Being a significant development in the digital world, NFT has swiftly gained popularity. However, it is imperative to examine what rights does a purchaser of an NFT have, and what effect does it have to copyright owners.
It is highly that an average internet user has encountered a thing or two about NFTs lately. But what really are NFTs and why are they considered by some to be something of value? More importantly, what role does intellectual property play concerning the consequences of the recent NFT craze the world is seeing right now?
What is an NFT?
NFT is an acronym that stands for “Non-Fungible Token”, a digital and unique token representing an asset and recorded on a blockchain. These digital tokens can represent a variety of assets. However, they are most commonly created to “tokenize” a piece of digital content online. With a vast array of possibilities, NFT can tokenize almost anything digital – songs, video clips, pieces of digital art, images, and even tweets. What is interesting though about NFT is the fact that it can, using blockchain technology, make common and reproducible digital assets unique. Thus, in a digital world where anything can be copy-pasted from the internet, NFT provides a blockchain authenticated unique copy of a non-fungible digital asset. Such characteristic is the the reason why some consider NFT immensely valuable.
In the previous months, the digital world witnessed several lucrative NFT sales of varying subjects. Twitter’s CEO, Jack Dorsey, auctioned his first tweet and saw the bid reached up to $25 Million, the band Kings of Leon is now selling their new album, When You See Yourself, as an NFT, a highlight clip known as a “moment” showing a LeBron James dunk sold for more than $200,000 through NBA Top Shot, and even the Associated Press (AP) joined the fray when its NFT artwork sold for $180,000.00.
NFT and its ticklish interplay with copyright.
It must be understood that a purchaser of an NFT only gets ownership over that specific NFT he purchased – nothing more, nothing less. Ownership of an NFT does not vest interest or ownership over any intellectual property particularly, the copyright of the original work embedded into an NFT. An owner may only claim ownership of that specific NFT he bought and may only exclude others from claiming ownership of his NFT. The owner, however, does not own the underlying digital asset from which such NFT was created. Such ownership also does not vest the right to copy or distribute the underlying digital asset.
To avoid legal quandary, a creator should ensure that he has first secured permission from the copyright owner of the underlying digital asset he used to create his NFT. General copyright laws provide exclusive rights to the owner of a copyrighted work. These rights include the right to reproduce, prepare derivatives, distribute copies, publicly perform, and publicly display.
A useful analogy to understand such technical parlance is the ownership of a signed book. Generally, the copyright over the book resides either with the creator of the work that is – the author, or with its publisher. One may own a copy of the book signed by the author which makes it a one-of-a-kind copy. However, ownership of such a signed copy would neither give the owner the right to own the copyright over the book nor the right to exclude others from buying other copies of the book apart from his signed copy.
The problem with NFT is that it can be created by anyone from almost any digital asset that can be found online. Similar to traditional and tangible original works, making and selling an NFT based upon another’s digital work would most certainly constitute copyright infringement. This is especially true considering that most NFT which sell for hefty sums are those created from original underlying digital assets. In fact, the backlash against NFT has already sprouted with artists reporting that their works have been stolen and are being sold as NFTs. Many artists around the world are reporting their work has been stolen and sold on NFT sites without their knowledge or permission, mostly due to NFT bot attacks.
But that is not to say that the NFT boom is totally off-putting. On the other side, the rise of NFT has given budding artists a new avenue to create and distribute their works. It is a new sphere where artists can directly monetize their craft without the hampering vicissitudes of the traditional industry. If at all, the NFT craze is poised to create massive monetary and social impact in the fields of technology and art. However, as in any other technological innovations, the interplay between NFT and intellectual property is something we have to stay tuned to find out.