"The path of the righteous man is beset on all sides by the iniquities of the selfish and the tyranny of evil men."
Quentin Tarantino-the legendary director behind Reservoir Dogs, Kill Bill and Once Upon a Time In Hollywood-is now in the midst of a legal dispute with Miramax over his planned sale of non-fungible tokens (NFTs) of unused content from Pulp Fiction.1 Miramax alleges that Tarantino's NFTs are a breach of contract and violate its copyright and trademark rights associated with the hit film. Tarantino argues that Pulp Fiction is his creation and that he may do what he pleases with the unused material.
While the parties have only just filed their respective complaint and answer, the case may be the first to address who has the right to create an NFT, what the legal significance of an NFT is and what residual rights artists have to their content. Or as Jules Winnfield would put it, who is the righteous man beset by the iniquities of the selfish.
The Tarantino NFTs
An NFT is a public digital record of an original work. NFTs are akin to digital original paintings: they are a unique identifiable item that may be traded. Through use of blockchains and cryptography, an NFT is digitally "signed" by an author. Although it may be technically or legally possible to copy an NFT's underlying content, the NFT itself cannot be duplicated. There can only be one valid NFT.
Tarantino plans to sell seven Pulp Fiction-related NFTs, though the details of what exactly they contain are intentionally sparse. The NFTs will apparently contain "personalized audio commentary from Quentin Tarantino" and scans of pages from the Pulp Fiction script. These NFTs will be "secret NFTs," where there is a public record of the sale, but the contents are private to the owner of the NFT. The NFT buyers will not know exactly what they bought until Tarantino transfers the NFT to them, and the general public may never know what exactly was sold.
Miramax has three main claims against the Tarantino NFTs: trademark infringement, copyright infringement and breach of contract.
The trademark infringement claim is straightforward: Tarantino used Miramax's trademark (PULP FICTION) in association with selling the Tarantino NFTs, but Miramax is not the source of the NFTs and did not authorize the use of the trademark. The registered trademark for PULP FICTION does not cover digital works, although it does cover "posters." The unregistered trademark for PULP FICTION may be broad enough to cover these new forms of digital works.
The copyright infringement claim seeks to assert Miramax's ownership of its copyright beyond the finished film Pulp Fiction, but also "all elements thereof in all stages of development and production." Tarantino argues that his NFTs contain content outside the scope of Miramax's copyright ownership in Pulp Fiction, or alternatively that his use is fair use. Interestingly, neither the complaint nor answer address in detail whether copyright law protects the right to convert a copyrightable work into an NFT.
The breach of contract claim is at the heart of the dispute. Miramax acknowledges that the original rights agreement gave Tarantino some reserved rights for Pulp Fiction. Of note, this includes "screenplay publication," a type of "print publication" right that explicitly extends to "electronic formats." Tarantino has the right to use the title of the movie in connection with his exploitation of his reserved rights. Miramax's claim comes down to whether conversion of unused excerpts of the screenplay into an NFT is one of Tarantino's reserved rights.
From Movie Memorabilia to NFTs
There is nothing unusual in selling movie memorabilia, whether it be costumes, props, manuscripts or animation cels. In such cases, the physical original is sold without any intangible rights. The purchaser of a cel from a cartoon is only purchasing the ownership of the physical cel; the owner of a cel is not allowed to use it to make a new movie using the cel, nor does the cel owner have any rights to the underlying work.
While Tarantino could have auctioned off his physical original or sold a single digital scan of his handwritten screenplay, he instead chose to sell it as an NFT. Beyond capitalization on the hot NFT market, Tarantino may have valid reasons for pursuing his NFT sale.
NFTs allow a real-world object to have two owners: an owner in the "real world" and an owner in the digital world. For Tarantino, he can retain his original handwritten screenplay in "real life" while realizing the sale of its value in a digital world. To quote Tarantino, "There's no amount of money in the world that would [make me give up] my original script."
For NFT buyers, NFTs are a way to "own" a piece of history. They have a declaration to the internet that, in this online realm, they are the one true owner of an item. On the internet where piracy is rampant, NFTs are a way of establishing online ownership.
The problem with NFTs is that it is unclear what "online ownership" means. Some NFT owners assert that copying or screenshotting their NFTs is theft, akin to copyright infringement. Other NFT owners encourage sharing their NFTs, as if owning an NFT was like adopting a highway or having one's name on a public park. The Tarantino NFTs are a sale of "a hold of secrets." Aside from the scans of the screenplay, it is unclear what exactly ownership of the secrets means. While Tarantino likely has a right to sell scans of his screenplay, if the Tarantino NFTs are really intellectual property rights to confidential information from the development of Pulp Fiction, Miramax would likely succeed on its claim.
While it may be tempting to see Tarantino as a futurist who sees the value of digital goods, he's a traditionalist at heart. Tarantino is selling NFTs because the online ownership does not have much value to him: the true value is in his beloved original physical screenplay, not its existence in cyberspace.
The NFT Grey Area
The dispute between Tarantino and Miramax highlights two key problems with the current state of the NFT market. First, NFT creators may not have the rights to sell an NFT in the first place. If the court sides with Miramax (i.e. Tarantino does not have a right to sell these NFTs), it is unclear what would happen to any NFT he already sold. While the purchaser may learn the "secrets" of the NFT's content, their ownership would be meaningless in law.
Second, there is no easy mechanism for rectifying unlawful NFTs. The courts may be powerless to make orders to rescind an NFT, transfer ownership or stop unlawful sales. NFTs are recorded on decentralized platforms, and the ownership and subsistence of an NFT are cryptographically secured. Once Tarantino issues the NFTs, Miramax may be unable to seek a meaningful remedy for the alleged rights violation.
The case is a warning for both rights holders and prospective buyers. Rights holders should be proactive in monitoring for and taking decisive action against unauthorized conversion of their rights into NFTs. NFTs are a "buyer beware" market, and anyone seeking to purchase an NFT should conduct due diligence to verify what they are purchasing and the validity of the purported rights. The dispute is even broadening to the fashion space.
1. Miramax, LLC v. Tarantino et. al., US District Court, Central District of California, 2:21-cv-08979. For more information, see Adi Robertson, "Miramax sues Quentin Tarantino over Pulp Fiction NFTs", The Verge (17 November 2021) (https://www.theverge.com/2021/11/17/22787216/miramax-pulp-fiction-quentin-tarantino-nft-lawsuit)
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