Miramax v Tarantino: a key test case for NFT IP disputes
The rise of the metaverse and non-fungible tokens (NFTs) heralds exciting opportunities in the digital realm, but has also prompted litigation posing pivotal questions concerning IP ownership.
One of the key cases to emerge is the ongoing NFT legal saga between the cult director Quentin Tarantino and the film studio Miramax.
Back in November, Miramax sued Tarantino in the US District Court for the Central District of California, over his plans to auction NFTs associated with the 1994 film, Pulp Fiction.
According to Tarantino, each non-fungible token contains “secret” content that’s only available to its owner, including the uncut first handwritten scripts of the movie.
Made for under $9 million, the film earned nearly $214 million at the box office, garnering Tarantino and co-writer Roger Avary an Oscar for best original screenplay.
In June, Tarantino filed a motion for judgment on the pleadings, asking the court to determine as a matter of law he is not liable for infringement—prompting heated debates as to who actually owns the IP associated with these digital assets and who should benefit once the NFTs have been sold.
The court has now set a relatively expedited schedule for this case: the trial has been set for February 28, 2023, while the fact-discovery deadline is on August 17 of this year.
A perfect storm
According to Anna Naydonov, partner at Finnegan, the legal wrangle could prefigure the direction and outcomes of IP disputes centring on non-fungible tokens.
“What makes the litigation fascinating is that it is a test case for how the courts will interpret decades-old contractual provisions and apply them to the NFT landscape,” she explains.
“The case is an example of a perfect storm of what happens when the NFT technology collides with contracts that were executed years before NFTs even existed.”
The case is a conundrum, she explains, partly because the parties are largely relying on copyright principles and contract language created long before the arrival of revolutionary blockchain technology.
“Some of the issues—including certain questions about ownership of the copyright in the screenplay—are disputes largely unrelated to the NFT technology,” she says.
For example, Miramax has specifically argued that NFTs could not have been contemplated back in 1993, and that Tarantino’s “right to print publication of the screenplay only relates to the media formats known at the time.
“The fact that Tarantino kept Miramax out of the loop is particularly problematic because he granted and assigned nearly all of his rights to ‘Pulp Fiction’ (and all its elements in all stages of development and production) to Miramax in 1993,” Miramax claimed in its complaint.
A question of rights
Tarantino countered that Miramax lacks the right to block the sale of his NFTs that are based on his original screenplay.
“The crux of Tarantino’s motion is that he always retained the rights to the screenplay of Pulp Fiction, and only assigned to Miramax the rights in the film, which he argues is a derivative work from the screenplay,” explains Oleg Elkhunovich, partner at Susman Godfrey.
Tarantino’s counsel told Miramax that “the right to screenplay publication” legitimately covers the seven disputed NFTs, which consist of “high-resolution digital scan[s] of Quentin’s original handwritten screenplay pages for a single scene from his screenplay for Pulp Fiction”.
The case is likely to be one of many IP licensing disputes that will arise as a result of the advent of NFTs, according to Elkhunovich.
“NFTs are a new medium that was not contemplated in the older IP licensing agreements and their treatment under those agreements and IP law generally will undoubtedly present previously unforeseen legal issues,” he predicts.
“This case also highlights that where NFTs are being created based on preexisting IP, careful analysis of rights to the preexisting IP is required to determine whether the NFT creator has the necessary rights to legacy IP to create the new medium incorporating it. A separate important issue is what IP rights, if any, are transferred when the NFT is sold.”
Tips for getting into the NFT space
Not only could this case mark a turning point in NFT litigation, but it also offers a cautionary tale to content creators who wish to enter and flourish in the metaverse.
“For content creators and owners, NFTs present a new opportunity to monetise their IP. Like any other effort to exploit IP assets, a robust IP clearance process is important,” urges Elkhunovich.
“Any NFT project must consider what rights will be transferred when the NFT is sold and how that IP strategy fits into the project’s broader business goals.”
Nayandaov also emphasises the importance of contractual vigilance—alongside some savvy anticipation.
“As NFTs, metaverse, and blockchain-related innovations continue to emerge, the tips for brands and artists contemplating NFTs would be to make contractual provisions as thorough and all-encompassing as possible to specifically contemplate and account for technologies that may not yet be in existence,” she says.
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