The Future of NFTs Lies With the Courts
April 3, 2022
Types : Bylined Articles
As the first cases involving NFTs hit the dockets, courts will decide questions around ownership, art, and commerce.
SUPERFARM TOUTED THE sale as “a groundbreaking landmark—both for the crypto space and the broader music industry.” The newly minted NFT of Jay-Z’s debut album Reasonable Doubt would, it said, “provide ownership of the album’s copyright, transferring the rights to all future revenue generated by the album from Damon Dash to the auction winner.”
The catch? Dash did not actually own the copyright to Reasonable Doubt (not that selling it as a non-fungible token would necessarily have worked if he did). Now he is the defendant in a federal lawsuit brought by the hip hop label Roc-A-Fella records.
This case, filed in June 2021, was one of the first involving NFTs to hit the dockets. In another case filed a few months later, Playboy Enterprises sued the operators of a counterfeit website designed to mimic the site Playboy created to sell its “Rabbitar” NFTs. According to Playboy, the scam worked—over a thousand people mistook the fake website for the real one and collectively shelled out more than a million dollars for Rabbitars they never received.
In the coming months, courts are going to see an influx of NFT-related litigation. Some early NFT cases, like Dash’s, will help identify places where the crypto hype machine has severed all ties with reality. Others, like the Playboy case, will hold to account a few of the many presently behaving as though the law simply disintegrates when one enters the world of Web3.
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