In today’s non shocking intellectual property news, Wizards of the Coast sent an incredibly polite cease and desist email to Magic the Gathering DAO (“mtgDAO”).
mtgDAO’s public white papers state they planned to create NFTs of Magic the Gathering cards to create a “scarcity driven NFT card economy.” mtgDAO planned to use the blockchain and NFTs to create a world in which you could play with cards if you owned one of the limited number of related NFTs. The cards would be minted and distributed accordingly by mtgDAO.
In order to be allowed to play a Wizards of the Coast card in the mtgDAO format, “players will need to show proof of ownership of an NFT for each card in their deck. In order to play the game, players will need to own both the NFT for their card and also the actual card used to play.”
Despite outright saying mtgDAO is “not creating NFTs licenced by Wizards of the Coast,” the white papers go so far as to say that mtgDAO’s eventual goal is to “just buy the Magic brand from Wizards of the Coast. mtgDAO could be the next evolution of what this game and this community is and how it is operated and controlled…” Not so fast.
A quick legal refresher, a trademark is a recognizable sign, phrase, or symbol that identifies a product or a service from anything similar. Once that trademark is registered with the United States Patent and Trademark Office (“USPTO”), the owner of the trademark has exclusive rights of use and can legally enforce such rights should another attempt to use the mark without their permission (in legal terms a “license”). A copyright, in its most basic terms, gives the owner of a creative original work, in a fixed tangible medium (paper, audio tape, video tape, etc.), the exclusive right to copy and distribute the work.
Wizards of the Coast legal counsel sent an email to mtgDAO that praised their creativity and effort, but gently informed mtgDAO that they would be unlawfully using Wizards of the Coast trademarks and copyrights. In its email, Wizards of the Coast’s legal counsel informs mtgDAO that by producing NFTs of the MAGIC cards, even though the person must own the card in person, Wizard’s copyrights are still being infringed because they have the sole right to reproduce the MAGIC card in any format. Because Wizards of the Coast is still considering a future with NFTs, an other “use of NFTs in connection with Wizards’ intellectual property is therefore strictly prohibited.”
mtgDAO continues to argue that they are not infringing any Wizards of the Coast IP rights, but are only adding an additional layer of scarcity to be able to play the MAGIC cards in a new format. Further stating "I don't know where we go from here. Wizards' position seems reactionary, but I don't currently know enough about copyright law to be confident about how a court would interpret this situation."
When one takes into consideration how common NFT rug pulls have been, Wizards of the Coast acted in their own best interests by quashing things before further progress was made. If this turned into a rug pull, Wizards of the Coast’s name, even if undeserved, would be associated to the failed project.
Good intentions or not, intellectual property rights are very well protected and doing a quick google search before creating an entire DAO never hurts.
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