World Trademark Review – OpenSea: how trademark infringement is rampant on the biggest NFT marketplace

• The OpenSea marketplace sold over $14 billion worth of NFTs in 2021
• Investigation finds collections of unauthorised brand-related NFTs
• Rights holders urged to monitor OpenSea for trademark infringement

A WTR investigation has uncovered numerous instances of major brand names and logos being sold for thousands of dollars on the NFT marketplace OpenSea. While copyright issues relating to NFTs have been in the spotlight thanks to an outcry from artists discovering stolen works for sale, trademark infringement is also a significant problem that rights holders should be aware of.

Non-fungible tokens (NFTs) are unique, individual tokens existing on a crypto blockchain (such as Ethereum). They are used in several specific applications, most commonly digital collectibles and art, as a means to prove authenticity and ownership. They are also proving to be popular in the digital trading community: the Bored Ape Yacht Club, for example, is an NFT art project featuring 10,000 unique variations of a cartoon ape, and were originally sold for 0.08 Ethereum (around $300) but have been resold for staggering amounts (including one selling for $3.4 million at Sotheby’s last year).

In recent months, critics of the NFT market have targeted the significant rates of copyright infringement reported by artists and content creators. According to NBC News, “thanks to the explosion of the NFT art market, thieves have started stealing [artwork] at a jaw-dropping rate”. One recent user on the NFT marketplace OpenSea published tens of thousands of listings of artwork by a creator without their permission. It is understood that at least 37 were sold before the artist was able to convince OpenSea that they were the copyright holder and that the listings should be removed. On The Gamer, numerous exasperated artists describe the stressful experience of discovering their work being sold on OpenSea – often by anonymous users who are presumed to be automated bots – and the difficult process of trying to get the listings taken down, described by one as “an endless, unbeatable game of Whack-a-Mole”.

What is less talked about is the potential trademark infringement threat for major brands, some of which have (or are considering) dipping their toe into the NFT arena (including companies such as Taco Bell, Coca-Cola, Mattel, Ray-Ban, Asics, NFL, and Gucci). To date, the number of lawsuits between major brands and NFT sellers for trademark infringement has been relatively low. Last year, Miramax launched legal action against Quentin Tarantino over the director’s planned creation of NFTs related to the movie Pulp Fiction, with the movie studio alleging copyright and trademark infringement. Earlier this month, Hermès filed a lawsuit against NFT creator Mason Rothschild, who created a viral line of NFTs called ‘MetaBirkins’ that have sold for tens of thousands of dollars. Responding to the lawsuit this week, Rothschild pledged to ‘defeat the claims in court and help to set a precedent’, claiming the first Amendment gives him the right to make and sell art that depicts Birkin bags (referencing Andy Warhol’s ability to sell art depicting Campbell brand tins).

Notably, while lawsuits are currently few and far between, big brands are clearly being targeted by NFT sellers on the OpenSea platform. WTR discovered dozens of accounts that are selling major brand names and logos. For example, the OpenSea user ‘OriginalTokenArt’ has over 100 listings selling the names of major brands for $18,800 each. Company names being sold include Microsoft Corp, Dell Inc, The Boeing Company, Barclays, Morgan Stanley, and Verizon. Any buyer would then be able to sell NFTs with the collection name of a major brand (eg, ‘opensea.io/collection/brand’), in activity that is similar to cybersquatting.

There are also OpenSea users dedicated to selling the logos of major brands as NFTs. Arguably the leader in this field is the user ‘Top Logo’, which has over 5,000 listings of logos, hundreds of which have sold for hundreds and even thousands of dollars. Unsurprisingly, most major brands are impacted, from entertainment and sports franchises to financial and technology conglomerates – with the highest prices being for the logos of Supreme (priced at a staggering $3.1 million) and Bank of China ($313,000).

In a similar vein, the OpenSea user ‘OG Logo’ is selling the logo of companies including Amazon, Disney, Adidas, Bentley, and Google. ‘Companies Logo’ is selling the branding of corporations including CNN, Lacoste, Nike, Huawei, and Netflix. Similarly, ‘Logo Master’ has over 1,400 listings of logos for brands including TikTok, Walmart, Christian Dior, Billabong, and Airbnb. Not to be outdone, ‘NFT UR LOGO’ – which claims “a logo is meaningless if it’s not NFT” – is selling the logos of Apple, Under Armor, Spotify, Visa, Red Bull, and many more.

