By Stephen L. Carter
IT WASN’T big news earlier this month when Playboy Enterprises won a preliminary injunction against defendants who allegedly counterfeited its “Rabbitars”: the name the company has given to its nonfungible tokens (NFT), animated images of rabbits doing … well, something. The case was an easy win. Nevertheless, the litigation raises a challenge we’ll soon have to deal with: how to treat unauthorized NFTs created not as competition for an existing brand, but simply as art.
That’s all a nonfungible token is, a piece of art that is stored digitally in the blockchain. Though it has no physical existence, it is unique and impossible to copy. Playboy’s Rabbitars, for example, are built on the Ethereum platform, and are intended as “keys to a reimagined Playboy Club.”
Prices of art in the metaverse are exploding. On a recent earnings call, Playboy CEO Ben Kohn explained that although the company’s NFTs were originally priced at about $900, one Rabbitar recently resold for about $50,000. That’s pocket change in a world where prices in the millions are increasingly common. And although celebrities have piled in, the big money seems mostly reserved for the often anonymous artists who’ve been digital all along. Consider the CryptoPunks, a series of NFTs created by Larva Labs. A user who in March purchased Crypto Punk 6046 for $83,000 recently turned down an offer of nearly $10 million for the work. Small wonder that Sotheby’s in October launched a platform to sell digital art.
But whether one thinks NFTs are a bubble or the future of art, the same question remains: Suppose Playboy had never come up with the idea of the Rabbitar — but someone else did. And didn’t get permission or a license. And went ahead and sold the Playboy-inspired NFTs to a willing public.
Presumably, whoever does the company’s intellectual property work would have shut down the interloper fast, starting with threatening letters and ending with a demand to the host under the Digital Millennium Copyright Act.
And yet not everything that matters to brand reputation is about rights.
Cue Andy Warhol. This year marks the 60th anniversary of the first time the public saw his iconic paintings of Campbell’s Soup cans — for which Mr. Warhol, a former commercial artist, sought no permission from the Campbell Soup Company.
And it wasn’t just soup cans. Over the next few years, Warhol painted Coca-Cola bottles. He painted S&H Green Stamps. He painted crates with the logo of Brillo soap pads, sparking controversy among critics over whether boxes you could see in the grocery store were art. He did not, as the philosopher Paul Mattick has put it, “scorn the so-called commonplace.”
What he did scorn was asking for a license. Did he need one?
Despite decades of discussion by academics, the legal status of the iconic Campbell’s Soup image and other Warhol creations based on familiar consumer goods was never tested. According to Tony Scherman and David Dalton in their engrossing book about Mr. Warhol’s art, the artist routinely backed down in the face of litigation threats. But he was sued rarely. (Interestingly, according to a 1988 federal court decision, many of Mr. Warhol’s own works that imitated commercial images, including at least one in the Campbell’s Soup series, were themselves left uncopyrighted.)
Some makers of consumer products were even pleased by Mr. Warhol’s homages. In a famous 1964 letter, a Campbell executive told him that his work “has evoked a great deal of interest here at Campbell Soup Company for obvious reasons.” But unlike the humorless, lawyer-reviewed missives that corporate honchos send out today, this letter neither threatened suit nor demanded that Warhol desist. Instead, the executive expressed admiration and concluded puckishly: “I am taking the liberty of having a couple of cases of our Tomato Soup delivered to you.”
Mr. Warhol’s imagery, although ironic, did no harm to the brands he chose. On the contrary: Precisely because each new piece of art was newsworthy, the consumer companies received enormously valuable free publicity.
Which brings us back to NFTs.
Art in the metaverse makes news mainly because so much of it sells for what seem like astonishingly high prices. But the prices aren’t why NFTs matter. They matter because more and more people will be spending more and more time in a “reality” that some consider as real as our own. We live after all in an age when at least one country — Barbados — has already arranged to open an embassy in one virtual world built atop the blockchain and is negotiating to do the same in others. Others will follow.
The Playboy case was easy because the company had already entered the NFT space. According to the complaint, the defendants had set up websites with names similar to the official one and were implying that the Rabbitars sold there were the same ones created by Playboy. Thus the counterfeits would take revenue Playboy expected to earn.
But had Playboy never worked out how to monetize the metaverse, and had an unknown designer been first to offer a nonfungible token inspired by a Playboy theme, maybe the right decision for the company would have been to sit back and wait for the free publicity.
Originally the Campbell’s Soup paintings could be seen in galleries around New York City, but the first official “show” was in Los Angeles in 1962. — Bloomberg