (NFTs) and copyright, WIPO Mag. (Dec. 2021), https://www.wipo.int/wipo_magazine/en/2021/04/article_0007.html.
[9] Id.
[10] See Complaint at 1, Miramax, LLC v. Tarantino, No. 2:21-cv-08979 (C.D. Cal. Nov. 16, 2021).
[11] See Tarantino NFTs, https://tarantinonfts.com/ (last visited Feb. 17, 2022).
[12] Complaint at 1, Miramax, LLC v. Tarantino, No. 2:21-cv-08979 (C.D. Cal. Nov. 16, 2021).
[13] Id. at 2.
[14] See Andrew Karpan, Tarantino Can’t Sell ‘Pulp Fiction’ Scenes as NFTs, Suit Says, Law360 (Nov. 16, 2021, 8:58 PM), https://www.law360.com/articles/1441154.
[15] See Complaint at 2, Miramax, LLC v. Tarantino, No. 2:21-cv-08979 (C.D. Cal. Nov. 16, 2021).
[16] See Karpan, supra note 14.
[17] See Answer to Pl.’s Complaint at 1, Miramax, LLC v. Tarantino, No. 2:21-cv-08979 (C.D. Cal. Dec. 9, 2021).
[18] See Complaint at 5, Miramax, LLC v. Tarantino, No. 2:21-cv-08979 (C.D. Cal. Nov. 16, 2021).
[19] See Andres Guadamuz, Non-fungible tokens (NFTs) and copyright, WIPO Mag. (Dec. 2021), https://www.wipo.int/wipo_magazine/en/2021/04/article_0007.html.
[20] See Tiffany Hu, Tarantino To Auction ‘Pulp Fiction’ NFTs Despite Miramax Suit, Law360 (Jan. 5, 2022, 8:52 PM), https://www.law360.com/articles/1452540.
[21] See Tarantino NFTs, https://scrtlabs.com/artists/, (last visited Feb. 17 2022).
[22] See Tarantino NFTs (@TarantinoNFTs), Twitter (Jan. 24, 2022, 7:23 AM), https://twitter.com/tarantinonfts/status/1485589162875138053?s=21.
[23] See Tarantino NFTs (@TarantinoNFTs), Twitter (Jan. 28, 2022, 3:59 PM), https://twitter.com/tarantinonfts/status/1487168591556456448?s=21.
[24] See Scheduling and Case Management Order Re: Jury Trial at 18, Miramax, LLC v. Tarantino, No. 2:21-cv-08979 (C.D. Cal. Feb. 16, 2022).
[25] See Tiffany Hu, Copyright Cases to Watch in 2022, Law360 (Jan. 3, 2022, 12:03 PM), https://www.law360.com/articles/1447908/copyright-cases-to-watch-in-2022.