TBI Tech & Analysis: How producers can outfox the NFT scammers

The Masked Singer

After a recent NFT scam led to a halt in production, consultant solicitor Julian Wilkins offers his expert view on what redress is available to the show’s creator – and what steps producers can take to further secure their digital assets.

Last week, TBI reported on Seth Green, the co-creator of Adult Swim’s Robot Chicken, who revealed he had been scammed out of several NFTs, potentially putting the brakes on his upcoming hybrid live-action/animated series White Horse Tavern, after his protagonist was essentially ‘kidnapped’.

In short, Green had developed the series around characters in his NFT collection, including Fred Simian, a Bored Ape Yacht Club NFT that was to serve as the show’s leading primate.

However, after interacting with a scam website, the actor and producer, known for his work on animated sitcom Family Guy and Marvel’s Guardians Of The Galaxy feature films, reported that several of his NFTs, including Fred Simian, were stolen from his NFT wallet and sold onwards, meaning the likeness and usage of the show’s protagonist now potentially belong to someone else.

The incident, and Green’s ongoing attempts to regain control of his character, exposed just how untested the application of NFTs has so far been in the production sector and the unexpected – in this case, bizarre – hurdles that can be thrown up as the TV industry begins to explore their potential.

Julian Wilkins

Seek a propriatery injunction

Consultant solicitor Julian Wilkins, who predicts that NFTs are set to become a mainstay of media IP protection, finance and distribution, told TBI that all hope is not lost for Green, or any other creator who finds themself in a similar situation, but that it might come down to your location – and the specifics of the case.

“If you treat NFTs as a form of crypto asset then courts in certain jurisdictions such as England and Singapore have treated them as a form of property,” he explains.

“As such, Seth Green could attempt to obtain a proprietary injunction to prevent the use of the NFT rights and also seek their return. Much will depend on the facts and circumstances and what he acquired, but the codes could be regarded as a form of property to seek injunctive relief.”

Wilkins explains that similar situations have occurred with cryptocurrency thefts and that the resolution strategies applied to those incidents could help Green regain control of the abducted Fred. “There have been court actions to recover unlawfully acquired Bitcoins, so similar principles could be used to recover the scammed NFTs.”

Aside from this specific case, however, Wilkins says there are steps that producers can take to avoid falling into similar traps.

“In the world of NFTs, especially where potentially lucrative IP rights may be at stake, the NFT should be ‘wrapped’ or allied to a smart contract clearly defining what rights are being acquired, including whether it includes any underlying trademark or copyright, and confirm that the NFT for the purposes of any enforcement is treated by the buyer and seller as property.

“Also, make sure the NFT is linked to a jurisdiction that recognises NFTs as a form of property. Of course, the scammers may be anywhere in the world, but these steps would be a start. Future steps include ensuring trading in NFTs is caught by anti-money laundering laws. Crypto exchanges and traditional financial institutions handling NFT transactions should beware of their obligations for reporting suspicious activity.”

Wilkins further suggests that organisations such as the World Intellectual Property Organisation (WIPO) should “consider the formation of some form of international enforcement system against perpetrators who have unlawfully acquired control of NFTs. If it is accepted the NFT in question includes ownership of IP rights like trademark or copyright it may mean existing methods of legal redress can be used.”

While some have dismissed NFTs themselves as a fad, others are deeply committed to unlocking their potential. Fox Entertainment has formed the Blockchain Creative Labs (BCL) and a $100m ‘creator fund’, while also launching the ‘MaskVerse’, enabling viewers to trade digital assets from the Masked Singer.

Meanwhile, Banijay is exploring sales of digital assets and collectibles inspired by its shows, beginning with the Mr Bean animated series, and more Metaverse projects to come.

Despite what some may suggest, NFTs are not going away any time soon and both the language and law around them is catching up as the content industry pushes ahead with exploiting the new opportunities they bring.

But if there is one piece of advice that all can take away from this, whether you are interested in NFTs or not, it is to stay far, far away from suspicious websites.

Julian is a consultant solicitor and notary public with Wordley Partnership, as well as a founding member of mediation and arbitration practice Q Chambers. Julian contributes to the EU Audio Visual Observatory IRIS publication and lectures upon intellectual property and crypto asset issues, including for the University of Reading.