Goldsmith licensed her studio photograph of, then rising star, Prince to Vanity Fair in 1984. After Prince passed away in 2016, the Andy Warhol Foundation for the Visual Arts, Inc. (AWF) licensed an image of “Orange Prince”—an orange silkscreen portrait of the musician Prince created by Andy Warhol—to appear on the cover of a Vanity Fair special edition magazine. AWF created and licensed 15 additional prints using Goldsmith’s photograph, a black and white portrait of Price, at issue in this case.
June 2022 Update: Copyright Small Claims Court Launched
By Jeffrey E. Jacobson, Esq.As explored early last year, the Copyright Claims Board (CCB) created by the CASE Act will start accepting claims on June 16, 2022. Claims for copyright infringement and misrepresentation will be accepted by the CCB. The initial filing fee is $40, followed by another $60 charge if the respondent does not "opt out" of the procedure. Claims up to $30,000 will be entertained and attorneys fees may be awarded. Mini cases for claims of $5000 will also be entertained. No depositions and expedited discover are permitted as part of this new procedure. This article is not intended as legal advice, as an attorney specializing in the field should be consulted. © 2022 The Jacobson Firm, P.C.
On April 26, 2022, the #EsportsBizShow aired on Preediction on Esports Organizations with Chris Lamarucciola of Parabellum Esports. In this episode, Chris spoke about launching esports organization, Parabellum Esports and its related properties. He continues by exploring Parabellum Esports' current competitive teams, such as their Rainbow Six Siege team, an exploration of iRacing as well as mentioning the organization's recent acquisition by React Gaming Group.Check the full interview here and below. https://open.spotify.com/episode/32qx9G788NATe6v523HGmu?si=nArpaPJHQEWwyMtH5hN85A
On April 12, 2022, the #EsportsBizShow aired on Preediction on NFTs, Crypto and Play 2 Earn (P2E) in esports and video games with Christopher Gonsalves of Community Gaming. In this episode, Chris spoke about starting Community Gaming New York and his original work in the cryptocurrency, bitcoin and NFT space. He continues by exploring his current work in the NFT and Play 2 Earn gaming space, including Community Gaming's recent investment and pivot to Community Gaming.io, which offers tournaments using its unique event and tournament management software as well as event prize distribution via blockchain and cryptocurrency system.Check the full interview here and below. https://open.spotify.com/episode/67vB5JO0SDsWUvHThDbPqy?si=nx5pUH-bSo2mc6Mn6nvNsg
Oh, No! They Rescheduled the Harry Styles Concert! Force Majeure and “Rain or Shine” Language in a Time of Disasters and Pandemics
By Jeremy M. Evans, Esq. and Justin M. Jacobson, Esq.The sale of many consumer goods, including concert tickets, indicates something along the lines of “rain or shine.” Does this include disasters that occur? What happens if a disaster happens? Do clients have a claim against the seller? How can attorneys advise these clients? Considering today’s unpredictable weather as well as the ongoing COVID-19 global pandemic, there has been substantial discussion regarding cancellation policies as they relate to commonly used “rain or shine” policies for live events and attractions, as well as the potential usages of “force majeure” language. One way that attorneys have managed the risk for clients is by inserting protection clauses in agreements or other written documents entered into by these individuals or businesses. Some of these provisions include force majeure, indemnification, waivers, protocols, and a seemingly “moving target” approach to handling the continued uncertainty in an ongoing, unprecedented health pandemic. In many ways, states have varied in their approaches to the pandemic, but attorneys have been more consistent in their approach of protecting their clients from lawsuits or unnecessary risk. This article will explore legal approaches to the uncertainty caused by forces outside of each party’s control. In any attorney-client relationship, trust is paramount. In any attorney-to-attorney or client-to-opposing-party or business relationship, trust is also most important. The parties should like or at least trust each to be flexible to make changes to an agreement as times and circumstances change in a way that benefits or harms both parties. This happened repeatedly during the pandemic when airlines and hotels rebooked and refunded planned trips. Attorneys and clients need to think about contingencies if and when things go wrong and how to make them right. It is a collaborative way of contracting and retaining customers. Parties that are too strict will lose trust and customers, which will affect their overall long-term profitability and sustainability. The best example is one in the endorsement and sponsorship setting. The parties should want to work together to promote one another. If the parties find that they do not like each other, they should move on, as the relationship usually continues on a downward trend. In terms of business, companies should want customers and should try to be flexible within reason. In this respect, terms and processes should be outlined in detail in written agreements, policies, and “terms and conditions” on websites, backs of admission tickets, or elsewhere so that a purchaser or any other customer is aware of the applicable regulations associated with a specific transaction or purchase. The following are some ways attorneys have addressed some of these issues.
“Rain or Shine” Event PoliciesIt is common for many consumer goods, such as live sporting events, musical concerts, festivals, and other “ticketed” ventures, to include standard “terms and conditions” that apply to the purchaser of a particular good, such as an admission ticket. While each prospective client or business has its own specific language and necessary protections, there is a trend of live event production entities incorporating something along the lines of a “rain or shine” policy. This means that a specific live event such as an MLB baseball game (see, e.g., https://tinyurl.com/bdfpujhh) or an outdoor music festival (see, e.g., https://foresthillsstadium.com/faq) will occur whether the weather is amenable or if it is less than ideal. There are, however, exceptions to this industry custom, such as the existence of extreme or severe weather conditions making it “unsafe” or “dangerous” to attend the event. For instance, popular musical artist Harry Styles had to reschedule a live concert due to the “dangerous” road conditions resulting from a hurricane in the area (https://tinyurl.com/2s4x462k). In an attempt to assuage fans, the concert was rescheduled to a later date in the year (https://tinyurl.com/msv7sxnd); this move might not be convenient for every potential customer, but it does provide an opportunity “for the show to go on.” Furthermore, the popular third-party ticket company Ticketmaster has its own established policy as it relates to canceled events (https://tinyurl.com/2p9ay2ar). The entity has gone as far as offering a purchaser event cancellation insurance that covers “the ticket price, taxes, convenience fees and shipping charges along with other eligible event-related items . . . such as parking” (https://www.ticketmaster.com/insurance). In light of today’s uncertain conditions, it is important to be aware of these policies and ensure that clients incorporate them to best protect their financial interest. Generally, in many of these situations, most parties attempt to mitigate a patron’s loss and maintain public goodwill by rescheduling the event to a later date that hopefully does not encounter similar climate restrictions—sometimes referred to as a “rain check” (see, e.g., https://www.mlb.com/yankees/tickets/raincheck). Conversely, the operator may cancel the event altogether and refund the monies received from a client’s customers (see, e.g., https://electriczoo.com/ticketing-terms). However, in some cases, the amicable approach is not appreciated by all customers, which has resulted in a series of individual as well as class-action lawsuits by ticket purchasers against the event hosts in light of cancellations due to COVID-19 and other uncontrollable disasters (see, e.g., https://tinyurl.com/ypfnnshh; see also McMillan v. StubHub Inc., Case No. 20-cv-06392-HSG (N.D. Cal. Oct. 21, 2020); Bromley v. SXSW, LLC, No. 1:20-cv-439 (W.D. Tex. Apr. 24, 2020)). Therefore, it is crucial that a client has outlined operational procedures related to these types of situations beforehand to best protect themselves.
Force Majeure ClausesIn addition to the inclusion of “rain or shine” and other weather-related policies when crafting an event cancellation policy, attorneys can also advise clients to include contractual language to protect them in the form of a force majeure clause. This provision exists to excuse a party’s nonperformance under a contract when extraordinary events or a specific “triggering event” prevents a party from fulfilling its contractual obligations. Black’s Law Dictionary (10th ed., 2014) defines a force majeure “triggering event” as “an event or effect that can be neither anticipated nor controlled” and “includes both acts of nature such as floods and hurricanes, and acts of people such as riots, strikes, and wars.” In extraordinary cases where a force majeure clause may be applicable, it is necessary to determine whether a specific event activates this provision, as its operability may eliminate or reduce any potential liability that a party might have for not performing their contractually obligated duty. In most circumstances, the terms of a contract are generally enforceable as written. In general, courts commonly look to and follow the express language contained in a force majeure clause when determining whether a particular event is listed and is therefore covered by this provision (see, e.g., Virginia Power Energy Mktg., Inc v. Apache Corp., 297 S.W.3d 397, 402 (Tex. App. Houston [14th Dist.] 2009, pet. denied) (“As we interpret the parties’ contract, including the force majeure provisions, our primary concern is to determine the parties’ intent”)). In fact, courts generally interpret force majeure clauses narrowly and will only enforce the clause and excuse a party if the provision “specifically includes the event that actually prevents a party’s performance” (see, e.g., Reade v. Stoneybrook Realty, LLC, 63 A.D.3d 433, 434 (2009) (citing Kel Kim Corp. v. Central Mkts., 70 N.Y.2d 900)). Because many courts commonly rely on the express language of a force majeure clause when determining whether a specific event is covered, it is crucial to ensure that a force majeure clause is incorporated in a client’s contract. Additionally, it is important to ensure that the drafted language explicitly lists all the possible triggering events covered by the provision (see, e.g., Virginia Power Energy Mktg., Inc v. Apache Corp., 297 S.W.3d at 402). This is because the inclusion of more specific language may make it more likely that the provision might be applicable to the specific situation (see, e.g., Perlman v. Pioneer Ltd. Partnership, 918 F.2d 1244, 1248 n.5 (5th Cir. 1990); Virginia Power Energy Mktg., Inc v. Apache Corp., 297 S.W.3d at 402). As a result, it is prudent to ensure a client unambiguously includes and directly mentions applicable force majeure events in the agreement, such as “COVID-19” along with other related verbiage such as “epidemic,” “pandemic,” “public health crisis,” “governmental or regulatory orders,” and/or “governmental restrictions on performance.” This way, a client is properly protected in the event of the occurrence of any of these events. Furthermore, in addition to explicitly stating the various applicable events, a party could also incorporate broad “catchall” language (e.g., “or other similar causes beyond the control of such party”), which might provide arguments for relief for events that were unforeseeable at the time of contracting and those that were not specifically mentioned and incorporated in the force majeure language. In cases where a client has used a force majeure clause in an agreement that does not include language explicitly referring to COVID-19 or other wording related to a health pandemic, and one or both of the parties’ performances are prevented due to the virus outbreak, one or both parties may look for relief under other interpretations of the language contained in many force majeure clauses such as claiming that the event is an “act of God” or “act of nature.” Black’s Law Dictionary defines an “act of God” as “an overwhelming, unpreventable event caused exclusively by forces of nature, such as an earthquake, flood, or tornado.” This could apply to “unusually severe weather,” which has been described as “adverse weather which at the time of year in which it occurred is unusual for the place in which it occurred” (Allied Contractors, Inc., I.B.C.A. No. 265, 1962 B.C.A. ¶ 3501, 1962 WL 9712 (I.B.C.A. Sept. 26, 1962)). Some courts interpret an “act of God” as one that solely occurs from natural forces, events, or causes (see, e.g., McWilliams v. Masterson, 112 S.W.3d 314, 320 (Tex. App. Amarillo 2003, pet. denied) (“[A]n event may be considered an act of God when it is occasioned exclusively by the violence of nature.”); Nat. Res. Def. Council v. Norton, 236 F. Supp. 3d 1198, 1220 n.9 (E.D. Cal. 2017) (quoting Black’s Law Dictionary 718 (9th ed. 2009); Cal. Civ. Code § 1511(2)). As a result, these courts might consider “acts of God” as those without any “human intervention,” and it may be argued that humans have been involved in the COVID-19 health crisis (Travelers Ins. Co. v. Williams, 378 S.W.2d 110, 113 (Tex. App.—Amarillo 1964, writ ref’d n.r.e.). However, in light of the unprecedented global health epidemic, some state courts have begun expanding the definition of what qualifies as a “natural disaster,” which is commonly inserted to in these types of provisions (see, e.g., JN Contemporary Art LLC v. Phillips Auctioneers LLC, No. 20-cv-4370, 2020 WL 7405262, at *7 (S.D.N.Y. Dec. 16, 2020)). A New York state court noted that “[a]lthough neither the New York Court of Appeals nor the Second Circuit Court of Appeals has yet addressed whether the COVID-19 pandemic should be classified as a natural disaster, the Second Circuit has identified ‘disease’ as an example of a natural disaster” eligible for force majeure protection in agreements that currently mention “natural disasters” as a potential clause triggering event (Badgley v. Varelas, 729 F.2d 894, 902 (2d Cir. 1984)). It will be interesting to see which other states follow suit as similar cases are decided. Finally, it is paramount that a client is aware of the listed remedies provided for by a contract’s force majeure provisions. This is because the clause can be drafted to permit the cancellation or termination of the entire contract upon the occurrence of a provision “triggering event.” Alternatively, the agreement might only provide for less severe relief, such as merely excusing the delay and tolling an existing agreement until the incident is resolved. Therefore, it is important in assisting a client in navigating an unforeseen disaster to not only include a force majeure provision in most every agreement but also to ensure that the language has widespread applicability as well as provides the correct relief.
