Copyright Infringement: Fair Use or Substantial Similarity

Copyright is the legal protection provided to creators of original works. It conveys exclusive rights to the creator to reproduce, adapt, publish, perform, and display the work. Copyright infringement occurs when someone else engages in the aforementioned acts without the creator's permission.

Fair use is a defense to copyright infringement, where the infringing party admits to intentionally using the protected work, but for educational purposes, parody, or social commentary.

Copyright infringement is determined by courts, and substantial similarity is the test used to decide whether infringement exists. Substantial similarity is exactly what the name suggests, how much of the protected work was reproduced and how similar is it to the original. The plaintiff has the burden of proving to the court that the defendant had access to the work and that the defendant's reproduction is substantially similar to the original.

Artist Matt Furie, the creator of the Pepe the Frog, has a history exercising legal action to protect the brand of his bulgy-eyed character. In 2017, an assistant principal at a Denton, Texas school self-published a book with a frog character named Pepe, to educate youth on conservative values. Furie threatened a lawsuit and the author settled with a list of concessions, including admitting infringement. In 2018, Furie sued alt-right TV show host, Alex Jones from InfoWars, for selling posters featuring Pepe. The lawsuit was settled for $15,000 in 2019.

Info Wars poster versus Original Pepe

Pepe the Frog was originally created by Furie in 2005 as a featured character in the "Boy's Club" comic. Since that time, Pepe has been the star of Internet meme culture and misappropriated as a figurehead in alt-right political circles. In 2021, Furie faces a new wave of Pepe infringement, this time on the immutable blockchain, in the form of NFTs.

On February 22, 2021, the Non-Fungible Pepes debuted on OpenSea earning $1.8 million in Ethereum. Backlash ensued on Twitter, prompting the project's developers to reach out to Matt Furie to get permission. However, Furie refused and the developers issued a refund. Tyler Ward, the main force behind the project, reported not knowing that the Pepe meme had an original creator. Note, ignorance is not a defense to copyright infringement.

Fast forward to August 9th, and another Pepe-themed project lists on OpenSea, the Sad Frogs District. The project quickly caught fire with total sales of $4 million. The project was even verified with the honorary blue checkmark by OpenSea. Within a few days after launch, OpenSea received a DMCA takedown request from Matt Furie's attorneys citing copyright infringement of Pepe the Frog, and the project was pulled from the marketplace. Though the developers of the Sad Frogs tweeted that they have issued a counter-notice to OpenSea, if they remain anonymous, the counter-notice is moot, because U.S. copyright law does not recognize anonymity for DMCA requests. The DMCA counter-notice must include the infringing party's name, address, and telephone number, and false statements can lead to civil or criminal penalties.

To avoid copyright infringement liability, online platforms are required to respond to DMCA takedown requests. So, before you buy your next NFT, ask yourself is it an original creation, or is it someone else's copyrighted work? If it is the latter, consider saving your ether.

UPDATE: On 8/23/2021 at 11:58am, OpenSea tweeted that the DMCA was withdrawn and the Sad Frogs District has been restored on the platform.