In Digital Collectibles v. Galactus & Anr., which was a dispute regarding unauthorized use of Indian cricketers’ attributes and identifiers such as name, images and publicly available match-statistics in the context of Online Fantasy Sports (“OFS”) games, the Delhi High Court got an opportunity to discuss Non Fungible Tokens (“NFTs”) also.
The plaintiffs, Rario had claimed that “the value of NFTs on the Striker platform is derived from the identity/personalities of the players and Striker is commercially gaining from the sale/trade of such NFTs without authorization from the players. This amounts to breach of personality rights”.
The decision discussed the two different manners in which NFTs were used in the business models of the disputing parties. Rario allowed both trading as well as playing with Rario’s NFTs. The same was allowed by Striker as well, which was the crux of Rario’s grievance. Rario believed that as the exclusive license holder to use cricketers’ attributes, only Rario should have the rights to allow trading of NFTs/Digital player cards containing such attributes.
In fact, Rario had even admitted at para 66 of the judgement that they would have had no objection if Striker’s NFTs were limited to playing the OFS game. The decision turned on the same basis, because the court took the view that the manner in which Striker’s NFTs were used, amounted to using the NFTs for playing the game, even though it involved trading of those NFTs. This is because tradability of Striker’s NFTs was only a feature to enable users to manage their fantasy teams for the purposes of playing the OFS game, and therefore any trading to facilitate player exchange by team managers did not make the OFS game a trading platform (See para 67 and 68 of the judgement).
If the Striker game had used NFTs in the same manner as used by Rario, i.e., in the form of digital merchandize and facilitated their trading through a separate trading platform outside of the OFS game, then things could have been trickier for Striker, because then it could have become a case of unauthorised merchandizing. (Although it is worth noting that the manner in which Rario’s NFTs have been provided, also does not strictly make it a digital merchandize in its true sense).
In other words, while Rario tried to argue that what they and the defendants were doing was the same, i.e., providing digital collectibles and trading, using cricketers’ attributes, the court disagreed by holding that Rario’s NFTs were collectibles that could be traded on a marketplace, while Striker’s NFTs were a feature for playing the game.
This author submits that this is an implicit recognition of the principle that celebrities’ publicly available information may be used on NFTs if it can be shown that such use is a non-merchandising use. In the case of Striker, it helped that Striker’s NFTs were deployed as a feature for playing the OFS game. It also helped that Striker never marketed their NFTs as collectibles or as digital property. The central takeaway from the case is that the use of NFTs as a feature is less likely to be held as merchandizing use.
From a perusal of the judgement text, certain distinguishing aspects, of the different manners in which NFTs were used, have been tabulated below to provide an easy understanding of the way in which NFTs can be deployed as collectibles or as features.
Rario/Plaintiffs use of NFTs as Collectibles
Striker/Defendants use of NFTs as a feature
NFTs are used in a more expansive sense because they could be used outside the game (although within Rario authorized apps only).
NFTs displayed real life representations of the cricketers.
NFTs displayed artistic impressions of the cricketers by an unauthorized artiste.
NFTs were used in D3, which was Rario’s OFS game, but they were available for sale and trades even outside of the game. NFTs could be bought, sold or traded at the marketplace with or without playing the OFS game.
NFTs were not used as commodities, but rather integrated into the OFS game’s format as in-game assets to facilitate cricketer exchange between users.
NFTs were touted as digital products/merchandize, whose value was derived strictly from the rarity and the personality of the cricketer associated with it.
NFTs were used more as a record of player experience because the value of NFT derived from (i) rarity of the card; (ii) on-field performance of the cricketer; (iii) XP and HP factors on the card, which are game related features; and, (iv) demand and supply in the market.
NFTs were marketed as digital collectibles, rare video moments, and memorabilia, containing images and clips that were clearly owned by sporting bodies and associations.
NFTs were not marketed as digital collectibles, nor were there any video moments or memorabilia on sale. NFTs also did not contain any private personal attributes of cricketers such as information related to their autographs, or height, weight measurements. They only used publicly available information related to the cricketers such as their names and match statistics, in addition to artistic impressions.
Rario marketed NFTs as officially licensed.
Striker did not market NFTs as officially licensed. In fact Striker did not market NFTs as NFTs. Instead, they were marketed as 'players' for forming fantasy teams.
Striker had a disclaimer on its website, excluding any impression that NFTs are officially licensed or endorsed, “Any resemblance to a person living or dead is purely coincidental. We do not claim or have any affiliation or licence from any individual or organisation except those recorded in these Terms nor do we intend to hurt any sentiments or infringe any third party rights.”
NFTs carrying exclusive information and player's real images were used in a manner that clearly indicated player endorsements.
NFTs were not used to suggest player endorsements. NFTs of all the current cricketers were used as an OFS game requires that each and every player be represented. The information that was used on such NFTs were all in the public domain.
Parts in bracket are supplied.
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