Landmark suit explores right of publicity as it relates to NFT digital playing cards

The Delhi High Court has ruled on 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 well-known cricket players, which amounted to unfair competition and violation of personality rights.

Background

The first plaintiff’s business involves an online marketplace where third-party users sell, purchase and trade officially licensed digital player cards, which feature the name, photograph and personality attributes of cricket players. The plaintiff spent significant resources to enter into agreements with several well-known cricketers to exclusively use these names and photographs. The digital player cards also function as NFTs that are capable of being sold, purchased 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 real-world performances in cricket matches, although better performances do increase a player’s popularity and therefore demand for their card.

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

The allegations

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

According to the plaintiffs, all sports players have a limited professional lifetime, so they have a right to monetise all aspects of their personality. While the artistic work underlying the defendants’ NFTs was identical across all of the digital player cards, the cards’ price varied, which implied that the price was not decided based on the artistic work but the personality of the player. Thus, the defendants’ profits – arising from trading their cards without authorisation from the players – resulted in a breach of personality rights.

The court’s decision

In the absence of a specific statute that deals 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 carried out a detailed examination of US decisions and common law jurisprudence, as well as prior Indian judgments to ascertain this.

First, the court stated that when determining infringement of the right of publicity, the applicable principles are the same that apply to the tort of passing off – 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 amounts to misrepresentation and increases the likelihood of consumer confusion, which leads to a finding of infringement. However, in scenarios where various online fantasy sport (OFS) platforms are using celebrities’ names, images and publicly available information for the purpose of identifying players featured in a game, the possibility of consumers mistakenly assuming that a particular player is endorsing such an OFS platform is obviated.

Second, the right to publicity is not absolute and must be weighed against the right to freedom of speech and expression, which is enshrined under 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 anybody, including the players themselves. Further, it is a settled position of law that protection under Article 19 extends to commercial speech. In this context, the present defendants’ use of players’ names, images and statistics for commercial gain would qualify as protected free speech.

Third, the court opined that the first plaintiff had no grievance with the defendants using player information in an ordinary OFS game – it primarily wanted to prevent the defendants from capitalising on trades of its unauthorised NFT digital player cards. According to the court, trading players is a part of all professional sporting leagues and the defendants’ aim was to enable users to wear a team manager’s hat and trade players. While, in theory, trading digital player cards was possible without playing the defendants’ game, the cards were primarily in-game assets meant to enhance user experience. Also, there was no difference between an OFS game with NFT-enabled player cards and an ordinary OFS game, as far as use – rather, misuse – of a player’s name or artistic impression/photograph was concerned.

The first plaintiff offered an example: the NFT digital trading card of famous footballer Erling Haaland was sold for a huge 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, made no claim of selling or trading in authorised or officially licensed collectibles. In the court’s opinion, collectors of players’ cards would be less inclined to buy the defendants’ card as memorabilia when other NFTs using the actual photograph or video moments were available for purchase on the first plaintiff’s platform.

Last, the defendants were not using photographs of the players on their digital player cards. Instead, they were using artistic renditions of players’ faces – hence, no copyright was being violated.

The court also considered that the plaintiffs seemed to be aware of the defendants’ OFS website and app for a while, but had chosen to launch a legal action to restrain them just as the Women’s Premier League and the Indian Premier League cricketing tournaments were about to begin – a time when gamers’ interest in digital playing cards and online fantasy cricket typically peaks. All of these factors led the court to refuse the plaintiffs’ application for an interim injunction. With the matter now listed to be heard on 10 July 2023, it will be interesting to observe the issues that are tackled.