• Pryor Cashman successfully defended its client, digital artist Kevin McCoy, in a case involving the world’s first Non-fungible Token (“NFT”).
• The court held that traditional legal principles govern the ownership of NFTs and dismissed all claims against McCoy and Sotheby’s.
• The court found no evidence of harm to Free Holdings’ separately created NFT based on McCoy’s sale of Quantum and its associated Ethereum token.
Pryor Cashman Wins Dismissal of Case Regarding World’s First NFT
Pryor Cashman won the complete dismissal of claims brought against its client, renowned and revolutionary digital artist Kevin McCoy, regarding his creation in 2014 of what is generally understood to be the world’s first non-fungible token (“NFT”). McCoy created his NFT in association with his digital artwork Quantum, which McCoy later sold through Sotheby’s in 2021 for $1.47 million. The case, Free Holdings Inc. v. Kevin McCoy and Sotheby’s, Inc., is one of the first in the U.S. to deal with the blockchain technology behind NFTs.
The plaintiff in the case was anonymous and sued through Free Holdings, a Canadian holding company. Its claims centered on the fact that McCoy, in 2014, had created his NFT using a blockchain known as Namecoin. McCoy later chose to preserve his original metadata using a token on a different and more modern blockchain, Ethereum. McCoy’s sale of Quantum in 2021 included the Ethereum token. Shortly prior to that sale, Free Holdings created a new NFT on the Namecoin blockchain, using the same namespace that McCoy had used seven years earlier and duplicating McCoy’s original metadata. Free Holdings then alleged that it was actually the owner of the “first-ever NFT.”
The court rejected Free Holding’s position and awarded judgment to McCoy and co-defendant Sotheby’s by agreeing that Free Holdings had not identified any harm caused by McCoys sale or duplication of metadata as well as dismissing all claims including false advertising , slander title deceptive business practices unjust enrichment etc . In particular ,the court agreed with Pryor Cashman’s arguments by stating traditional legal principles govern ownership over NFTS .
In summary , Pryor Cashmans successful defense resulted in complete dismissal of claims against their client proving traditional legal principles govern ownership over NFTS .