Doctrines of Impossibility, Impracticability, and Frustration of PurposeIn the event that no drafted agreement exists between the parties or if a written document does not contain a force majeure clause at all and does not otherwise address these types of unforeseeable events, there might be other available avenues to protect a client’s interest in the event that a disaster strikes. For instance, some states recognize and enforce a variety of common law defenses, including impossibility, impracticability, and/or frustration of purpose. These doctrines are intended to be applicable when some unforeseen and unexpected event has made the fulfillment of an obligation impossible or impracticable (see, e.g., FP Stores v. Tramontina US, Inc., 513 S.W.3d 684, 693 (Tex. App.—Houston [1st Dist.] 2016, pet. denied); City of Vernon v. City of Los Angeles, 45 Cal. 2d 710, 720 (1955) (“A thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost”)). The doctrine of impossibility may excuse a party’s performance when the destruction of the subject matter of the contract or the means of performance makes the performance objectively impossible. Moreover, the “impossibility” must be produced by an unanticipated event that could not have been foreseen or guarded or otherwise protected against in the contract (see, e.g., 407 E. 61st Garage v. Savoy Fifth Ave. Corp., 23 N.Y.2d 275 (N.Y. 1968)). In addition, some states, such as California, have separately codified a contractual defense of impossibility that excuses performance when it is prevented or delayed “by an irresistible, superhuman cause” (Cal. Civ. Code Section 1511(2)). Similarly, the doctrine of frustration of purpose might be applicable; it does not require the impossibility of performance under a contract but rather may terminate a contract that no longer provides the benefits that the parties bargained for because of intervening unforeseeable events, and the now-frustrated purpose was the primary reason for entering into such contract (see, e.g., U.S. v. Gen. Douglas MacArthur Senior Vill., 508 F.2d 377, 381 (2d Cir.1974)). It is clear that a disaster—whether it is a hurricane or tornado or a global health pandemic causing businesses to be mandated by the government to close or operate at limited or otherwise restricted capacity—are impossible and impractical to reasonably foresee at the time of contracting; in some cases, these events may frustrate the entire purpose of an agreement.
Indemnification, Waivers, and Dispute ResolutionIn addition to the potential contractual provisions as well as some common law protections mentioned above, it is common for the parties to include language that indemnifies or holds the other party harmless against a potential loss or verbiage that solely indemnifies the individual who is taking the risk by organizing the event for another. In this case, there should be written policies and procedures in place prior to the occasion, specifically in production and live event scenarios. Additionally, the talent, attendees, and others should be encouraged to sign waivers of liability and/or give disclosures of symptoms related to COVID-19 as well as following any other state-issued laws or orders. Written policies related to live events should also discuss testing requirements for all attendees. Finally, dispute resolution procedures, such as arbitration or mediation, could be included in a provision in the agreement to help the parties alleviate problems by means short of litigation. Overall, the potential losses and uncertainty of today’s current business landscape can potentially be mitigated through cooperative efforts between the parties as well as with proper written contracts with appropriate clauses addressing the procedures for a potential unforeseen disaster standing in the way of a performance. This article is not intended as legal advice, as an attorney specializing in the field should be consulted. Please review the article originally posted on the ABA website here (sorry, for ABA members only). This article was originally published in GPSOLO, Volume 39, Number 2, March/April 2022, (c) 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder
04-05-22 – Jacobson’s esports business and legal textbook “The Essential Guide to the Business & Law of Esports & Professional Video Gaming” has been awarded both the STEM.org Authenticated and STEM.org Reviewed trustmarks
(New York, NY) – Justin M. Jacobson’s esports business and legal textbook, “The Essential Guide to the Business & Law of Esports & Professional Video Gaming” has been awarded both the STEM.org Authenticated and STEM.org Reviewed trustmarks. For further information, the STEM.org Authenticated trustmark streamlines consumer’s ability to identify goods that conform to the organization’s vetted standards, thus assisting with quick decision-making in favor of quality. The STEM.org Reviewed trustmark streamlines consumer’s ability to identify the content and multimedia that conform to the organization’s vetted standards, thus assisting with quick decision-making in favor of quality. STEM.org Educational Research (SER) is the longest continually-operating, privately held STEM education research and credentialing organization in America. STEM.org works closely with pedagogical researchers, an international coalition of educators, administrators, NGO’s, and schools to establish a trusted set of STEM benchmarks. The resources and proven best-practices of this initiative have led to the world’s original and most recognized, blockchain-secured algorithmic STEM credentialing framework: STEM.org Accredited™ for Programs, STEM.org Certified™ for People, and STEM.org Authenticated™ for Products.
On April 4, 2022, the #EsportsBizShow aired on Preediction on Esports Sponsorships and Partnerships with Justin Stefanovic of Misfits Gaming Group. In this episode, Justin spoke about his work in the esports space and gaming space, including his initial work as at an advertising agency. He continues by exploring his current sponsorship and partnership work on behalf of the Misfits Gaming Group, including past and current sponsorships for Misfits Gaming, Florida Mutineers and Florida Mayhem esports teams.Check the full interview here and below. https://open.spotify.com/episode/3Q47VrBvGWkCi98p2d7GUK?si=QXzq-p_JTG6nZbTuXJ9AgA
03-31-22 – Jacobson Acts As A Panelist For “The Fashion Industry’s Impact on Gaming” Panel As Part Of Ritual Motion’s Fashion in Gaming Virtual Summit
(New York, NY) – Justin M. Jacobson recently provided insight on “The Fashion Industry’s Impact on Gaming” panel as part of Ritual Motion’s Fashion in Gaming Virtual Summit. This panel explored the intersection between the fashion industry and esports and video gaming. It looked at the growth of crossover between fashion and gaming, including the emergence on new luxury brands activating in the space with professional gamers, streamers, esports organizations and teams, game publishers and developers, and event organizers, including brands such as Gucci, Ralph Lauren, and Balenciaga. The conversation continued by discussing the growth and future of digital fashion, including Louis Vuitton working with Riot Games for League of Legends in-game items and physical merchandise, Burberry creating custom in-game skins for Honor of Kings as well as brands such as Valentino and Marc Jacobs producing digital items for Animal Crossing. Finally, Justin spoke on impact will blockchain authentication have on emerging digital fashion as well as the fashion paradigms that exist due the emergence of the “metaverse.”
