In the recent article, “Why Hermès’ MetaBirkins Lawsuit Has High Stakes for Brands and Creators”, featured in The Business of Fashion, Partner Preetha Chakrabarti expands upon her insights from the her previous blog posts on non-fungible tokens (“NFTs”) and the metaverse. Previously, Chakrabarti reported on how the designer, Hermès, sued an individual named Mason
NFTs (non-fungible tokens) hit the scene in 2017 with CryptoKitties, a game on the Ethereum blockchain for buying, selling, and breeding digital cats. Clearly, CryptoKitties represents a humble start for NFTs, the technology that has since captured astonishing public and media attention. More recent NFTs—like the NFT-based digital artwork by Beeple that sold at Christie’s for $69 million last month—demonstrate the rising importance of these novel digital assets.
Each NFT is a one-of-a-kind digital information file typically associated with a digital image, like an artwork, video, gif, tweet, or even event ticket. At least in theory, NFTs can also be created for physical objects, a possibility just beginning to gain meaningful attention.
Where associated with a digital image, the NFT does not generally contain the image but functions like an integrated smart contract with a link to the image file. This smart contract uses blockchain technology to track changes in ownership and affirm authenticity, much like a digital provenance. NFTs also contain a feature that can disseminate royalties whenever the NFT is sold, exemplifying the design flexibility and diverse functionality of these assets.
NFTs are a new form of non-tangible property with substantial implications in the art, entertainment, fashion, and marketing/advertising realms. Individuals and businesses operating in these spaces should carefully consider the merits of NFT platform or portfolio ownership and should anticipate new applications of and perhaps changes to existing bodies of law, like copyright and false advertising, that will address NFT issues.
Continue Reading NFT Risks and Opportunities in the IP, Advertising, and Brand Management Spaces