An NFT Called “Copyright Infringement”

Author: Hannah Brown

This story begins in 1982, when Andy Warhol met Jean-Michel Basquiat. Warhol and Basquait, two famous and successful artists, agreed to collaborate on an exhibition. In 1985, photographer Michael Halsband went to dinner with Basquait, which led to Halsband agreeing to photograph the poster for Basquait and Warhol’s collaborative to be titled “Paintings.”1 Halsband then took this famous picture of Warhol and Basquait on July 10, 1985:

This photo has been referred to as “perhaps one of the most iconic portraits of the two artists.”2

Fast forward to 2019, and enter New York artist CJ Hendry. Hendry is known for her realistic and incredibly detailed drawings. Hendry created an illustration based on Halsband’s photograph. Halsband sent Hendry a cease and desist letter, claiming copyright infringement.3 Halsband demanded that Hendry destroy her work. Complying, Hendry spray-painted over the piece. A screenshot of Hendry’s Instagram story shows the final result:

In fact, Hendry recorded herself spray-painting over the image with black paint:4

But, where things get really interesting is what Hendry did next. She turned the video into an NFT, or non-fungible token, and explained infra, and put it up for auction. The NFT was titled “Copyright Infringement.” As of April 16, 2021, the NFT was listed for sale at $6,685 at SuperRare.com.5 A search of SuperRare’s website shows Hendry’s NFT is no longer for sale on the site. How much the NFT sold for, if at all, is unknown.

Before diving into the issue of NFTs and Hendry’s video, the first issue is, did Hendry infringe Halsband’s work with her drawing of the photo? The answer is likely yes. Hendry creates incredible and realistic drawings. A quick look at her Instagram account shows her true talent and the realistic and detailed art that she can create with (what appears to be) colored pencils.

While an image of Hendry’s drawing of Halsband’s photograph is not available on her Instagram account, the below screenshot of her Instagram story gives us an idea of what it must have looked like:

It appears Hendry more or less reproduced the photograph in her drawing. A copyright of a work of art may be infringed by reproduction of the object itself. Home Art Inc. v. Glensder Textile Corp., 81 F.Supp. 551 (S.D.N.Y. 1948) (oil painting reproduced in scarf); Leigh v. Gerber, 86 F.Supp. 320 (S.D.N.Y. 1949) (painting reproduced by publication without consent in a magazine).

After receiving the cease and desist letter, Hendry took to Instagram to express her frustration with Halsband and his legal team, saying that she looks up to Halsband, and wondering how her drawing could not be seen as a compliment to him and his work. As noted above in her Instagram post, Hendry notes she was never going to sell the piece and was never going to profit off of it. However, a person can be liable for copyright infringement even if they have not gained profits from the infringing work. A plaintiff may recover statutory damages “whether or not there is adequate evidence of the actual damages suffered by plaintiff or of the profits reaped by defendant,” Harris v. Emus Records Corp., 734 F.2d 1329, 1335 (9th Cir. 1984), “‘to sanction and vindicate the statutory policy’ of discouraging infringement.” Peer Int’l Corp. v. Pausa Records, Inc., 909 F.2d 1332, 1336 (9th Cir. 1990) (quoting F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 232 (1952)).6

Hendry could argue that her work was fair use of Halsband’s photograph under 17 U.S.C. § 107. In analyzing fair use, courts consider: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. Id. But, as noted, Hendry did not take this issue to court and did not fight Halsband’s claim with a fair use defense. Instead, she destroyed the work and sold the video of her doing so as an NFT.

A brief explanation of an NFT is helpful. NFT stands for non-fungible token. NFTs are digital files, for example videos or digital art, and the buyer of the NFT gets to claim that they own the original digital work.7 NFTs are called “non-fungible” because they are unique, original, and cannot be interchangeable (unlike dollars bills or Bitcoin currency.) Your first thought may be: why would anyone ever pay for a digital work that they could download for free? You’re not alone in this thought, and as one author put it: “If all of this sounds bizarre, that’s because it is. The idea of paying for the symbolic ownership of a digital image that lives somewhere on the web and can be captured on a screenshot or right-click-download within seconds, is so alien it seems either idiotic or ironic.”8 But there is certainly a market for them, with videos and tweets selling for hundreds of thousands or millions of dollars.9

This leads to two other questions: (1) Does Hendry’s video of her painting over her drawing created using Halsband’s photograph, constitute copyright infringement? and (2) Can Hendry then copyright that video/NFT?

The answer to the first question is: maybe. While certainly Hendry’s video of her spray painting over her work is original content, it is likely that the video contains, at least in part, an image of Halsband’s copyrighted photograph (see the image above showing the drawing as Hendry begins to paint). However, it is also possible that her use of the photograph in the video as a whole was de minimis. “For an unauthorized use of a copyrighted work to be actionable, the use must be significant enough to constitute infringement.” Newton v. Diamond, 388 F.3d 1189, 1192–93 (9th Cir. 2004). “Even where there is some copying, that fact is not conclusive of infringement. Some copying is permitted. In addition to copying, it must be shown that this has been done to an unfair extent.” West Publ’g Co. v. Edward Thompson Co., 169 F. 833, 861 (E.D.N.Y.1909). If Hendry created a lengthy video of the spray painting, and the photograph was only in a small portion of that video, it is possible that this would not constitute infringement if her use of the photo was minimal when looking at the video as a whole.