On March 28 2022, the #EsportsBizShow aired on Preediction on Youth Esports with Bubba Gaeddert of the Varsity Esports Foundation. In this episode, Bubba spoke about his work in the sports space before transitioning into the esports and gaming space. He continues by exploring his current work with the Varsity Esports Foundation, including how the foundation is working with high school esports programs to provide technology and educational information on the benefits of esports and gaming to students.Check the full interview here and below. https://open.spotify.com/episode/3YdCZp62lcnmh9N2gd30rv?si=T9QaXD7NQeaoA0gBd1gv4g
Some Information On U.S. Trademark Litigation
By Justin M. Jacobson, Esq. and Jeffrey E. Jacobson, Esq.In cases where someone believes that their exclusive ownership rights in a validly registered trademark are violated by another, this individual or company has a variety of options, including potentially instituting a claim or lawsuit against them and engage in trademark litigation. In these situations, the trademark registrant might proceed against the infringer in a variety of ways, including sending appropriate notice letters or even filing documentation to initiate a formal legal proceeding in a number of potential forums. Generally, when a trademark owner first believes that their rights in a particular mark are violated, it is prudent to send a formal letter to the infringer commonly referred to as a “cease and desist” (C&D) letter. This letter directs the other party to cease from any further infringement of the mark and it might also demand other remuneration as well as contain other formal requests. The mailing of a C&D letter could be beneficial in subsequent trademark litigation as it provides the alleged infringing party with notice of their potential violation of the owner’s rights in a mark. In fact, this correspondence could later be introduced during a formal legal proceeding as evidence of notice of a violation. In some instances, if a party receives a formal notice and disregards it by continuing with their infringing practices, it might enable the mark owner to proceed against the other party on a “willful” infringement basis in addition to any other appropriate legal causes of actions. After a C&D letter is sent to an infringing party, the initiating party has a few unique options as to how to proceed and prosecute a claim. For instance, if a pending trademark application infringes or otherwise damages an existing party’s trademark registration, the damaged party can file an Opposition Proceeding with the Trademark Trial and Appeals Board (T.T.A.B.) to oppose the pending application on the basis that the application infringes or otherwise damages the owner’s trademark. Alternatively, in situations where an existing registered trademark violates another’s rights, a party can initiate a Cancellation Proceeding with the T.T.A.B. in an attempt to cancel an existing infringing registered mark. Additionally, a damaged party might turn to other means, including exploring obtaining an injunction or other court ordered relief to prevent an existing infringement. In lieu of the above options, a damaged party could also initiate a formal lawsuit in a state or federal court or even with the U.S. International Trade Commission. This is because an owner’s trademark rights are acquired through “common” law as well as achieved through state enacted legislation, which can be obtained through a formal state trademark registration process. Alternatively, a registrant can utilize the federal courts to prosecute a party that violates federal trademark laws, such as the Lanham Act. As previously explored, there exists a selection of different causes of action that might provide a party with a basis to initiate a trademark infringement lawsuit. In order to commence a legal action, the damaged party, known as the plaintiff, must file a formal document known as a “complaint” with the relevant arbitrating body such as a state or federal court or with the T.T.A.B. The required content in a specific complaint varies based on the particular legal cause of action and relief sought. Some of the relevant causes of action might include a party infringing another based on a “likelihood of confusion” between a party’s trademark and another’s mark. This type of matter is generally resolved through analysis of the “Polaroid factors,” including examining whether there is any evidence of “actual consumer confusion” as well as focusing on the “sophistication” of the prospective consumers. In addition or in lieu of this cause of action, there might be a claim by a damaged party for “tarnishment” of an existing mark as well as potentially a claim for “dilution” of a famous mark by another’s unauthorized or otherwise damaging use. Ultimately, the arbiter, whether a state or federal court or the T.T.A.B., determines whether another’s usage violates the other party’s trademark rights in a name. If a party is found to have violated any or all of the owner’s trademark rights, then the party who brought the valid claim might be entitled to recover their actual damages suffered as a result of the infringement. This recovery could be in addition to them potentially recovering their attorney’s fees, which are the amounts spent by the party pursuing the claim; and, in rare cases, they might also be entitled to statutory proscribed amounts called “statutory” damages for willful instances of infringement. While each individual situation is different, it is important that a trademark owner is aware of their duty to police any infringements, which might include taking appropriate steps such as sending “cease and desist” letters and potentially filing an appropriate state or federal lawsuit or a T.T.A.B. proceeding. Since every occurrence is different, it is crucial that a competent attorney is consulted to ensure that all the proper avenues are taken and that all the potential available remedies for the damaged party are explored. This article is not intended as legal advice, as an attorney specializing in the field should be consulted. © 2022 The Jacobson Firm, P.C
On March 21 2022, the #EsportsBizShow aired on Preediction on Professional Esports Organizations with the CEO of Skillshot Media and Co-Owner of Ghost Gaming, Todd Harris. In this episode, Todd talked about his work in the esports and gaming space, including discussing the early days of founding game developer and publisher, Hi-Rez Studios and its later growth and success with its release, SMITE. He continues by exploring his current work with Skillshot Media and his job as the co-owner and part of the ownership group that purchased esports organization, Ghost Gaming.Check the full interview here and below. https://open.spotify.com/episode/4jz7OcR23Y2rLeLaDqxpx9?si=YbkyHo5DQB6fclPFZV45Tw
03-15-2022 – JACOBSON GUEST LECTURES FOR SHAWNEE STATE UNIVERSITY’S SPECIAL TOPICS IN GAME DEVELOPMENT CLASS
(New York, NY) – Justin M. Jacobson was a guest lecturer for the Special Topics in Game Development class at Shawnee State University. While speaking to the class, Justin explored a variety of legal considerations for video and software game developers. He highlighted the proper usage of business entities by game developers as well as addressed a few intellectual property protections available for game publishers and developers such as trademarks and copyrights. In addition, he provided some insight on legal matters related to game publisher/game developer licensing agreement, “user generated content,” and licenses with third-party IP owners to include existing IP in a game.
Some Intellectual Property Law Considerations for Video Game Developers and Publishers
By Justin M. Jacobson, Esq.Proper protection of intellectual property by game publishers and game developers is of utmost importance. Usage of these protocols are especially critical as international major and independent or “indie” developers and publishers continue to grow their businesses via traditional business models (i.e., digital and physical copy sales), through the “Free-to-play” (F2P) and freemium models, as well as with the emergence of “Play-to-earn” (P2E) game titles and the creation and expansion of digital “metaverses” and associated non-fungible tokens (NFTs). As a result, a video game creator should be aware of and properly protect all of their intellectual property assets, including any relevant trademarks and copyrights.
Trademark Law Protections for Game Developers and PublishersA major intellectual property protection that exists is trademark law. A trademark registration protects a word, logo, slogan, color, sound, catchphrase, product design, a hashtag, or any combination of these used to differentiate the goods or services that one company provides from those of another. As a result, most major AAA publishers as well as many indie game developers utilize trademark law to protect their intellectual property. In fact, trademark protection can be acquired by a company on a state, federal and/or on an international level. Consequently, it is paramount that a video game or software developer ensures that they are protected in the various jurisdictions that they market, license, distribute and sell their games. While there are many benefits in obtaining a trademark registration, one of these is that it prevents another party from using the same or a confusing similar mark for the identical or similar goods or services. Similarly, a trademark registration in a name is also a valuable commodity that can be licensed or sold to a third party. The existence of a registered mark also provides the owner with the ability to stop counterfeit or “grey market” goods with the owner’s mark from entering the United States by coordinating with the U.S. Customs and Border department. Finally, another useful benefit of a trademark registration is that it can be used offensively to file infringement claims with various social media platforms to retrieve or to block potentially infringing accounts, including with Facebook, Twitter, and Instagram as well as it may be used during a website domain dispute through ICANN. While a game development or publishing company has many different trademarks to choose from, some common ones include filing for trademark protection in their game publisher or developer company name as well as in their company logo. For instance, companies such as “Riot Games” (U.S. Reg. No. 4,109,440), “Activision” (U.S. Reg. No. 1,207,377), “Nintendo” (U.S. Reg. No. 1,689,015), “Epic Games” (U.S. Reg. No. 5,712,420), and “Supercell” (U.S. Reg. No. 4,929,916), among many others, have all obtained registered trademarks in their company names as well as, in some cases, their logo. In fact, some of these companies have obtained protection in the United States as well as in other countries. A game creator could also register an individual game title or a gaming console name with their associated game or console logos. In fact, some console names are currently protected by their owners such as “Nintendo 64” (U.S. Reg. No. 2,372,472), “Playstation” (U.S. Reg. No. 2,259,732), “Xbox” (U.S. Reg. No. 2,698,179) and its successor console, “Xbox One” (U.S. Reg. No. 4,557,248). Additionally, some of these companies have also received protection for their gaming console names in the United States as well as internationally. There are also many videogame titles and associated logos that have been protected via trademark law, such as “Valorant” (U.S. Reg. No. 6,286,126), “League of Legends” (U.S. Reg. No. 3,756,125), “The Legend of Zelda Breath Of The Wild” (U.S. Reg. No. 5,277,680), “Clash of Clans” (U.S. Reg. No. 4,643,127), and “Starcraft” (U.S. Reg. No. 2,881,608). Furthermore, subsequent game titles in a specific series may also be eligible for trademark protection. For example, a game publisher has obtained protection in the original game title, “Pokémon” (U.S. Reg. No. 2,514,998) as well as for other sequel titles in the series such as “Pokémon Moon” (U.S. Reg. No. 5,214,916), “Pokémon Sun” (U.S. Reg. No. 5,214,914) and “Pokémon Go” (U.S. Reg. No. 5,646,122) in a variety of different classes and for many unique products. Similarly, the developer for first-person shooter (FPS) title, “Call of Duty” (U.S. Reg. No. 4,035,859) has obtained protection in its original title and in subsequent game names including for “Call of Duty Ghosts” (U.S. Reg. No. 4,766,061) and for “Call of Duty Black Ops” (U.S. Reg. No. 4,029,838). Finally, in addition to a software development company’s protection of their company name and logo, a game title or video game console, equipment or peripheral name and logo; these companies may also obtain protection in any “in-game” character names. In fact, many iconic game character names are protected under trademark law, including “Super Mario” (U.S. Reg. No. 6,082,304) “Pikachu” (U.S. Reg. No. 2,646,008) and “Sonic The Hedgehog” (U.S. Reg. No. 3,009,472). These entities might also protect any public marketing slogans and any identifiable “catchphrases” associated with their game, with their company, or with a specific in-game character. These companies could also obtain trademark protection for any hashtags used by them in any public marketing and publicity campaigns related to the promotion of a game or of the developer. While these are just a few common trademarkable assets owned by a game developer or publisher, it is important that a company is aware of what might be protected and how to best safeguard their tradenames in the global video game market. These considerations are particularly important if these entities began creating their own digital metaverses or “virtual worlds” as well as if they are incorporating and offering their own protected and transferable in-game items and assets, such as in the form of NFTs.
