- Artists and brands are fighting over who has the right to sell non-fungible tokens.
- Olive Garden, Hermès, and Miramax have all taken legal action against NFT projects that the corporations argue are violating their trademark or contractual rights.
- The Non-Fungible Olive Gardens and MetaBirkin NFT projects were both taken off the popular marketplace OpenSea following legal letters from corporate lawyers.
To Brian Moore and Mike Lacher, Olive Garden restaurants — with their unlimited breadsticks and everyone-is-family geniality — are the epitome of inclusivity.
So when the two digital artists wanted to create a collection of NFT art that would feel accessible and nonintimidating to the average person, they turned to their favorite casual-dining restaurant for inspiration. The 880 “Non-Fungible Olive Gardens” that Moore and Lacher created are essentially digital photographs of real-world Olive Garden restaurants, each one encoded on the blockchain as a unique asset.
The artists sold each NFT, or nonfungible token, for $19.99 (the price of a “Tour of Italy” entree at Olive Garden restaurants), they created additional NFTs of breadsticks that they gave away for free, and they helped grow an active
community where people role played dining at the popular Italian-American eatery.
Ten days later, Olive Garden made it clear that it did not consider the artists, or their NFTs, to be part of the family.
On December 30, Olive Garden owner Darden Restaurants sent a takedown notice to OpenSea, the popular NFT trading platform on which collectors were selling their Non-Fungible Olive Gardens. OpenSea banished the organizers from the platform and blocked sales of the NFTs, putting the thriving online community of Olive Garden aficionados at odds with the very brand it came together to celebrate.
Cease and desist letters and legal threats are an increasingly common occurrence amid the sudden craze for NFTs. In some cases, artists are being forced to play cops, hunting down fraudsters who create NFT versions of existing artwork to sell as their own. More consequential is a collision between corporate brands and artists with conflicting views about the purpose and value of NFTs.
What was once a fairly clear cut distinction between the fair use of a company’s brand or trademark in a work of art (think Andy Warhol’s Campbell’s Soup Cans series) as opposed to the commercial misappropriation of a brand to deceive customers (think counterfeit jeans) has been blurred by the rise of blockchain technology and the scramble to stake a claim in the metaverse.
An NFT of a luxury watch, like a Rolex, is digital art in the eyes of one beholder. For the watchmaker thinking about commerce in new, virtual realms though, that digital watch is another version of their product — the type of virtual goods that could one day be the basis of a thriving business in the metaverse.
For now, the virtual worlds in which we’ll all purchase accessories and property for our digital avatars are largely works in progress, but a number of companies — from French fashion house Hermès to the Hollywood studio Miramax —are seeking to squash sales of NFTs that have a connection to their brands. The disputes represent an early example of the novel challenges and unresolved questions likely to become more frequent as the internet evolves into an immersive, and blockchain-based realm.
“This is a moving tide of innovation and evolution,” Mason Rothschild, an artist who creates images of fur-covered Hermès Birkin handbags, wrote in an open letter to Hermès in December after receiving a cease-and-desist letter from the fashion company. “Your actions can help determine the future of art in the Metaverse.”
‘Fake’ purses in the metaverse
Rothchild’s so-called MetaBirkins have become a big hit, with the highest priced MetaBirkin NFT selling for $45,000. The entire collection now has a
of $1.2 million, according to the NFT marketplace Raribles, where the project moved after getting delisted from OpenSea.
In his letter to Hermès, Rothschild argued that selling MetaBirkins as NFTs is “akin to selling them as physical art prints,” a medium in which the use of trademark or copyrighted materials without permission has traditionally been protected by Fair Use law.
“It should not be my job to educate you on advancements in the world and the culture of art,” Rothschild wrote in the open letter.
NFTs are digital ledgers tied to specific pieces of digital content. They can be used to trace ownership, and have found traction in the digital art community, including with some gallery owners and art collectors who use the technology to track the provenance, or ownership, of art, making it a helpful tool in a world where anyone can download copies of digital art pieces from the internet.
