Landmark suit explores right of publicity regarding NFT digital playing cards

The High Court in Delhi has decided on that Digital Collectibles Pte Ltd v Galactus Funware Technology Private Limited (CS(COMM) 108/2023, 26 April 2023), which focuses on non-fungible token (NFT) player cards, previously unexplored in Indian jurisprudence. The plaintiffs alleged the unlawful use of attributes surrounding famous cricketers, which amounted to unfair competition and infringement of personality rights.

Background

The first plaintiff’s business involves an online marketplace where third-party users sell, buy and trade officially licensed digital player cards, which contain the names, photographs and personality traits of cricketers. The plaintiff spent considerable resources entering into agreements with several well-known cricketers for the exclusive use of these names and photographs. The digital player cards also act as NFTs capable of being sold, bought and traded for real money on the plaintiff’s Rario website via its private blockchain. In general, the price of a digital player card depends on the relative supply and demand of that card at a particular time. It is not linked to actual performance in cricket matches, although better performance increases a player’s popularity and therefore the demand for their card.

The defendants have a similar business model that they operate through the Striker website and mobile application. The main difference, however, is that the defendants did not enter into any endorsement agreements with any cricketers. Furthermore, their digital player cards – also NFT-enabled – include artistic drawings of the players instead of photographs.

Claims

The plaintiffs’ complaint was that the defendants’ profits, earned by trading NFT’s digital player cards on their Striker platform, were unfair. The suit alleged illegal use of player marks and other attributes that amounted to unfair competition (including passing off) and infringement of personality rights, among other things.

According to the plaintiffs, all sports players have a limited professional life, so they are entitled to monetize every aspect of their personality. While the artwork underlying the defendants’ NFTs was identical across all of the digital player cards, the cards’ price varied, suggesting that the price was not determined based on the artwork, but the player’s personality. Thus, the defendants’ profits—which arose from the trading of their cards without the authorization of the players—resulted in violation of personality rights.

The court’s decision

In the absence of a specific statute dealing with publicity or personality rights in India, the main issue before the Delhi High Court was to determine the scope of the right of publicity. The court conducted a detailed examination of US decisions and common law doctrine, as well as previous Indian judgments to determine this.

Firstly, the court stated that in determining infringement of the right of publicity, the applicable principles are the same as those applicable to liability – celebrity goodwill, misrepresentation and damage. Where a celebrity’s identity is used to promote a product or to show or imply its endorsement without the celebrity’s consent, this constitutes a misrepresentation and increases the likelihood of consumer confusion, leading to a finding of infringement. However, in scenarios where various online fantasy sports (OFS) platforms use celebrity names, images and publicly available information for the purpose of identifying players featured in a game, the potential for consumers to mistakenly assume that a particular player endorses such OFS . the platform is avoided.

Second, the right to publicity is not absolute and must be weighed against the right to freedom of speech and expression, which is enshrined in Article 19 of the Indian Constitution. Information in the public domain – such as a player’s on-field performance statistics – is fair game for anyone (eg news reporters or biographers) and cannot be owned by anyone, including the players themselves. Furthermore, it is a settled legal position that the protection under Article 19 covers commercial expressions. In this context, the current defendants’ use of the players’ names, images and statistics for commercial gain will qualify as protected freedom of expression.

Thirdly, the court held that the first plaintiff had no complaint that the defendant used player information in an ordinary OFS game – it primarily wanted to prevent the defendants exploiting trades with their unauthorized NFT digital player cards. According to the court, trading players is part of all professional sports leagues, and the defendants’ goal was to enable users to wear a team manager’s hat and trade players. While it was theoretically possible to exchange digital player cards without playing the defendants’ games, the cards were primarily in-game assets intended to enhance the user experience. There was also no difference between an OFS game with NFT-enabled player cards and a regular OFS game, when it came to the use – rather abuse – of a player’s name or artistic impression/photograph.

The first claimant gave an example: NFT digital trading cards for the famous soccer player Erling Haaland were sold for a large amount. The court pointed out that this card was officially licensed. The defendants’ website clearly stated that they had no affiliation with any of the players, and unlike the plaintiff, they made no claim to the sale or trade of authorized or officially licensed collectibles. In the court’s opinion, collectors of player cards would be less inclined to purchase the defendant’s commemorative cards when other NFTs using the actual photograph or video moments were available for purchase on the first plaintiff’s platform.

Lastly, the defendants did not use photographs of the players on their digital player cards. Instead, they used artistic renderings of the players’ faces – therefore no copyright was infringed.

The court also held that the plaintiffs appeared to have been aware of the defendants’ OFS website and app for some time, but had chosen to initiate legal action to restrain them just as the Women’s Premier League and the Indian Premier League the cricket tournaments were about to begin – a time when players’ interest in digital playing cards and online fantasy cricket usually peaks. All these conditions led the court to reject the plaintiffs’ request for a temporary injunction. With the matter now listed for hearing on 10 July 2023, it will be interesting to observe the issues raised.