Copyright Law Protections for Game Developers and PublishersIn addition to proper trademark protection for a game developer or publisher, there are existing copyright law protections that these companies might also incorporate to best protect themselves. Similar to the music industry, copyrights for a video game and computer software are a complex matter. This is because there are two separate copyrights in a video or computer game. Specifically, there is a copyrightable work in the underlying software code as a “literary” work as well as a distinct copyright in the artwork, animations, imagery, and sound as an “audiovisual” work. In fact, since a game contains and combines multiple protectable art forms (i.e., music and video) integrated and working with a computer program code that manages some or all of the audiovisual elements of the game; each component of the game is potentially protectable through copyright law. As a result, a game developer or publisher can obtain copyright protection in America and other countries in their actual finished game. A copyright might also apply to any “video” or “visual” elements utilized in the game, including any photographic images, specific in-game character design, any digitally captured moving images and animations, written text, the specific gameplay storylines, the “imagined” environments as well as geographic locations created within the game, the actual game “box” or cartridge design, in addition to the actual computer code. This might include copyright protection in both the game’s source code as well as in its object code. Furthermore, protection might be appropriate for any original music and other audio elements incorporated into the game, such as any character voices and gameplay sound effects. (Justin M. Jacobson, Esq., The Essential Guide to the Business & Law of Esports & Professional Video Gaming, 58 (CRC Press 2021). While there may be other protectible assets owned by game developers and publishers, the above is intended to highlight a few common ones used by many of the industry’s top video game creation and publishing companies. Overall, as gaming companies continue to develop original intellectual property and expand their companies, consoles, and game titles globally; the need to properly protect these assets become even more crucial to a company’s commercial success and long-term viability and profitability. This article is not intended as legal advice, as an attorney specializing in the field should be consulted. © 2022 The Jacobson Firm, P.C
Some Additional Legal Protections for Small Business Owners
By Justin M. Jacobson, Esq.Building off the initial piece, this article explores some additional available legal protections that small business owners might consider when starting or operating an existing company. While this is not an exhaustive list, it is meant to explore a few other relevant legal protocols that might assist a company in legally operating their business both effectively and efficiently. In addition to trademark and copyright protection for a company’s intellectual property assets, such as their company or product name or logo; similar protection might also be available for any trade secrets owned or established by the business, including any confidential information or any other private assets that they develop or create. In these situations, it is important to ensure that a company has written agreements in place with any third parties who contributes any work to their business as well as those who receive, review, or otherwise accesses or has access to any confidential trade documents and other related company “trade secrets.” For example, in order to obtain protection for this type of classified information, a business owner could ensure that written and executed non-disclosure agreements (referred to as “NDAs”) are in place with any individual or corporation that receives or is provided with access to the company’s confidential information. Additionally, a small business might further protect its materials by requiring any employee or third-party that contributes or has access to this information must sign an agreement that includes provision addressing confidentiality and non-disclosure obligations as they relate to the company’s confidential materials. These clauses would typically aim to prohibit the receiving party, the employee or independent contractor, from sharing any confidential trade secrets or information they receive as a result of their employment with any other third party as well as prevents the individual from using this protected information for their own benefit or purpose. Furthermore, in some cases, copyright protection might also potentially be available for the specific confidential content if it is eligible for such protection. This might include registering a copyright for a confidential written presentation or some other protected visual image, diagram or any existing confidential business model or analytics software developed by the company and that is not publicly available. In all of these cases, it is also paramount to ensure that any and all “confidential” and sensitive information is labelled as such, including affixing wording such as “confidential” or “trade secret” prominently on these materials including on any the documents, diagrams, or data. Additionally, when operating a business, there might also be some employment and labor law considerations to be aware of, including visa and immigration matters. For example, if an American-based company is hiring an employee who is a non-U.S. citizen, the company might be required to apply for and obtain a visa or other work permit or authorization to properly employ as well as pay this individual. The lack of an appropriate work permit can subject the company to substantial penalties, including potential liability for violation of status. In these cases, an eligible party must first prepare and file the appropriate visa application with the correct governmental entity to obtain the work permit. In the U.S., the organization responsible for these procedures is the U.S.C.I.S. Since the contents of each visa application differs based on which classification an individual is applying for, a small business owner should consult a specialist to ensure that they procure the appropriate visa type that provides the proper work authorization for a foreign worker. Next, once an application is submitted and the governing body approves the visa, the party must then finalize the documentation at their respective home country’s consulate or embassy. This means that the foreign individual must usually make an appointment with their local consulate’s office to finalize the work authorization procedure prior to entering the United States. Consequently, since the length of a visa differs greatly based on the anticipated time frame that the individual will be performing the paid services in the U.S., it is crucial that a business owner is aware of the time limitations and that they apply for the correct type of visa classification that correlates to the requisite time period. Since many of these processes are time consuming, certain countries, such as the U.S., have created “expedited” or other premium processing options that may be available to speed up the visa approval process and provides a decision within a set time. Furthermore, with the rise of social media and email marketing as a chief or primary marketing mechanism for most small business, it is important to understand some legal matters related to these actions as they apply to small businesses. For example, there exists the Controlling the Assault of Non-Solicited Pornography And Marketing (CAN-SPAM) Act of 2003 referred to as the “Anti-Spam” law. This legislation created national standards for commercial e-mail communications and is regulated by the Federal Trade Commission (FTC). As a result, this Anti-Spam law governs mass emails sent to individuals. This legislation is applicable when a small business sends an email mailing to their existing customers as well as when the digital correspondence is sent to target potential customers. These rules aim to distinguish between “opt-in” and “opt-out” procedures, including informing the recipients on the procedure to “opt out of receiving future email” as well as “honor[ing the] opt-out requests promptly.” There are also other requirements such as mandating that messages include a “valid physical postal address” as well as including language indicating that the email is an “advertisement” without the use of “deceptive subject lines” or “misleading header information.” Finally, as we previously explored, it is essential to include a disclosure whenever a paid sponsored post is used by a business, especially when the post involves a third-party endorser. This requirement exists due to the public nature of the statement (the social media post) and the existence of a business relationship (whether in kind or paid) between the parties. Coincidentally, similar to email business communications, all paid social media posts, testimonials and endorsements all fall under the regulatory authority of the FTC. In these cases, an explicit disclosure is required by the posting party, whether the disclosure is written, auditory or in both mediums. While there is no specific language requirement for an influencer’s disclosure statement, the FTC states that it must contain “simple and clear language.” The statement must also be made “in the same language as the endorsement itself.” For example, potential terms that may be utilized include “advertisement,” “ad,” “sponsored,” “ambassador,” “paid,” or “partner,” as well as incorporating disclosure hashtags such as “#ad,” “#partner,” or “#sponsored.” This disclosure recommendation applies to any recorded videos, such as those distributed on live platforms such as YouTube, during any live online streams such as those on Twitch as well as for all non-static social media posts, including Instagram Stories in addition to Snapchat posts. Overall, there are a variety of legal factors that small business owner should be aware of and consider prior to commencing business as well as when operating an on-going enterprise. As discussed, the above are just a few select issues that proprietors need to be aware of and must consider when operating a company. These are in addition to many others that have been explored in prior articles. For a further explanation, please contact an attorney specializing in the field. This article is not intended as legal advice, as an attorney specializing in the field should be consulted. © 2022 The Jacobson Firm, P.C
02-15-22 – JUSTIN M. JACOBSON SPOKE AT A WEBINAR ON SOME COMMON LEGAL PROTECTIONS FOR SMALL BUSINESS OWNERS HOSTED BY THE SMALL BUSINESS UNIVERSITY ONLINE
(New York, NY) – Justin M. Jacobson recently spoke at a webinar on “Some Common Legal Protections for Small Business Owners” hosted by the Small Business University as part of Small Biz Expo 2022. This webinar explored various legal protections available for existing and prospective small business owners. This discussion included information about the use of business entities such as LLCs and corporations, intellectual property protection of a businesses’ assets utilizing trademark and copyright law, the protection of company’s “trade secrets,” the benefits of contracting with third parties as well as an exploration of some employment and immigration legal considerations.
Some Intellectual Property Law Considerations When “Minting” An NFT
By Justin M. Jacobson, Esq.
The current buzz in the entertainment, sports, gaming, fashion, and art worlds as well as in other lifestyle, business, and technology areas are the “metaverse” and “non-fungible tokens” known as “NFTs.” However, it is crucial that an individual or company attempting to launch or “mint” their own NFT or any associated blockchain collection or token is aware of all the relevant legal considerations related to this business transaction. While there are many pertinent ones, including those focused on securities law, tax and other financial regulatory matters, this article will solely explore a variety of relevant intellectual property protections and considerations. This includes examining the benefits of copyright law, trademark law, and the drafting of proper licensing terms related to the ownership and usage of the digital asset. This piece also explores potential ownership rights monitoring and enforcement efforts that a project owner or a NFT purchaser might undertake to protect their virtual asset.
Intellectual Property Law and NFT CreationWhile the U.S. government and others around the world are still determining how to best regulate and to effectively tax various NFTs and other associated blockchain “assets,” such as cryptocurrencies and select NFT projects; another paramount legal consideration is the intellectual property rights in the associated digital art as well as matters related to the underlying ownership rights in the specific NFT or other digital blockchain linked asset. Consequently, when a party is creating their own NFT project, whether a single token or an entire multi-piece collection, it is crucial to ensure that the intellectual property related to the project is properly cleared, protected, structured, and the ownership rights are expressed in writing, in order that that a purchaser is fully aware of what they do and do not receive when purchasing a specific cryptotoken.
