Panini's sudden loss of its NFL trading card license raises questions around the fate of its football-themed NFTs. However, most experts believe these digital collectibles will live on thanks to legal protections for secondary sales.
License Loss Throws Panini's Future Into Doubt
In a surprise move this week, the NFL Players Association terminated its trading card deal with Panini three years early. The license was awarded to rival Fanatics, who now has exclusive rights to produce NFLPA-licensed trading cards.
This is a huge blow to Panini, a dominant player in the sports collectibles space. The company had counted on NFL trading cards as a key revenue stream.
While the focus is on physical trading cards, Panini also operates a marketplace for NFL player NFTs. With its license revoked, it's unclear if Panini can continue selling these digital collectibles.
The First Sale Doctrine Likely Protects Existing NFT Owners
However, legal experts believe current owners of Panini-minted NFL NFTs have little to worry about. The first sale doctrine gives the buyer of a licensed product the right to resell it without permission from the copyright holder.
"I could draw a mustache on a licensed baseball card and sell it - Fanatics can't come after me for infringement," explains Ross Feingold, special counsel at law firm Titan.
The first sale doctrine has protected secondary sales of physical trading cards for decades. There's no reason it shouldn't apply to digital collectibles like NFTs.
So while Panini may not be able to mint new NFL NFTs, previous buyers can likely continue trading their existing Panini NFTs on secondary markets without issue. The first sale doctrine protects their ownership rights.
Legal Gray Areas Remain Around Digital IPs
That said, some scholars argue the first sale doctrine itself is not firmly established for digital goods. NFTs represent a new paradigm that the law has yet to fully catch up to.
Copyright law currently does not recognize a true "digital first sale" because it cannot guarantee deletion of the original file when copied. This legal uncertainty leaves the door open for abuse, like NFT creators revoking secondary sales.
The complex intersection of publicity rights, trademarks, and first sale doctrine has spawned extensive litigation in the trading card industry. NFTs add a new wrinkle that may require additional court rulings to provide definitive guidance.
For now, most experts think Panini NFT owners are protected. But Fanatics could potentially exploit gray areas around digital IP rights to make things difficult if it chooses.
Will Fanatics Seek to Shut Down Panini's NFL NFT Market?
The biggest question is whether Fanatics will pressure Panini to shut down its NFL NFT operations entirely now that it has lost the license.
Legally, Panini could probably keep the market running and enable continued secondary trading. But without licensed access to NFL branding and players, it cannot mint new NFTs based on up-to-date content.
Rather than wage a legal battle, Panini may opt to simply wind down its NFL NFT venture and focus efforts elsewhere. It still holds strong licenses across other major sports leagues.
However, Fanatics recently sold its stake in an NFT company, signaling less interest in the space. If Fanatics is less invested in digital collectibles, it may not care enough to come after Panini's NFL NFTs. Status quo could prevail.
What's the Future for NFL NFTs and Digital Collectibles?
The shakeup in licenses raises doubts around the future of NFL NFTs. Panini's market offered licensed digital collectibles, but its fate is now uncertain. Meanwhile, Fanatics just abandoned its own NFT project.
This confusion at the top of the collectibles industry shows that NFTs have yet to gain a true foothold compared to physical cards. Trading volumes for Panini's NFL NFTs pale in comparison to prices for tangible cards of the same players.
Mainstream adoption is still lacking. Until digital collectibles build a stronger audience, they will continue playing second fiddle to traditional cards in terms of revenue potential and industry focus.
But this is likely just a temporary growing pain. The advantages of NFTs around proof of ownership and eliminating counterfeits will eventually shine through. Panini and Fanatics may be slow to embrace this future, but NFT collectibles will find their niche in time as technology improves and mainstream comfort grows.
Key Takeaways: No Need to Panic Over Existing NFTs
- Panini's loss of its NFL trading card license does not invalidate existing NFL NFTs minted by the company.
- Legal protections like the first sale doctrine likely allow continued trading of Panini's NFL NFTs on secondary markets.
- Open questions around digital IP rights remain, but major disruption for current NFT owners seems unlikely.
- Fanatics could pressure Panini to shut down NFL NFT operations, but has limited incentive given its own reduced NFT focus.
- For now, this license shakeup highlights that NFT collectibles are still finding their footing versus traditional cards.
So while the industry landscape is shifting, owners of current Panini NFL NFTs need not fear their digital collections disappearing. The established legal framework should preserve secondary market activity, even if uncertainty swirls around the future of new NFL NFT drops.
Check our guide of the most promising crypto