The same week OpenSea laid off 20% of its workforce, the top NFT marketplace removed several music-themed Ethereum Name Service (ENS) domain auctions after receiving a cease and desist letter from the Recording Industry Association of America (RIAA).
The letter argued that a number of OpenSea-hosted ENS auctions were in violation of US trademark law, although not all of the domain names contain trademarked material.
OpenSea complied with the letter, continuing the centralized NFT (non-fungible token) exchange’s precedent of honoring copyright complaints.
ENS domains serve as unique website addresses, ending in “.eth.” Similar to how the internet’s Domain Name Service replaces IP addresses with strings of characters, ENS domains can be used to access websites hosted on decentralized storage solution IPFS.
They can also substitute complicated Ethereum blockchain addresses, allowing users to receive cryptocurrency via their domains. Registrations for ENS domains can be transferred by NFTs, which denote ownership and enable trading on marketplaces such as OpenSea.
In the RIAA’s letter, posted online by TorrentFreak, the trade association provides a list of .ETH domains it believes violate the 1999 Anti Cyber-Squatting Consumer Protection Act. The law prevents the creation of web domains containing trademarks with “bad-faith intent to profit.”
ENS domains have been popular of late, with 000.eth selling for $328,000 last week.
The RIAA flagged “universalmusic.eth” and “atlanticrecords.eth” as breaking the law alongside dozens more. Both ENS domains are owned by the same address, which paid $5 for each domain in 2020. They’ve also acquired a swath of domains tied to popular brands including Columbia Records, Sony Entertainment, Subpop and Capitol Records, among others.
The trade group also objected to domains titled for individual music industry executives like mitchglazier.eth and robstringer.eth, CEOs of the RIAA and Sony Music, respectively. Both domains are owned by the same blockchain address, which paid $5 and $15, respectively.
Neither name appears in the US Patent and Trademark Office database, although the owner has also registered named ENS domains for celebrity figures such as WWE billionaire Vince McMahon, Pink Floyd superstar Syd Barrett and Columbia Records CEO Ron Perry.
Jeffrey Blockinger, general counsel at Web3 startup Quadrata, told Blockworks in an email that OpenSea’s initial reaction to the RIAA letter indicates Web3 companies are “becoming aware of traditional property rights and the value their protection can add to the development of NFTs as an asset class.”
“It is encouraging to see a company in an emerging industry implement takedown procedures that appear designed to protect [intellectual property] rights in a way that reflects responsible behaviors in more traditional asset classes,” Blockinger said.
OpenSea regularly errs on the side of caution with intellectual property complaints. The NFT marketplace removed a collection of Hermes handbag digital collectibles in December following opposition from the upscale fashion company.
Earlier this year, free expression activist Jillian York asked OpenSea to remove an NFT of her face posted without her consent, and OpenSea complied.
NFTs are popular in the music industry, as streaming has made it difficult for artists to monetize their music. Snoop Dogg, BTS and Steve Aoki each released NFT collections for fans this year.
Institutional players seem to be moving toward Web3, too. Yesterday, a Universal Music Group affiliate partnered with Moonpay to allow the Bored Ape collectors band KINGSHIP fans to mint NFTs.