Many brands have started to see the potential of having a presence in the metaverse, where owning a digital storefront or selling digital products as NFTs could mean getting in front of a new generation of customers. Some companies like Nike, which recently acquired an NFT company that makes digital sneakers, have even taken steps toward selling digital versions of the products they sell in the real world.
“In the metaverse, we’re all world-builders,” Cathy Hackl, CEO of the Futures Intelligence Group, told Insider’s Kari McMahon in a recent interview. “And now is the time to start building. Whether you’re a creator, whether you’re a brand or a business, now is the time to start figuring out, how do I start building for this? What are the building blocks?”
Kal Raustiala, an intellectual property researcher and professor at UCLA School of Law, said the law has traditionally favored creators like Rothschild. But he cautioned that those norms could change if any of these NFT specific cases get put in front of a judge.
“I think the big issue that’s looming goes beyond NFTs,” said Raustiala. “It’s about how do trademarks work in the metaverse and what does it mean to have trademarks on digital goods?”
Prior cases that could provide guidance are scarce. In 2016, movie theater chain Cinemark sued Roblox because some users had created virtual cities within Roblox that included Cinemark theaters. The case was dismissed two months later without any public resolution.
It’s unclear whether Hermès or Darden have taken any legal action to stop the NFT projects from spreading beyond OpenSea. Darden declined to comment. Hermès did not respond to a request for comment.
Neither company has made serious moves to launch projects of their own in the metaverse either.
Hermès prefers to focus on the “tangible expression of handcrafted physical objects,” the company told the Financial Times.
“These NFTs infringe upon the intellectual property and trademark rights of Hermès and are an example of fake Hermès products in the metaverse,” Hermès told the FT.
The next big fight: Pulp Fiction
One of the most high-profile disputes involving NFTs will be in the spotlight this week, when movie director Quentin Tarantino attempts to sell NFT versions of the script to the 1994 blockbuster film “Pulp Fiction.”
The Tarantino NFT collection includes seven unique NFTs which will give its owners access to digital images of the original handwritten movie script, as well as previously unreleased audio commentary from Tarantino. Miramax, the Hollywood studio that produced the film, sued Tarantino in November, seeking to prevent the sale.
In the lawsuit, Miramax argues that Tarantino’s NFT project violates the contract signed by both parties in 1993. While that contract reserves Tarantino’s right to make money off the script from things like print books and interactive media, it doesn’t explicitly mention NFTs, which were not invented until two decades after the film’s release.
But the contract gives Miramax “all” other rights, which its lawyers interpret to include the development, marketing and sale of NFTs.
“It’s a sort of garden variety contract dispute, but it has this NFT twist,” UCLA’s Raustiala said. The question, he said, is whether Tarantino’s contract with Miramax allows him to sell a single copy of the script.
Tarantino has not relented. In its response to the lawsuit, the director’s lawyers accused Miramax of using “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.”
Bidding on the first NFT in the collection is set to begin January 17.
You ‘can’t just ban’ fans
The sky-high expectations driving the NFT market are evident in OpenSea, the leading platform for buying and selling the digital assets, which was recently valued by private investors at $13.3 billion. OpenSea’s approach to trademark disputes has so far been to take the path of least resistance.
In response to questions about its takedown of MetaBirkins and Non-Fungible Olive Gardens, the company responded with information about its policy on plagiarized content.
“One of our operating principles is to support creators and their audiences by deterring theft and plagiarism on our platform,” Abram Smith, a spokesperson for OpenSea, told Insider in the statement. “To that end, it is against our policy to sell NFTs using plagiarized content, which we regularly enforce in various ways, including delisting and in some instances, banning accounts.”
Still, the legal missives have not been enough to remove Non-Fungible Olive Gardens from the internet altogether. The NFTs of Olive Garden restaurants still trade on other platforms, and it’s still possible to mint new breadstick NFTs from the project’s website. Italian music still plays around the clock on the NFOG Discord channel.
Moore and Lacher are hopeful that Darden will change its mind. They see themselves as “on Olive Garden’s side” and want to be, “for lack of a better term, part of the family,” Moore told Insider.
But if that doesn’t work, Moore said, he’s certain the NFOG community will find a way forward.
“You can’t melt down the community. You can’t just ban them,” he said. “They’re Olive Garden fans.”