Trademark of NFT Collection Name or Company Name for Metaverse Inclusion or NFT digital itemsAnother beneficial legal protection for an NFT owner is the usage of trademark law. Similar to other public identifiers, such an artist or performer’s name, a gamer-tag or a band name, an NFT collection name as well as an existing company or a new brand name can receive trademark protection. This protection might apply to a particular project or collection’s name or logo as well as for a company’s name, logo, color, slogan, or hashtag in a variety of digitally focused business categories and goods. This includes potentially applying for protection for digital assets and NFTs, for downloadable virtual goods, or even for retail stores featuring specific virtual goods. In fact, this has become a new trend with both existing NFT projects as well as for established brands applying for trademark protection in the metaverse and in other digital token-related categories, including McDonald's. Additionally, the retail store Saks applied for protection for its brand name “SAKS” in Class 009 for “digital media, namely, digital collectibles, digital tokens, non-fungible tokens (NFTs) and digital art.” (U.S. Serial No. 90/789,965). Similarly, sportswear company, Nike who had previously activated in the “metaverse” with games such as Roblox, has also applied for protection for its brand name. This includes the company submitting trademark applications to protect its name, “Nike” as well as for its “swoosh” logo (U.S. Serial Nos. 97/095,855 and 97/095,944) in the metaverse. The company has applied in several international classes, including Class 009 for “downloadable virtual goods, namely, computer programs featuring footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories for use online and in online virtual worlds,” in Class 031 for “entertainment services, namely, providing on-line, non-downloadable virtual footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories for use in virtual environments,” as well as in Class 035 for “retail store services featuring virtual goods, namely, footwear, clothing, headwear, eyewear, sports bags, backpacks, sports equipment, art, toys and accessories for use online; on-line retail store services featuring virtual merchandise, namely, footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories.” The brand has gone even further by applying for trademark protection in other IP assets such as its marketing slogan, “Just Do It” (U.S. Serial No. 97/096,236) as well as for another one of its clothing brands, the “Jordan” brand (U.S. Serial No. 97/096,950) in similar classes. Additionally, a well-known NFT project, “Bored Ape Yacht Club” has applied for protection in a variety of classes for its project name including in Class 016 for “digital collectibles; digital collectibles sold as non-fungible tokens,” in Class 035 to “maintain and record ownership of digital illustrations; maintain and record ownership of digital illustrations represented by non-fungible tokens; providing a website featuring an online marketplace for exchanging digital collectibles” and in Class 045 for “online social networking services provided through a members-only website; computer services, namely, creating an online community for registered users to access a collaborative graffiti board” (U.S. Serial No. 90/739,977). In addition, the same owners have applied for protection of its BAYC logo in several classes for various merchandise such as “jewelry,” “hats,” t-shirts,” “skateboards, and “plush toys.” (U.S. Serial No. 97/015,931) Similarly, another highly successful project, “Cryptopunks” has also applied for protection for various classes for its NFT collection name. (U.S. Serial No. 90587519) In addition to applying for protection in an NFT project or collection name, proper policing of an existing brand name and other protected IP is crucial for a new company starting in the space as well as for an existing venture expanding into the sale of digital assets and collectibles or other metaverse-related services or products. This means that individuals and businesses must monitor any existing NFT usage related to their company or product name for any potential infringing or other unauthorized use of a protected asset. In fact, there is an existing dispute related to the usage of a protected product name. Currently, the owners of “Birkin” are in an on-going dispute with the creators of the digital “Meta Birkin” NFT project related to the unauthorized usages of their protected trademark in “Birkin” (U.S. Reg. No. 2,991,927).
Copyright Protection For NFT Designs And CollectionsFinally, as with any created work that is fixed in a tangible medium of expression, an NFT design or a series of avatars or digital artwork pieces may be eligible for copyright protection. Since an NFT design is fixed in a digital file (i.e., a JPEG file), such as a “profile picture” (PFPs) NFT, a single image or a set could be potentially submitted to the U.S. Copyright Office for copyright registration for the created art or for a series of images. There are many benefits that copyright registration affords the owner, including protecting against any infringing usage of the protected imagery and permitting the party to file a copyright infringement claim in U.S. federal court. Registration of a work can also be useful in policing any unauthorized usage or sales containing the image with social media platforms as well as permits the utilization of U.S. Customs and Border services to impound and stop any counterfeit goods that feature the protected design from entering the marketplace. Overall, as the NFT craze continues to build and as more companies and brands invest as well as build into the “metaverse;” legal protection and structuring will only become more important. Therefore, it is imperative that any party operating in the space understand and properly approach the space, including protecting themselves and their creative assets as well as clearly defining a purchaser’s rights in their acquired digital asset. This article is not intended as legal advice, as an attorney specializing in the field should be consulted. © 2022 The Jacobson Firm, P.C.
02-09-22 – JACOBSON GUEST LECTURES FOR DREXEL UNIVERSITY’S BUSINESS OF ESPORTS CLASS
(New York, NY) – Justin M. Jacobson was a guest lecturer for the Business of Esports class at Drexel University, which is part of their BSBA in Esports Business program. While speaking to the class, Justin explored his trajectory from law school to practicing entertainment and esports law as well as discussed, his esports legal and business industry experience. He spoke about his day-to-day role as an esports attorney working with professional esports players, streamers, content creators, casters, and other gaming personalities. He also highlighted some important contractual clauses that a professional gamer or other gaming talent must be aware of. Finally, he provided some insight on legal matters related to player rights as well as “name and likeness” considerations.
02-02-22 – JACOBSON GUEST LECTURES FOR NORTHWOOD UNIVERSITY’S ESPORTS EVENT MANAGEMENT AND PRODUCTION CLASS
(New York, NY) – Justin M. Jacobson was a guest lecturer for the Esports Event Management and Production class at Northwood University. While speaking to the class, Justin explored his past esports industry experience, including his day-to-day role as an esports attorney working with professional esports players and gamers, streamers, content creators, casters, coaches and other gaming talent. He also highlighted some important legal and business considerations a company or an individual should be aware of when operating and managing an esports event. In addition, he provided some insight on legal matters related to esports tournament and event licensing from game publishers and developers.
12-03-21 – JACOBSON GUEST LECTURES FOR SEVERAL UNIVERSITIES ON ESPORTS BUSINESS AND LAW
(New York, NY) – Justin M. Jacobson was a guest lecturer at four different colleges over the past few months. This includes speaking at an esports marketing class at Seneca College in Canada. He also was a guest lecturer for esports students at Sacred Heart University in Connecticut where he discussed the esports business and law. He also explored the intersections of fashion, entertainment, and the gaming world. Justin then spoke at the La Salle University about his experience as an esports attorney. Most recently, Mr. Jacobson engaged with esports marketing and business students at Harrisburg University about esports law and the role an esports attorney plays in the esports business ecosystem. During all of these speaking engagements, he answered questions and discussed matters related to the esports business and law field, including on NFTs, digital collectibles and pitfalls that professional games may encounter.
11-08-21 – Jacobson hosts “Professional Job In Esports” information session during SIEGE2021 hosted by Georgia Game Developers Association
(New York, NY) – Justin M. Jacobson recently hosted an information session focused on “Professional Jobs in Esports” as part of the SIEGE2021, a conference hosted by the Georgia Game Developers Association. This webinar explored the various professional careers in the esports and competitive gaming world. This includes looking at the variety of jobs that exist as a professional gamer as well as in other esports businesses such as esports teams, event organizers and game developers. The session continued by describing many of the growing other professional occupations that are now servicing the esports world, including esports attorneys, accountants, financial advisors, and other career professionals who are now working in the esports and professional video game world.
Enjoy the full information session below.
Trademark Law Update: The Trademark Modernization ActIn March 2020, Congress passed the Trademark Modernization Act of 2020 (“Trademark Modernization Act”). Depending on which side you sit on, this was either a great step forward or backward for trademark owners. If nothing else, this tightens up the practice of registering and keeping registered trademarks; and, aims to prevent those who are merely claiming rights to goods or services which they are not actually providing which may prevent other rightful users from obtaining protection. As a result of the Trademark Modernization Act, the United States Patent and Trademark Office (U.S.P.T.O.), the government agency responsible for administering registered trademarks in the U.S., have instituted proposed rulemaking related to these changes. These suggested alterations include ex parte proceedings to cancel unused registered marks which could be a way to clear out some inappropriate registrations. Expungement proceedings are also proposed which would allow third parties to request the cancellation of some or all of the goods and/or services covered by an existing registration when the owner is not actually using the mark for the specified goods or services. Third parties may be able to request a re-examination proceeding under the proposed new procedures. That will subject an existing trademark holder to an inspection regarding their actual mark usage. This includes an expansion to permit interested parties to file Letters of Protests on additional grounds than previously existed, including for conflicting prior trademark uses as well as introducing evidence that a mark is not actually in use for the identified goods or services. Finally, under the proposed rules, “applicants (excluding Madrid Section 66(a) applicants) and registrants will be required to respond to office actions within three months.” That means that the response period to an Office Action Letter will be shortened from six months to three months which requires an owner to quickly respond to prevent the loss of their existing application or registration. These new procedures could go into effect before the end of the year. This reminds everyone to be careful of the claims made in trademark applications and to avoid fiction when dealing with the U.S.P.T.O. This is especially true when claiming a brand in goods or services that an owner is not actually using or intending to use as these could cause an existing application or registration to be cancelled or otherwise prevented. This article is not intended as legal advice, as an attorney specializing in the field should be consulted. (C) 2021 The Jacobson Firm, P.C.
10-06-21 – Jacobson Acts As A Panelist For “They Aren’t Playing Games: The Growth, Challenges and Legal Issues in Esports” Panel As Part of PLI’s Sports Law Program
(New York, NY) – Justin M. Jacobson recently provided insight on “They Aren’t Playing Games: The Growth, Challenges and Legal Issues in eSports” panel as part of the Practising Law Institute’s (PLI) Sports Law 2021 program. In fact, Justin was joined by world-class esports and sports medical doctor, Dr. Melita Moore. This panel explored the various legal issues related to the esports world as well as explored information on advising professional gamers, streamers, and content creators. The panel discussed the growth of esports globally as well as examined a multitude of legal challenges that a professional esports athlete might encounter, including proper brand and trademark protection, visas and immigration, and player and sponsorship contract negotiation matters. It finished by exploring future of esports and gaming law, including the use of NFTs and other digital collectibles in esports and gaming space and touched on how esports will continue to grow at the collegiate, high school and recreation levels.
JEFFREY E. JACOBSON NAMED SUPER LAWYER AGAIN IN 2021
(New York, NY) – Jeffrey E. Jacobson, President of The Jacobson Firm, P.C. has been selected for an eighth year in a row as a 2021 Super Lawyer. In this role, Mr. Jacobson will be listed in the New York Times Magazine as well as on the “Super Lawyer” website under Intellectual Property. Only 5% of the attorneys in the New York Metro area are selected to be listed with Super Lawyers. For over three decades, this publication has been regarded by both the profession and public as the most credible and definitive guide to legal excellence in the United States. Super Lawyers select attorneys using a patented multiphase process consisting of peer nominations and evaluations based on 12 indicators of peer recognition in addition to professional achievement to receive this award.
