Who really has the rights to NFTs?
Digital ownership of artwork exploded in popularity in 2021 and this novel form of ownership went from niche to mainstream almost overnight. A year on, the public’s focus on one-of-the-kind works and eye-watering price tags is slowly shifting to a yet to be solved, recurring problem in the metaverse: who really has the rights to NFTs?
The process of selling and buying an NFT is relatively straightforward. The individual with an intention to sell a work begins the process by minting a unique copy on the blockchain. Recorded on the blockchain forever, the work is to be sold, displayed, collected or traded to any willing participant in a transaction which grants the buyer a set of rights in relation to the purchased NFT.
The transaction is simple but the question of ‘who owns what’ remains a complicated IP issue in the NFT space. We answer three immediate and pressing questions NFT creators ought to know in order to protect their IP rights:
What are my legal rights to mint and sell and NFT?
The maxim ‘just because you can doesn’t mean you should’ applies heavily when it comes to minting and selling NFTs not rightfully belonging to you. NFTs may not be protected by copyright laws but the original piece of work created or minted by the artist may be. Copying, displaying or selling works you do not have legal rights to, with or without intention of making a profit, could land you in legal trouble as you may be accused of copyright infringement. Such an accusation is not only reserved for direct copies of work, but for confusingly similar copies as well.
To avoid copyright infringement accusations, it is advised to only mint and sell works of which copyright belongs to you. Make sure you have the rights to mint and sell works prior to doing so. Creators ought to stay vigilant and up-to-date with their IP portfolios to prevent exploitation from third parties. Sell on platforms with built-in technology to track unscrupulous copycats.
For marketplace owners, maintain a strong stance on anti-copycat laws in fine print as a warning to those who intend to sell stolen work on your platform. Policies should be set in place to counter the possibility of facilitating the sale of stolen works. Routinely exercise takedowns as a preemptive to prevent accusations of promoting theft and fraud of artwork.
What are my IP rights as a creator of an NFT?
The common misconception surrounding a creator’s rights upon the sale of an NFT is the transfer of all existing rights from seller to buyer once the transaction is completed. This is mostly untrue depending on marketplace to marketplace. Creators need to determine the limits of duplication, distribution and recreation belonging to the buyer in fine print prior to trading NFTs. Some useful questions to ask yourself during this process could sound like the following:
- Do I allow for the commercialisation of my artwork by an individual or company other than myself?
- Do I allow for the display of my artwork in the public sphere by a third party or am I looking to sell to a private collector?
- Do I allow for copies of my artwork to be distributed? Do I allow for the refashioning or borrowing of my artwork?
As a creator, you will retain a certain amount of rights to your work, even after the sale of the NFT in question. Firstly, ensure your original work is registered and protected by copyright in the correct classifications. Once you have obtained legal protection, you are ready to license and sell your work as an NFT. Be clear on what rights are to be retained by you and granted to the buyer in a written agreement. Make sure all parties are aware of the rights to be kept and to be signed away. Marketplace owners, too, can play a role in the fair distribution of rights between seller and buyer by disclosing personal rights of each party in a terms and conditions agreement.
What are my IP rights as a buyer or collector of an NFT?
What do you actually own when you buy an NFT? As previously mentioned, buyers do not own the copyright to the artwork. Owning a unique token on a blockchain does not equate to gaining legal rights to distributing, commercializing or modifying the artwork. Know your purpose in purchasing the NFT in question. Are you looking to profit off the NFT? Or are you simply looking to add to your private collection? Once you have established your goals, determine if the rights agreed in the written contract are appropriate to your expectations as a buyer. Remember: the contract governs all rights and legal activity once the sale of the NFT is authorized.
IP is at the forefront of the many challenges faced by creators and collectors in the NFT space in 2022. The granting of rights are predicted to change and evolve following the development of NFT ownership in the future.
Have a question about copyright, trademark or design protection when it comes to NFTs? Quality Oracle are ready to assist you with personalized solutions for your NFT needs. We are proud of our 29 years of professional experience in Intellectual Property. Get in touch for a free consultation today.