When Hollywood director and filmmaker Quentin Tarantino announced he would be selling non-fungible tokens (NFTs) consisting of seven scenes from the 1994 “Pulp Fiction,” it immediately became apparent that Miramax—the owner of most, but crucially not all, rights in the film—did not green-light the sale.
Thanks to the explosive growth of the NFT market this year, many media and entertainment companies are seeking to monetize their intellectual property by turning legacy content into new offerings—sharpening attorneys’ focus on exactly what rights are needed to offer NFTs, and what rights are conveyed in a sale.
In the Tarantino NFT dust-up, the issue is the former: Does the director have sufficient rights in the works associated with his NFTs to sell them without Miramax’s approval or involvement?
NFTs: Content Unchained?
An NFT is a unique blockchain record that can be used to identify something else, usually a digital asset. Blockchain records are akin to indestructible certificates that prove something exists or has occurred. Tokens such as Bitcoins are, like dollars, fungible—each one has the same value as the next. NFTs by contrast are non-fungible—each one is unique.
Most NFTs are currently used to represent ownership of digital art and collectibles, but what that “ownership” entails can be complex. Because copyright law generally does not recognize sales of individual instances of digital content, there is no secondary market for “used” e-books, music files, or online videos or images.
Therefore, transfer of rights in digital content requires a license. Many NFT marketplaces thus convey, along with the token itself, a limited license to view and display the associated content for non-commercial purposes.
The spectrum of content rights that can be offered with an NFT is, however, essentially unlimited. The creators of the Bored Ape Yacht Club, for instance, have granted extensive rights for buyers to take part in the creative economy by developing (and monetizing) derivative works around the content.
Before diving into the NFT market, a rights-holder must ask this question: Even if I hold certain rights to use a piece of content, do my rights extend to selling it with an NFT? If not, minting an NFT can raise the specter of copyright and trademark infringement, right of publicity violations, contract breaches, and other legal issues.
Once Upon a Time in Hollywood
Tarantino intends to auction on OpenSea “seven exclusive scenes” from his movie “Pulp Fiction” as NFTs. In addition to containing “high-resolution digital scans of Quentin’s original handwritten screenplay pages for a single scene from his screenplay for Pulp Fiction,” each NFT will also include an original “drawing that will be inspired by some element from the scene.”
The exact nature of these NFTs, in particular the rights that will be conveyed in the sale, are unclear. The bragging rights in owning Tarantino NFTs associated with his work, as well as access to “secret content,” are the evident draw.
Miramax LLC immediately took issue with the planned sale, filing a complaint in California against the director alleging breach of contract, copyright infringement, and trademark infringement.
In 1993, when Miramax acquired rights to “Pulp Fiction,” blockchain was not even a gleam in any cypherpunk’s eye, so NFTs could not have been contemplated. While Miramax acquired “all rights … now or hereafter known … in all media now or hereafter known,” Tarantino reserved certain limited rights, including “print publication,” including “screenplay publication.”
We’ve seen this type of dispute before when new technology does not neatly fit into our old models. The case of Random House Inc. v. Rosetta Books LLC considered whether the right to publish “in book form” included electronic book rights.The district court suggested that the language was not broad enough to cover the new use, and the U.S. Court of Appeals for the Second Circuit further noted that a fact-finder should review the contractual language based on the “customs, practices, usages and terminology as generally understood in the [...] trade or business at the time of contracting.”
A similar fight played out between freelance writers and periodical publishers in New York Times v. Tasini on the topic of digital databases. The question in Tasini was whether publishers of the original articles held the necessary rights to license the articles for electronic databases, which the U.S. Supreme Court rejected.
While Miramax acquired broad rights that appear to include all future uses (thus potentially avoiding the Tasini and Rosetta issues), Tarantino argues that his reserved right in “screenplay publication” allows creation of NFTs. However, Miramax argues that selling pages or scenes as NFTs amounts to “a one-time transaction, which does not constitute publication.”
Navigate With Caution
Ultimately the dispute between Tarantino and Miramax is whether the parties contemplated the new use when contracting, and may come down to the definition of two these words.
“If my answers frighten you then you should cease asking scary questions,” says “Pulp Fiction” character Jules Winnfield. This case raises a disconcerting question for content creators and distributors alike: Should the unsettled nature of NFT rights mean they should be avoided?
Surely not: NFTs have creative and commercial potential and are likely here to stay. The Tarantino lawsuit does confirm that NFTs, like other new technologies before them, may not fit neatly into existing legal boxes, and that this new market must be navigated with caution, through close review of existing rights and careful licensing of new sales.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Lance Koonce is a partner at Klaris Law in New York where he focuses on litigation, intellectual property, and blockchain.
Louise Carron is an associate at Klaris Law in New York who advises content creators, start-ups, and nonprofits across creative industries.