The answer to the second question is: the NFT likely meets the criteria for copyrightability, but Halsband would probably object to the NFT becoming copyrighted. To be copyrightable, a work must be original and fixed in a tangible medium of expression. Hendry’s video of herself is original content (non-fungible literally means original and unique). But, the video would include Halsband’s copyrighted image. A copyright including another copyrighted image could lead to issues. Indeed, Hendry even titled her work “Copyright Infringement”!

In an analogous situation: a person cannot copyright a video of themselves if that video contains another’s copyrighted song. You may have heard of Nathan Apodaca, better known as 420Doggface208, or the man who went viral while skateboarding, drinking juice, and listening to Fleetwood Mac. Apodaca attempted to mint the video of himself as an NFT. But, because the video contained copyrighted material, i.e. the song, Stevie Nicks allegedly would not agree to Apodaca creating an NFT featuring her song.10

In fact, Halsband probably could have objected to Hendry making the video into an NFT, and profiting off of it, in the first place, due to use of his photograph. Halsband had sent Hendry a cease and desist letter already, and nothing would have stopped him from doing so again, this time requesting she desist from selling the NFT in an auction. Certainly, the point of Hendry’s NFT was to destroy what Halsband deemed an infringing work, and the NFT contained an image of that work. But, as noted above, Halsband may lose due to the de minimis defense.

With NFTs becoming more and more popular and profitable, this leads to an important piece of advice for anyone looking to create an NFT: consider whether your NFT is using another’s intellectual property. This could be use of a copyrighted image or even a song within the NFT. There does not appear to be any intellectual property requirements for creating an NFT; the creator does not have to certify that their work is completely their own creation.11 There is no agency needed to “approve” or “register” the NFT like is done when one seeks to register a copyright or trademark. It is important for creators of NFTs to review their work to ensure it is their original content, or that they have the permission from the author of the work, and that nothing they are putting online will get them in trouble.

About the author: Hannah Brown is an associate and member of Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group, specializing in trademark, copyright, and patent litigation. She is a former law clerk to the Hon. Janis Sammartino and Hon. Cynthia Bashant of the U.S. District Court, Southern District of California.
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1 https://www.swanngalleries.com/news/photographs-and-photobooks/2020/06/the-making-of-a-portrait-michael-halsbands-photograph-of-andy-warhol-and-jean-michel-basquiat/
2 https://www.swanngalleries.com/news/photographs-and-photobooks/2020/06/the-making-of-a-portrait-michael-halsbands-photograph-of-andy-warhol-and-jean-michel-basquiat/
3 https://hypebeast.com/2021/4/cj-hendry-copyright-infringement-nft-auction-superrare-release
4 https://hypebeast.com/2021/4/cj-hendry-copyright-infringement-nft-auction-superrare-release
5 https://hypebeast.com/2021/4/cj-hendry-copyright-infringement-nft-auction-superrare-release
6 This would be different if Hendry were fighting a criminal copyright infringement claim. To prevail on an allegation of criminal copyright infringement, a plaintiff must establish “infringement, that the infringement was willful, and that it was engaged in for profit.” Mattel, Inc. v. MGA Ent., Inc., 782 F. Supp. 2d 911, 1042 (C.D. Cal. 2011) (quoting United States v. Bily, 4066 F. Supp. 7266, 733 (E.D. Pa. 1975)).
7https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq
8 https://www.wired.com/story/nfts-boom-collectors-shell-out-crypto/
9 .
10 https://www.lamag.com/article/nft-law-copyright/
11 https://help.foundation.app/en/articles/4742869-a-complete-guide-to-minting-an-nft#:~:text=Mint%20your%20NFT%3A%20Confirm%20that,the%20same%20with%20your%20wallet.

Lady A vs. Lady A: (Trademark) Battle of the Bands

Author: Hannah Brown

The tragic death of George Floyd last summer sparked nationwide protests and activism. This response and demand for change led to noteworthy decisions by many corporations and entities. Quaker Oats announced its plans to rebrand its Aunt Jemima brand of syrup and pancake mix because the company recognized that “Aunt Jemima’s origins are based on a racial stereotype.” The companies that own Mrs. Butterworth’s and Cream of Wheat also proclaimed their intent to reshape the brands’ images. The Washington Redskins announced that they would no longer use the name and logo “Redskins” and the team (for now and maybe permanently) will go by the name the “Washington Football Team.”1

Further, in June 2020, a country band that had gone by the name “Lady Antebellum” since it was formed in 2006 officially changed its name to “Lady A.” The band issued a public statement, noting that they named the band after the southern “antebellum” style home where they took their first photos together, but they “did not take into account the associations that weigh down this word referring to the period of history before The Civil War, which includes slavery.” The band pledged to drop the word “antebellum” and “move forward as Lady A, the nickname [their] fans gave [them] almost from the start.”

