Makers of Magic The Gathering Threaten DAO With Lawsuit Over IP

Copyright and intellectual property issues are moving front and center in Web3 as more and more non-fungible tokens (NFTs) and decentralized autonomous organizations (DAOs) spring up around brands, books, movies, and consumer products.

In December, Hermes, the creator of the Birkin Handbag, called the MetaBirkin NFT collection an infringement on the manufacturer's trademark. Last month, Quentin Tarantino said he planned to move forward with a line of NFTs based on his hit 1994 film “Pulp Fiction,” even after Miramax filed suit against the director, citing copyright.

But it's not just handbag makers and movie studios taking issue with NFTs—Wizards of the Coast, publishers of the popular Magic: The Gathering card game, sent an email to mtgDAO saying that the DAO's intention to launch a series of NFTs based on Magic constitutes copyright infringement.

The email from Reynolds Law, the firm representing Wizards of the Coast, was sent to mtgDAO on February 4 and posted to the DAO's Twitter on February 10. Reynolds Law said mtgDAO was brought to their attention by Wizards of the Coast after reading the DAO's white paper.

Magic: The Gathering, aka Magic or MTG, was created by Richard Garfield and released in 1993, published by Renton, Washington-based Wizards of the Coast.

MtgDAO, which launched in November, said it has a similar vision used by a local game store to host tournaments, fund writers, and sponsor players using a DAO structure.

"A DAO is the primary community building tool of web3. To forbid a Magic DAO is to forbid any authentic presence in web3. Ngmi," mtgDAO wrote on Twitter.

The mtgDAO white paper said the still-to-be-launched project would center around a crypto NFT card economy governed by the DAO. The idea is to use scarcity to limit how many players of the mtgDAO NFT card game can use the same card during a game.

According to mtgDAO, players would need to show proof of ownership of an NFT for each card in their deck and be required to own both the NFT and the physical card. The NFTs are the focus of the potential lawsuit.

"You appear to be operating under the mistaken assumption," the email from Reynolds Law reads, "that the project would be legal because you would allow the reproduction of MAGIC cards in the form of NFTs only by a player who had purchased a physical card, a card on Arena, or a card on MTGO. This is not correct."

MtgDAO said it’s not creating NFTs licensed by Wizards of the Coast, only adding a layer of scarcity to create a new playing format.

"We are not building gaming software or printing copies of official cards. Games will still be played using Arena, MTGO, or tabletop with real cards,” the group’s white paper reads. MtgDAO said the NFTs will be used as a ticket to enter tournaments but added that they don't represent ownership of the copyrighted card.

Reynolds Law said Wizards of the Coast is currently evaluating plans for its own NFTs. The law firm didn’t immediately respond to requests for additional comment from Decrypt.

"To a large extent, everyone is still scrambling to sort out how NFTs, DAOs, and the Web3 ecosystem is going to fit into existing law," Seattle attorney John Bender of Corr Cronin, who is representing mtgDAO, told Decrypt. "I can tell you that the idea behind the concept came about based on a genuine desire to create a community, enhance game play, and have fun in a non-infringing way using NFTs and blockchain, and it generated significant interest. Wizards of the Coast should embrace this," he said.

NFTs have seen a massive pushback from the gaming community. Studios, including most recently Team17, have received significant backlash on social media after announcing plans to launch NFTs.

MtgDAO said that as Web3 becomes more popular, this attitude will not age well, adding that Wizards of the Coast are digging their heels into the old world.

"Internet culture moves quickly and WotC is solidifying their position as dinosaurs on the brink of extinction,” the group wrote. “Catching up will only become harder. Ngmi.”

Editor's note: This article was updated after publication to include comments from mtgDAO's legal representation.