06-30-21 – JACOBSON FIRM ATTORNEYS JUSTIN M. JACOBSON, AND PABLO G. VELEZ SPOKE ON A PANEL ON IMMIGRATION, COPYRIGHT AND TRADEMARK LAW MATTERS FOR ESPORTS TEAMS, PROFESSIONAL GAMERS AND STREAMERS HOSTED BY RITUAL MOTION AND COPE
(New York, NY) – The Jacobson Firm’s lawyers Justin M. Jacobson and Pablo G. Velez recently spoke on a panel titled “Esports Business & Law Information Session: A Look at Visas, IP Law & Tax Matters for Professional Gamers, Streamers and Teams” hosted by Ritual Motion and Coalition for Parents in Esports (COPE). This webinar explored various visa and immigration law concepts related to the esports and professional gaming industry. This discussion included information about visas and immigration for professional gamers, coaches and esports organizations as well as examined some potential evidence that might be beneficial when preparing a visa application. The panel also looked at the benefits of copyright and trademark protection as well as explored how gamers, streamers, content creators and esports teams are currently utilizing trademarks for brand protection. This panel can still be seen here.
05-28-21 – Jacobson Acts As Panelist For “Esports and the Blockchain: Buzzwords or Innovation?” Panel As Part of the 2021 Inven Global Esports Conference (IGEC)
(New York, NY) – Justin M. Jacobson recently provided insight on “Esports and the Blockchain: Buzzwords or Innovation?” panel as part of the 2021 Inven Global Esports Conference (IGEC). Justin was joined by others including moderator, Freya Fox as well as Co-Founder of Digital Collectibles Inc., Mark Donovan and the COO of Gen.G Esports, Arnold Hur. This panel explored how competitive gaming and esports can make use of blockchain technology and non-fungible tokens (NFTs). The panel also discussed various successful esports block chain activations in addition to how some of the gaming world could incorporate and benefit from cryptocurrency as well as NFTs.
A Quick Look at Social Media Disclosures for Influencers
By Justin M. Jacobson, Esq.Today’s entertainment, sports, music, and gaming worlds are dominated by the rise of influential celebrities and personalities commonly referred to as “influencers.” Many of these influencers operate in the physical space as well as within the digital metaverse and social media worlds. In fact, due to the rise in popularity and influence upon their fans and communities, many top brands and companies have begun engaging these personalities, including for digital promotion, marketing, sponsorship, in addition to endorsement opportunities. Some of these people are earning substantial sums for posting about a product on their social media, including on Instagram, Twitter, or Tik Tok; or, for utilizing a brand partner on a social streaming platform, such as on Twitch, YouTube, or Facebook Gaming. These types of influencer marketing initiatives are generally operated by a brand in an effort to engage with the celebrity’s followers in an attempt to have their fans become aware of or customers of the sponsoring product. However, as a result of their public nature and the existence of a business relationship (whether in kind or paid), the public statements made by influencers fall under the regulatory authority of the Federal Trade Commission (FTC) in the U.S. In particular, the FTC is the American regulatory agency responsible for establishing policies to govern these types of individual’s actions. Specifically, Section 5 of the FTC Act titled the “Use of Endorsements and Testimonials in Advertising” governs and is applicable to an influencer’s social media statements, including those made in a posted video or while on stream. (15 U.S.C. § 45 (1914)) This regulatory section outlines the “general principles” used for “evaluating endorsements and testimonials” as well as those analyzed when determining whether or not a specific public “endorsement or testimonial” made by a party is “deceptive.” As a result of the growing usage of influencers in public marketing campaigns, the FTC released guidelines that are applicable to social media and streaming influencers, “Disclosure 101 for Social Media Influencers.” This document lists “the various ways that an influencer’s relationship with a brand would make [a] disclosure necessary.” For instance, the statute requires that any post or other public statement made by an influencer is true and that the comment “reflect[s] the honest opinions, findings, beliefs, […] of the endorser.” This means that the party cannot make a “false or unsubstantiated” claim about the product or service that they post or otherwise endorse. Additionally, if an influencer “endorse[s] a product through social media,” they must “make it obvious” to the consuming public that a “relationship with the brand” exists. This means that the personality must publicly disclose the existence of a sponsorship relationship in cases where the influencer has a “material connection” to the brand. A “material connection” may be found when a “personal, family, employment or financial relationship” exists between the influencer and the posted product. This means that the FTC requires a public disclosure, even if the influencer only receives “free or discounted products or services” from the company. Furthermore, when a material connection exists, a disclosure is also required by an influencer even if they are just “tagging” a company in social media because the individual’s actions could be seen as a public endorsement of the product. While there is no bright-line rule for how and what a social media or streaming “disclosure” must contain, the FTC has articulated some guiding principles within the “Disclosure 101 for Social Media Influencers” document. For instance, an influencer’s disclosure must be in a position that it is not “hard to miss.” This could include incorporating the required language within the “endorsement message itself,” such as the influencer placing it in the body of the social media post, listing it (“#ad” or “#sponsored”) in the video content or in the livestream’s title. Additionally, if the influencer’s endorsement is included in a “picture on a platform like Snapchat” or is inserted in a non-static social media medium, such as “Instagram story” or other short-lived format; then, the relevant disclosure must be “superimpose[d …] over the picture” to ensure that “viewers have enough time to notice and read it.” Similarly, if an endorsement is made in an audio-visual work such as a video posted on YouTube, then the required disclosure must be inserted in the actual video content and “not” just included in the video’s description. Furthermore, if a product testimonial is made on or during a live stream, such as during a Twitch broadcast, any required disclosure statement must be repeated “periodically so [that any] viewers who only see part of the stream” and tune in later will hear and receive notice of it. Another FTC suggestion is for an influencer to make any required disclaimer in both audio and written form in case some viewers “watch [the content] without sound.” While there is no specific language requirement for an influencer’s disclosure statement, the FTC states that it must contain “simple and clear language.” It also must be made “in the same language as the endorsement itself.” For example, when an influencer creates a social post, they may use and include terms such as “advertisement,” “ad,” “sponsored,” “ambassador,” or “partner,” as well as use hashtags such as “#ad” or “#sponsored.” In addition, some products may also require another disclaimer in addition to this required disclosure. For instance, if a person is promoting a product that contains nicotine, such as tobacco or e-cigarettes; then, an additional disclosure stating that the product contains nicotine is needed. This means that an influencer who works with a sponsoring e-cigarette company may be required to disclose the existence of the sponsorship in a social media post as well as include a disclaimer regarding the product’s actual contents (that it contains nicotine). In conclusion, since the FTC governs public testimonials and endorsements made by an individual, it is essential that an influencer only endorses products that they have actual “experience” with. This means the individual should not fabricate claims about a product that “require proof the advertiser doesn’t have.” Therefore, it is prudent that the personality does not say something is great when it is not or make other unsubstantiated claims about a sponsor’s item or service. As is evident from the above, it is imperative that an influencer discloses any existing business relationship with a sponsor that they post or otherwise promote on their social media or during their live stream, even if they receive the item for free. The failure to include the legally required disclosure could subject the influencer as well as potentially the sponsoring brand to potential liability. This article is not intended as legal advice, as an attorney specializing in the field should be consulted. © 2021 The Jacobson Firm, P.C.
04-27-21 – JEFFREY E. JACOBSON, JUSTIN M. JACOBSON, AND PABLO G. VELEZ ALL SPOKE AT WEBINAR ON VISA AND IMMIGRATION ISSUES FOR MUSICIANS AND MUSIC MAKERS HOSTED BY THE GRAMMY’S MUSICARES
(New York, NY) – Jeffrey E. Jacobson , Justin M. Jacobson, and Pablo G. Velez recently all spoke at a webinar on “Visas and Immigration for Musicians & Music Makers” hosted by the National Academy of Recording Arts and Sciences’ (NARAS) Musicares’ educational program. This webinar explored various visa and immigration law concepts related to the music industry. This discussion included information about visas and immigration support during COVID-19 as well as national and international policy and renewal changes under the new administration.
04-23-21 – JUSTIN M. JACOBSON JOINS THE ESPORTS RESEARCH NETWORK
(New York, NY) – Justin M. Jacobson was approved to join the Esports Research Network. As an Adjunct Professor at University of North Carolina Wilmington, Justin will be providing his unique insight on the professional gaming world with dozens of other industry professionals and academics from across the world. The Esports Research Network is a collaboration of various professionals fostering interdisciplinary research on the emerging phenomenon of esports. The goals of the Esports Research Network are to gain rigorous insights into esports, foster the sustainable growth of esports, shape the role of esports in the society and translate this knowledge to obtain cognition for the digitized world society is growing into. For additional information, visit https://esportsresearch.net.