Following this announcement, the band was criticized by blues singer Anita White, who claims she has recorded music and performed under the name Lady A for decades. The parties attempted to work out a way where they could both use the name, with the band offering Ms. White money for legal fees and a promise to help her with her career if she gave them rights to use the name Lady A. Ms. White did not agree to these terms and requested a $10 million payment to allow the band to continue to use the mark. The band did not accept and filed suit in Tennessee federal court, seeking declaratory judgment that the band’s trademarks incorporating “Lady A” do not infringe any of Ms. White’s rights in “Lady A.” The band claims it has been using “Lady A” interchangeably with “Lady Antebellum” since 2006. The band attached evidence to its complaint that it registered the trademark “Lady A” for musical records and for entertainment services in 2010 and 2011. Ms. White did not oppose or contest the registrations, which are now incontestable. See Section 15 of the Trademark Act, 15 U.S.C. § 1065. The band also notes that Ms. White never applied to register “Lady A” as a trademark. The band specifies in its complaint that it does not wish to prohibit Ms. White from performing as “Lady A” nor does it seek damages; instead, it wishes to peacefully coexist with her.

Ms. White countersued in Washington federal court, alleging that the band “usurped” her brand and caused her to lose business and status. She brings causes of action for trademark infringement and unfair competition, claiming that she has used the stage name and trademark “Lady A” for nearly thirty years and has thus accrued common law rights in the trademark. She seeks an injunction and damages.

Both cases are still ongoing and nothing on the merits has been decided. There seems to be no dispute that the band has been using the name “Lady A” for at least a decade; they submitted proof of online articles, clothing, and other evidence that they can be associated by the name as well as by the name “Lady Antebellum.” The band also registered the mark, while Ms. White did not. The band notes the incontestability status of their marks, but this is likely not something that will help them in this case. Incontestability relates to the validity of a mark, not the strength of the mark. The mark’s registration as incontestable is not relevant to the issue of whether the mark is sufficient to trigger confusion. An incontestable mark is also subject to the challenge that another party used the mark in commerce first—before the incontestable mark’s registration. This is what Ms. White is claiming, that she used the mark in commerce first through performances and music sales. Ms. White claims she released albums as “Lady A” since 2006 and has been performing using the name since at least the early 1990s.

The band also claims that Ms. White has never used “Lady ‘A’” as a trademark to identify her goods or as a service mark to identify her entertainment services, and, if she did use it as a trademark, it was after the band established their rights in the mark. Ms. White disagrees, stating she has used the name for decades.

Ms. White will need to prove the territory in which she has continued to use the mark without significant interruption since prior to the band’s use in that territory. The band is nationally, if not internationally, known, but, as of now, it appears that Ms. White’s territory of use is not so clear or established. If Ms. White can establish her territory of use (along with a zone of natural expansion), she will likely have rights superior to the band in that territory. If Ms. White’s use has been restricted to only one small area, such as Seattle, the band may be granted nationwide use of the mark, subject only to an exception in that area. Even the band’s incontestable registration would not grant it the exclusive right to use the mark where Ms. White has continued to use the mark and has established rights since prior to the band’s registration. It is unclear how such a division and exception could be made for the band who performs and sells music nationwide.

As of now, the only pending questions before both district courts in the parties’ cases relate to venue and the first to file rule. But eventually, the dueling trademark rights will be analyzed and this will be an interesting case for trademark lawyers to continue to follow.

About the author: Hannah Brown is an associate and member of Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group, specializing in trademark, copyright, and patent litigation. She is a former law clerk to the Hon. Janis Sammartino and Hon. Cynthia Bashant of the U.S. District Court, Southern District of California.
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1 As an interesting intellectual property-related side note, this is not the first time the Redskins have been criticized for their name. In 1992, several Native Americans filed a joint petition with the Trademark Trial and Appeal Board (TTAB) of the U.S Patent and Trademark office requesting the cancellation of the term “Redskins.” The petition claimed the term is “disparaging” to American Indians. The TTAB judges canceled the federal registration of the mark Redskins “on the grounds that the subject marks may disparage Native Americans and may bring them into contempt or disrepute.” The case underwent several rounds of appeals. Eventually, the Fourth Circuit Court of Appeals reinstated the trademark. See Pro-Football, Inc. v. Blackhorse et al., Case No. 15-1874 (4th Cir. 2015). The decision was based on a Supreme Court decision issued in June 2017 in an unrelated case involving a rock band, the Slants. The Supreme Court declared that a section of federal law banning trademarks that may disparage people was a violation of the First Amendment. It was this section of the Lanham Act that the Native Americans relied upon to argue that the Redskins’ trademarks should be cancelled. The Fourth Circuit therefore issued a decision consistent with the Supreme Court ruling that the disparaging trademark ban is unconstitutional.
Although technically a loss for the plaintiffs, the lawsuit alerted the nation to the Native Americans’ contentions and feelings regarding the team’s name. Now, their request has been granted and the “Redskins” are no more.