Taking a slightly more creative approach, the users ‘Logo Punk’ and ‘Pixel Brand Logos’ are selling pixelated versions of logos from brands including Ubisoft, Microsoft, Mastercard, Starbucks, and the World Health Organisation. And really pushing the boundaries of creativity, the user ‘Company Punks’ is selling over 150 NFTs featuring an unchanged pixelated head on top of corporate logos from brands including Volvo, Adobe, Electronic Arts, Pfizer, and Liverpool Football Club.

Of course, many of the OpenSea accounts selling NFTs featuring corporate logos will be hoping to make a quick buck from imagery that will be recognisable to a large percentage of traders. However, that doesn’t mean that buyers won’t be duped into thinking the NFT will give them intellectual property rights related to a brand – just this week, reports emerged of an NFT group that purchased a rare book for more than $3 million and mistakenly believed it gave them the copyright to create NFTs and produce an animated series. Talking to WTR, Wedlake Bell partner and head of trademarks Charlotte Wilding says it is “extremely concerning” yet “unsurprising” that there are users on OpenSea selling brand-relating usernames and logos as NFTs, adding: “It is likely that the instances of infringement may increase initially whilst NFTs increase in popularity.”

There is also the danger of confusion. Any major brand that is associated with a popular product should consider monitoring for NFT collections that may look official or endorsed in some way. For example, there are instances of NFTs with Lego models, the most notable of which being the ‘Lego Punks’ collection which features digitally-created Lego heads that are selling for thousands of dollars (with the most expensive being listed for $527,000). There are also accounts that are based on popular fashion items, such as ‘AirJordan1s’ and ‘Supreme Box Logo Collection’.

Indeed, Wilding says that infringement on OpenSea “typically ranges from blatant rip offs of IP right holders trademarks, designs and logos through to ‘copycat’ images and designs, which are intended to create an association with the legitimate IP rights of a third party”. Crucially, the ease of creating an NFT (compared to physical counterfeit items), means “it really is open to anyone to create and sell an NFT, including ‘fans’ of a particular brand who may not realise the implications of what they are doing”, she adds.

For that reason, then, Wilding says that OpenSea should be added to the online enforcement roster of trademark counsel. “Of course, it can be extremely difficult to police all online marketplaces, but OpenSea does appear to have a significant number of infringements and so regular monitoring is recommended,” she notes. “Ultimately, the quicker that action can be taken, the better for the brand owner.”

After WTR reached out for more information, an OpenSea spokesperson responded: “We support an open and creative ecosystem in which people have greater freedom and ownership over digital items of all kinds; that said, one of our operating principles is to support creators and their audiences by deterring IP infringement on our platform. To that end, it is against our policy to sell NFTs that infringe on trademark rights and we enforce this policy in various ways, including delisting and in some instances, banning accounts. We are actively expanding our efforts across customer support, trust and safety, and site integrity so we can move faster to protect and empower our community and creators, and we are constantly evaluating new ways to do our part. We encourage rights holders to submit reports of IP violations by using our form or following the instructions here.”

While positive that OpenSea opposes such infringement and has a reporting process in place, Wilding says it needs to be improved. “OpenSea’s reporting mechanism is an online form, requiring details of the earlier IP rights and any additional information that may be relevant,” she explains. “This is then reviewed, sent to the other side and appropriate action taken. The reporting mechanism appears to be simple and easy to use. However, a downside is that you have to complete the form for each separate violation – if a brand user were able to complete a form to include all infringing activities from a number of users, then that would help save time and may encourage brand users to be more proactive.”

For now, rights holders are encouraged to monitor for any potential infringement on the OpenSea platform and use the current system to remove them when applicable. With OpenSea growing at such a rapid rate – it captured more than 60% ($14 billion) of the total NFT market in 2021, an increase of over 600 times from 2020’s $21 million – it is hoped that it will improve its IP rights protection mechanism going forward.