An Introduction to NFTs in the Esports and Gaming Worlds
By Justin M. Jacobson, Esq.Today’s entertainment, sports, art, esports and gaming industries are buzzing about NFTs or “non-fungible tokens.” This includes musicians earning millions of dollars through releasing their own NFTs, professional athletes launching their own NFT companies, and the trending NBA Top Shot taking over social media and press outlets everywhere. In fact, there has also been a rapid expansion and usage of NFTs in the entertainment and sports collectibles market, the art world and most recently in the esports and gaming space. This might include utilizing NFTs to secure rights to a particular piece of artwork, an “in-game” digital character or a “skin,” a digital “racing horse,” or even a video “moment” or other highlight of a professional athlete or wrestler. An NFT is a type of cryptographic token that is only one “original” copy that cannot be replicated or otherwise divisible no matter what. In fact, NFTs are “coded to have unique IDs” and underlying “metadata” that another token cannot reproduce which is where much of the value lies. This unique crypto token is managed on a “blockchain,” which acts as an official transfer ledger to trace and delineate the ownership and the full transaction history of an associated NFT. A unique feature of an NFT is the ability to be easily transfer it from one owner to another through the existing blockchain technology. Generally, when a user earns an “in-game” item or any other digital asset, it is usually difficult to assign, trade, transfer or otherwise sell the item; however, an NFT solves this problem as the digital item can now be easily managed and transferred through a secure platform, such as a “Trust Wallet.” The owner’s asset can be traded or sold in various “marketplaces,” such as OpenSea and the Worldwide Asset eXchange (WAX). Two dominant forms of NFTs in today’s entertainment and gaming marketplaces are “fully digital” NFTs as well as those that exist as digital “placeholders” for actual “real world assets,” such as a painting or a signed jersey. In some cases, such as in the entertainment world, an “NFT Drop” might actually be a combination of both of these types. For example, the token might be for a purely digital item such as a digital song or character “skin” playable or usable in-game or through the purchaser’s digital “wallet” as well as those NFTs that act as a digital “placeholder” for a signed item, a concert ticket or some other fan “experience” that is also managed in the owner’s “wallet.” There currently exists established marketplaces such as CryptoArt.io and SuperRare to purchase and sell artwork as well as other NFTs related to unique physical memorabilia such as NFL player Rob Gronkowski’s limited edition “digitally hand-signed” NFTs, Pokémon cards, stamps, digital artwork, autographed items, virtual and physical concert tickets, songs and even unique “in-game” items such as a limited edition or unique weapon, avatar, sticker, badge or anything else that is earned or purchased within a particular gaming title. This means that existence of an NFT permits the item purchaser to acquire “digital ‘collectible’ versions of a record” or other “fan experiences (either looks backstage or during the artistic process itself), all of which the buyers could ‘own,’ sell, display, [or just] revel in, how cool it is” to own this exclusive item. As a result of the existence of the fully “digital tradeable tokens” as well as “hybrid” NFTs, many traditional entertainers, sports leagues, professional gaming entities and creative artists are starting to offer them for sale. For instance, some companies have created “branded NFTs” that are similar to traditional physical collectibles but are now a fully digital version. In fact, some of these have been extremely successful, such as the recent Kings of Leon album that generated $2 million from its sale. The musical artist Grimes sold nearly $6 million dollars’ worth of a “one-of-a kind video” as well as sold other “short videos.” EDM producer, 3LAU made over $11 million through the sale of “digital-tokens” exchangeable for “special edition vinyl 3LAU albums, unreleased music [and other] special experiences.” The NBA has licensed its various basketball game highlights to Dapper Lab to create the NBA Top Shot product, which operates with multiple levels of rarity for specific NFTs (a highlight) with different market values based on the different “levels” and scarcity of the “Moment” in the marketplace, including a LeBron James Top Shot that recently sold for “over $387,000.” There also have been some other unique athlete driven NFTs such as Sorare’s digital soccer cards as well as MLB Champions as well as Topps’ digital baseball cards. In fact, one of Sorare’s digital trading cards sold for $65,000 and is an example of how sports, esports and other entertainment properties can expand their reach and further diversify their revenue streams. With the success of NFTs in other entertainment and sports fields and with the concept of digital items already engrained in the gaming world; these digital assets are prime for growth and expansion in esports. In this regard, an NFT could apply to any “in-game” purchased item such as any collectible, skin, weapon, “champion,” “hero,” “card” or any other in-game playable “character” or avatar. For example, a highly successful NFT is CryptoKitties, which is administered by Dapper Labs and permits a user to “breed and trade digital kitties using Ethereum-based smart contracts.” This was so successful that it led to a collaboration with Warner Music for the creation of a “rock-inspired” CryptoKitties NFT line. Another unique gaming NFT use is that of Axie Infinity, the creator of a “digital pet universe,” wherein an individual purchases “larva” and then evolves and grows the creature over time. The creation of this digital metaverse caused a company to spend $100,000 to purchase 88 digital “plots” within the Axie Infinity universe, which has many unique available monetization avenues. There has also been the creation of a sleuth of mobile gaming apps that permit the transfer and sale of various in-game items to other players, such as World of Ether, God Unchained, Chain Clash, and Esports Fight Club. Similarly, some esports content rightsholders, such as game publishers and esports organizations, are exploring the integrations of NFTs into their consumer offerings. For example, a unique highlight of an iconic League of Legends match or play owned by Riot Games could be “minted” and sold to the consuming public. There are also opportunities for digital player cards, similar to those that currently exist in other sports, such as unique “1 of 1” or other limited-edition collections of a professional gamers, streamers or content creators. Some esports teams, such as 100 Thieves, Misfits Gaming, and Simplicity Esports have begun exploring incorporating NFTs into their business through the use of digital “gamer” cards and potentially with creating NFTs linked to iconic images or other photographs that the esports organization owns rights to as well as for purely virtual merchandise. Additionally, previously, esports organization, OG Esports “minted” their own NFT for a 2018 Dota championship ring digital collectible that was available for purchase by fans. Furthermore, esports organizations, Natus Vincere (Na’Vi) and Team Heretics have each launched their own “fan” digital token available for purchase by the team’s supporters. For example, a fan can purchase of one of these digital tokens can earn “exclusive digital and real-life rewards” from the team. More recently, esports organization Sentinels minted and released their own NFT to commemorate their “Valorant Masters Crown.” ESE Entertainment also announced the creation of a “Virtual Pitstop” tied to its new digital “motor sports simulation platform” for the creation of “animations [and] skins,” among other computerized items. Finally, top gaming streamer and content creator Turner “Tfue” Tenney just released his own limited edition NFT that included rights to “3 Bobblehead NFTs that bring Tfue to life.” As more and more dominant content owners in the esports and gaming space begin understanding and further utilizing NFTs as part of their business model, the more legal and business considerations come into play. It will be interesting to see how professional gamers as well as more esports organizations, game publishers, event organizers and any other individuals who own rights to material begin in esports and competitive gaming start offering NFTs or other blockchain linked assets. This article is not intended as legal advice, as an attorney specializing in the field should be consulted. This article was originally posted on The Esports Observer. © 2021 The Jacobson Firm, P.C.
04-12-21 – Jacobson Acts As A Panelist For “The Future of Esports and Gaming Law” Panel As Part SULC Esports Summit 2021
(New York, NY) – Justin M. Jacobson recently provided insight on “The Future of Esports and Gaming Law” panel as part of the Southern University Law Center’s (SULC) Esports Summit 2021. In fact, Justin was joined by others including the esports professor at Johnson S. Smith University, Dr. Bernadette Lawson-Williams and esports legal researcher, Nepomuk Nothelfer. This panel explored the various legal issues related to the current esports scene, including as it applies to gaming content creators, streamers, and professional gamers. The panel discussed the future of esports and gaming law, including the use of NFTs in esports and gaming space and how esports player contracts may change over the years.
Check the full panel below.
03-27-21 – Jacobson Acts As A Panelist For The “Esports Connection to In-Demand Job Skills” Panel As Part Of Ritual Motion’s College Esports Fair
(New York, NY) – Justin M. Jacobson recently provided insight on the “Esports Connection to In-Demand Job Skills” panel as part of Ritual Motion’s College Esports Fair. In fact, Justin was joined by others including individuals from Nerd Street Gamers and PlayVS. This panel explored the role of esports and gaming in developing desirable and transferable skills in the job market. It looked at the potential career opportunities available in esports and the professional gaming world as well as the “hard” and “soft” skills that gamers learn that can translate to their future careers.
03-26-21 – Jacobson Acts As Moderator For “Working with Partners – Panel: Maximizing Sponsorships in the Collegiate Ecosystem” As Part Of The Esports Business Summit University 2021
(New York, NY) – Justin M. Jacobson recently acted as the moderator for the “Working with Partners – Panel: Maximizing Sponsorships in the Collegiate Ecosystem” as part of the Esports Business Summit University 2021. The panel consisted of individuals from Nerd Street Gamers, Collegiate Star League Esports, HyperX and Barnes & Noble College. This panel explored the growth of sponsorship in collegiate esports and the potential avenues available to brands and companies looking to activate in the collegiate esports space.
03-24-21 – Jacobson Acts As A Panelist For The “Content Creation and Esports: An Introduction to the Future of Gaming” Panel As Part Of FIU Law’s SEFA First Annual Symposium
(New York, NY) – Justin M. Jacobson recently provided insight on the “Content Creation and Esports: An Introduction to the Future of Gaming” panel as part of the Florida International University Law’s Sports, Entertainment, Fashion, and Art Law Society (SEFA) First Annual Symposium. In fact, Justin was joined by others including the Lead Counsel of AR/VR for Facebook. This panel explored the various legal and business matters related to gaming content creators, streamers, and professional gamers. The panel discussed the potential evolution of esports and gaming, including the inclusion of AR/VR as well as the use of NFTs in esports and gaming space.
