Juventus scores landmark NFT decision
An NFT site falls foul of trademark law in the first European case of its kind after selling virtual football trading cards using the football club’s marks. Lawyers from Trevisan & Cuonzo and Advant NCTM tell Sarah Speight why the case could be the start of many.
Italian football club Juventus scored a major win in a landmark trademark infringement case on home turf against an online seller of non-fungible tokens (NFTs) of fantasy football playing cards.
The club sued Rome-based blockchain network Blockeras earlier this year, accusing it of trademark infringement and unfair competition practices via the NFTs, which bore its trademarks.
Juventus owns the word marks ‘JUVE’ and ‘JUVENTUS’, as well as a figurative trademark depicting the club’s signature black-and-white jersey bearing two stars (indicating that the club won more than 20 championships).
The infringing tokens had also featured unauthorised images of former Juventus player Christian ‘Bobo’ Vieri donning the team kit and name (although Vieri has authorised the use of his image alone).
The club discovered that Blockeras was minting, marketing and offering for sale the tokens—along with other digital content using the images and trademarks—hosted by NFT platform Binance.
Tokens sold on Binance
It was found that Blockeras had marketed and sold the tokens via a project called Coin Of Champions (COC), which it had launched in 2021 and described as “the first [virtual] token supported by past and present athletes”. The offending tokens were on sale via Binance between April and May 2022, with 68 of them generating revenues of almost $36,000.
Juventus applied for a preliminary injunction, which the Rome Court of First Instance granted in July, barring Blockeras from selling NFTs that make use of the club’s trademarks. In the absence of an appeal by the defendant, the case was made final and public this month (November) with lawyers such as Eleanora Rosati promptly discussing the merits of the decision.
Overall, the court’s decision was based on urgency and prima facie evidence.
It reasoned that Juventus is a well-established brand with recognisable trademarks, which it uses on its merchandise and on its own NFTs, having entered the virtual market in 2021.
Blockeras is now barred from producing, marketing and selling the NFTs and related digital contents that use Vieri’s image or Juventus’s trademarks. It must also withdraw said NFTs from the market, and remove or obscure the offending products from every website that it controls directly or indirectly.
A ‘notable’ case
Lorenzo Battarino, counsel at Italian firm Trevisan & Cuonzo (which assisted Juventus in the case, based on what WIPR was able to determine) wrote an article on the case describing it as “notable”.
“This is the first known judgment by a European court holding that NFTs reproducing a third-party’s trademarks without authorisation are infringing and hence granting a related injunction,” he wrote.
Counsel of Trevisan & Cuonzo Riccardo Traina Chiarini told WIPR that the decision is “certainly good news for the NFT space in general”.
“For the first time it affirms the principle that NFTs are subject to the traditional rules of IP protection,” he says, “and brand owners can enforce their trademarks against NFT creators (this may seem obvious in retrospect, but the argument had never been upheld by a European court yet).”
He adds that brand owners should feel reassured that they can actually obtain protection for their IP rights—even in the metaverse.
Paolo Lazzarino, partner at Advant NCTM in Milan, also views the judgment as a positive one.
“This decision is among the first ones which will compose a future body of settled case law on IP protection for virtual goods, [as well as] on unaddressed issues such as whether trademark similarity exists between a physical item and its virtual equivalent.
“It will give more confidence to brand owners in pursuing unauthorised NFTs, as it casts some light on two matters—if NFT-specific registrations are needed, and the legal definition of an NFT.”
In response to Blockeras’s defence that the protected trademarks were not registered in the category of ‘downloadable virtual products’, the court would not be swayed. It concluded that the registrations would also include goods in Class 9 that are not included in the Nice Classification, including ‘downloadable digital publications’.
Battarino wrote in his article that the most important takeaway from the judgement is that NFTs have legal autonomy as compared with the images or data associated with them.
His colleague Traina Chiarini tells WIPR: “The court distinguishes between the digital content reproducing the trademarks (which is obviously infringing) and the digital certificate.”
“Whilst it could have been argued that the latter is not a separate entity and therefore does not amount to an infringement per se, the Court of Rome considers that even the digital certificate per se amounts to trademark infringement (or at least to unfair competition) and thus enjoins its creation/sale.
“If the digital certificate is considered infringing per se, then this might have significant consequences in terms of enforcement of the injunction (it might be very difficult or actually impossible for the infringer to recall from the market all NFTs already sold and on which he has no control anymore) and in terms of damages (if the smart contract which the NFT is based on provides for a share of the value of future transactions to be paid to the original creator, then in principle damages arising from infringement may continue accumulating forever).”
But, Traina Chiarini points out, “Given its preliminary nature, the decision of the Court of Rome could not address some of these still outstanding legal topics, which will have to be addressed by future decisions.”
Risk of association
Regarding the likelihood of confusion cited by the court, Lazzarino says that, in order to grant the injunction, a finding of possible risk of association with the Juventus trademarks, which are already registered and used in the digital environment, was sufficient.
“Therefore, a first lesson from this decision is that marks, even where there is a lack of specific trademark registrations (which remain, however, suggested), can provide leverage on the risk of confusion between NFTs and trademarks as already registered and/or used for similar digital activities.
“Moreover, the court, by separately addressing the injunction against NFTs and ‘the digital contents associated therewith’, clarifies the distinction between the NFT as an authentication, and the associated ‘digital data’.”
This position, he adds, seems consistent with the recent practical tips released by the EU Intellectual Property Office ( EUIPO) in view of the 12th edition of the Nice Classification coming into force on January 1, 2023.
The EUIPO’s advice, highlights Lazzarino, argues that “the term ‘non-fungible tokens’ on its own is not acceptable. The type of digital item authenticated by the NFT must be specified”.
Enforcement strategy
While the ruling strengthens the rights of NFT creators in giving them legal autonomy and clarity, it also makes it paramount that creators are aware of the risks of potential copyright and trademark infringement when selecting the digital contents on which their creations are based, Traina Chiarini explains.
Brand owners’ enforcement strategy should take into account two factors, he advises, the first of which is the trademarks’ registration status.
“While the Court of Rome did not assess in detail this aspect being those of Juventus well-known trademarks, it apparently considered that at least registration in Class 9 is necessary for non-well-known trademarks to obtain protection.”
The second factor, he adds, is having an effective enforcement strategy in place to actually obtain the removal of the NFTs once they are declared infringing.
According to Traina Chiarini, cases of this kind will become more commonplace and more injunctions will be issued against NFTs in the months to come.
“From a purely legal perspective, it will be interesting to see how some of the still outstanding issues are dealt with by other courts,” he says.
“From a business perspective, now is the time for brand owners to speak to their counsel to devise an effective monitoring and enforcement strategy, before infringement of their IP rights in the NFT/metaverse space becomes widespread as a consequence of the growing in popularity of these technologies with the general public.”
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