A Look At NFTs in the Art, Entertainment, Music, Sports, Esports and Gaming Worlds and the Metaverse
By Justin M. Jacobson, Esq.NFTs or “non-fungible tokens” are all the buzz in today’s entertainment, sports, art, esports and gaming industries. This includes musicians earning millions of dollars through releasing their own NFTs, celebrities like Tom Brady and Jay-Z investing (and launching) in NFT distribution companies, and the trending NBA Top Shot taking over social media and press outlets everywhere. In fact, there has also been a rapid expansion and usage of NFTs in the entertainment and sports collectibles market, the art world and most recently in the esports and gaming space. This might include utilizing NFTs to secure rights to a particular piece of physical artwork and digital pieces, an “in-game” digital character or a “skin,” a digital sneaker from Adidas or Nike, or digital art "camo" print from BAPE, or even a video “moment” or other unique collectible from current or legendary professional athletes and teams, such as NFL and NHL athletes and even WWE wrestlers. Professional soccer superstar Lionel Messi has even agreed to take a portion of his upcoming salary in his team's "crypto token." An NFT is a type of cryptographic token that is not mutually interchangeable with something else that exists. This means that there is only one “original” copy that cannot be replicated or otherwise divisible no matter what. In fact, NFTs are “coded to have unique IDs” and underlying “metadata” that another token cannot reproduce which is where much of the value lies. This unique crypto token is managed on a “blockchain,” which acts as an official transfer ledger to trace and delineate the ownership and the full transaction history of an associated NFT. In practice, this creates an automated and computerized ownership verification process and database for a specific asset which is authenticated on a “back-end blockchain” technology, such as Ethereum. Additionally, other technology platforms such as FLOW are used by Dapper Labs for the administration of its extraordinarily successful NBA Top Shot NFT. In practice, NFTs are written with a software code referred to as a “smart contract.” A “smart contract” proscribes the permissible actions for an NFT, including assisting in verifying the ownership and managing the transferability of the digital asset. Similarly, a “smart contract” could be coded to automatically allocate a portion of any the amount paid in any subsequent sale of the NFT back to the original owner. This unique attribute provides the original owner with the ability to earn income from the “secondary marketplace” for all the subsequent sales of a digital item. This means that when a creator makes or “mints” an NFT and engages in an “NFT Drop,” they are actually creating and inserting applicable “smart contract” code into an NFT to govern it. When creating these “smart contracts,” many established blockchain platforms follow the “Non-Fungible Token Standard” articulated under ERC-721, including Ethereum. In particular, the ERC-721 Token Standard governs the distribution and maintenance of non-fungible tokens. More recently, a more agile and versatile Token Standard, the ERC-1155 has been developed and is beginning to be implemented by some platforms. The new ERC-1155 is said to increase the ability to more efficiently and cost effectively transfer NFTs as this new “Multi Token Standard” permits “transferring [of] multiple token types at once [which] sav[es] on transaction costs.” Another unique feature of an NFT is the ability to be easily transfer it from one owner to another through the existing blockchain technology. Generally, when a user earns an “in-game” item or any other digital asset, it is usually difficult to assign, trade, transfer or otherwise sell the item; however, an NFT solves this problem as the digital item can now be easily managed and transferred through a secure platform, such as “Trust Wallet,” whch include both custodial and non-custodial options. The owner’s asset can be traded or sold in various “marketplaces,” such as OpenSea, Mintable, and the Worldwide Asset eXchange (WAX). This means that an ERC-721 token purchased in a marketplace is stored in a user’s associated Ethereum “wallet address” so that it can be transferred or otherwise sold at a later date by the buyer. Additionally, it is important to be aware of the proposed EIP-2981 standard related to the administration of the residual royalty payments owed to prior owners of an NFT when a subsequent transfer of the asset is initiated. A revolutionary attribute of an NFT is that one could also derive some unique value based on its current and previous owners, thereby creating an inherent value in the particular digitized asset. This is because the ownership history that is publicly available on the blockchain records provide an easily obtainable and fully transparent listing of the true NFT owners. Consequently, if a famous or other notable person owned the digital item, this might factor into a specific NFT’s value on the marketplace. An important legal consideration is what actual ownership rights the purchaser of an NFT receives from the original NFT “minter.” In these cases, the terms of an NFT are generally governed by any existing license or any other applicable “terms of service” or “terms and conditions.” This means that an NFT purchaser does not necessarily automatically have the sole and exclusive rights to all of the original content owner’s enumerated rights under § 106 of the U.S. Copyright Act. For instance, if a license does not include any “derivative” rights or the right to reproduce the NFT in a physical item, then it is fair to assume that the buyer does not receive these rights through its purchase of a specific digital asset. Accordingly, absence language to the contrary, an NFT purchaser only receives the rights listed in the transfer agreement. In some cases, this might only be the license “to display the related media in their token wallet for personal purposes only.” Moreover, the operator of the NBA Top Shot, Dapper Labs provides an alternative NFT License template that outlines rights that might be licensed to the buyer. Additionally, the current “Terms of Service” for NBA Top Shot provides the owner of an NFT “Moment” (the basketball highlight) with “the right to swap [the purchaser’s] Moment, sell it, or give it away with the actual [o]wnership of the Moment […] mediated entirely by the Flow Network.” Two dominant forms of NFTs in today’s marketplace are “fully digital” NFTs as well as those that exist as digital “placeholders” for actual “real world assets,” such as a painting or a signed jersey. In some cases, such as in the entertainment world, an “NFT Drop” might actually be a combination of both of these types. For example, the token might be for a purely digital item such as a digital song or music video playable through the purchaser’s digital “wallet” as well as acts as a digital “placeholder” for a signed item or for a concert ticket or some other fan “experience” that is also stored in the owner’s “wallet.” In practice, this means that the particular NFT’s blockchain technology permits the secure transfer of the ticket directly into the fan’s digital “wallet” or if the original party desires to sell the ticket to another individual, the NFT helps facilitate the transaction and track and payout the income generated through a “second sale” of the item. Additionally, if the NFT is programmed to, it may provide a set royalty payment directly to the original minter, the musical artist or other rightsholder such as a recording label. There are also some other legal and business benefits that NFTs provide to rights holders. For instance, the owners of a specific painting, sculpture or other artwork piece is able to list the work as an NFT to prove their ownership of it in order to prevent forgery and any other potential fraud. The usage of this technology also permits the creator to seamlessly sell their works in established marketplaces such as CryptoArt.io and SuperRare. In fact, Sotheby's just generated over $15 million through its first hosted NFT that included NFTs solely tied to digital assets as well as those linked to a digital as well as a physical art piece, including the unique "CryptoPunk NFTs". The same is applicable for unique physical memorabilia such as digital racing horses, baseball cards, Pokémon cards, stamps, jewelry, autographed items, virtual and physical concert tickets, songs and even unique “in-game” items such as a limited edition or unique weapon, avatar, sticker, badge or anything else that is earned or purchased within a particular gaming title. This means that existence of an NFT permits the item purchaser to acquire “digital ‘collectible’ versions of a record” or other “fan experiences (either looks backstage or during the artistic process itself), all of which the buyers could ‘own,’ sell, display, [or just] revel in, how cool it is” to own this exclusive item. As a result of the existence of the fully “digital tradeable tokens” as well as “hybrid” NFTs, many traditional entertainers, sports leagues, professional gaming entities and creative artists are starting to offer them for sale. For instance, some artists have created “branded NFTs” that are similar to traditional physical collectibles but are now a fully digital version. In fact, some of these have been extremely successful, such as the recent Kings of Leon album that generated $2 million from its sale. The musical artist Grimes sold nearly $6 million dollars’ worth of a “one-of-a kind video” as well as sold other “short videos.” EDM producer, 3LAU made over $11 million through the sale of “digital-tokens” exchangeable for “special edition vinyl 3LAU albums, unreleased music [and other] special experiences.” Similarly, musician Don Diablo sold an NFT with rights to an "hour-long concert" for $1.2 million. The NBA has licensed its various basketball game highlights to Dapper Lab to create the NBA Top Shot product, which operates with multiple levels of rarity for specific NFTs (a highlight) with different market values based on the different “levels” and scarcity of the “Moment” in the marketplace based on each card's serial number, including a LeBron James Top Shot that recently sold for “over $387,000” and other "Moments" selling for six figures. There also have been some other unique athlete driven NFTs such as Sorare’s digital soccer cards, NFL player Rob Gronkowski as well as MLB Champions, Topps’ digital baseball cards and MLB's highlight and memorabilia driven NFT.In fact, one of Sorare’s digital trading cards sold for $65,000 and is an example of how sports, esports and other entertainment properties can expand their reach and further diversify their revenue streams. In addition, NBA team the Golden State Warriors became one of the first U.S. professional sports teams to mint their own NFT. More recently, the New Jersey Devils were the first NHL franchise to create their own fan "NJD NFT Digital Marketplace" for its own created NFTs. Finally, NBA player LaMelo Ball has released the first ever "dynamic NFT" that has the possibility of "evolving" over time and includes access to unique perks in addition to the digital asset itself. The NFT craze has expanded to collegiate sports as Miami University has begun minting its own digital "commemorative" NFTs for their college national championships. With the success of NFTs in other entertainment and sports fields and with the concept of digital items already engrained in the gaming world; these digital assets are prime for growth and expansion. In this regard, an NFT could apply to any “in-game” purchased items such as any collectible, skin, weapon, “champion,” “hero,” “card” or any other in-game playable “character” or avatar. For example, a highly successful NFT is CryptoKitties, which is administered by Dapper Labs and permits a user to “breed and trade digital kitties using Ethereum-based smart contracts.” This was so successful that it led to a collaboration with Warner Music for the creation of a “rock-inspired” CryptoKitties NFT line. Another unique gaming NFT use is that of Axie Infinity, the creator of a “digital pet universe,” wherein an individual purchases “larva” and then evolves and grows the creature over time. The creation of this digital metaverse caused a company to spend $100,000 to purchase 88 digital “plots” within the Axie Infinity universe. There has also been the creation of a sleuth of mobile gaming apps that permit the transfer and sale of various in-game items to other players, such as World of Ether, God Unchained, Chain Clash, Esports Fight Club, and Mythical Games' and its "Blankos Block Party" title. Similarly, some esports content rightsholders, such as game publishers and esports organizations, are exploring these integrations of NFTs into their consumer offerings. For example, a unique highlight of an iconic League of Legends match or play owned by Riot Games could be “minted” and sold to the consuming public. There are also opportunities for digital player cards, similar to those that currently exist in other sports, such as unique “1 of 1” or other limited-edition collections of a professional gamers, streamers or content creators. Some esports teams, such as 100 Thieves, Dignitas and Simplicity Esports have all begun exploring incorporating NFTs into their business through the use of digital “gamer” cards and potentially with creating NFTs linked to iconic images or other photographs that the esports organization owns rights to. Previous to this, esports organization, OG Esports “minted” their own NFT for a 2018 Dota championship ring digital collectible that was available for purchase. ESE Entertainment announced the creation of a “Virtual Pitstop” tied to its new digital “motor sports simulation platform” for the creation of “animations [and] skins,” among other computerized items. Previously esports teams have also created fan crypto tokens that can be purchased or earned. Additionally, superstar gamer, streamer and content creator, Turner "Tfue" Tenney released his own limited edition NFT that included "3 Bobblehead NFTs that bring Tfue to life." Most recently, esports league operated by top esports organizations, Flashpoint minted a player-focused NFT that also included a print physical card for the purchaser. As more and more dominant content owners, especially those in the large entertainment, sports, esports and other related media world begin understanding and further utilizing NFTs as part of their business model, the more relevant legal and business considerations come into play, including the potential tax treatment of these transactions, the ownership rights of the actual IP as well as information related to Ethereum Gas Prices and associated fees. It will be interesting to see how professional gamers, musicians, athletes, celebrities and influencers as well as more esports organizations, game publishers, event organizers, recording labels, sports leagues and any other individual or company who owns rights to original material begin, if at all, offering NFTs or other blockchain linked assets. This article is not intended as legal advice, as an attorney specializing in the field should be consulted. © 2021 The Jacobson Firm, P.C.