Intellectual property rights and NFTs

Intellectual property rights and NFTs

The NFT craze began rolling at the top of 2021 and reached maximum hype towards the end of the year following the record-breaking monthly volumes and high-profile auctions. Projects such as Bored Ape yacht club received mainstream attention through celebrity co-signs, and PFPs became a common sight across social media channels.

In the time since, the frenzy has somewhat plateaued, and the market has evolved in several innovative ways. New projects are constantly developing, and the industry has infiltrated various other sectors. There are dozens of ways to monetize NFTs, from restaurant chains to merchandise. However, there is still a grey area regarding ownership of many projects. Some don’t allow holders to profit from their artwork and use intellectual property laws to enforce these conditions.

But what exactly is intellectual property? In short, anything you create with your mind includes a story, an invention, an artistic work, or a symbol. Despite different countries having IP laws, some pretty standard criteria exist. Usually own intellectual property if you created it (and have either a patent, copyright, or design) or bought the intellectual property rights from the creator or previous owner.

Compared to the past, enforcing IP laws in the digital era is more complex than ever. It takes no work to copy and paste or right-click and save someone else’s work. So what does this mean for NFT buyers? Do you automatically own the IP rights as soon as you mint or buy? The simple answer is no, and it’s essential to read the terms and conditions to know your rights.

The easiest way to monetize an NFT is selling it via a secondary market. But digital asset ownership is not as straightforward as its physical equivalent. It’s simple enough to prove you own an NFT, but you may not necessarily own anything more. You could technically own the digital representation, i.e., the NFT, but not the asset itself. To give a physical example, a collector could possess a unique limited-edition print but have no proprietary right to the original.

One notable example is the sale of former Twitter CEO Jack Dorsey’s “first tweet” via the Valuable platform. The site was clear in its terms and conditions that the buyer was purchasing “an autographed certificate of the tweet” and would receive the copyright in the Tweet. This means that despite spending $2.9 million, they wouldn’t be able to use the tweet (e.g., by printing it on merchandise) without permission.



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As developers have spent more time fine-tuning their projects, the NFT market has evolved to accommodate new licensing structures for holders. Commercial licenses allow creators to give buyers some rights while maintaining overall IP control and ownership. For instance, with permission, holders could sell merchandise or create content featuring the NFT. The popular BAYC has even expanded into the fast-food industry with the Bored & Hungry restaurant project. BAYC member CryptoJanswiss also announced the opening of the Ape-themed Bored Cafe in the Bahnhof Bern, the Swiss capital’s central railway station.

Platforms are now also presenting buyers with more options regarding IP rights. Non-profit Creative Commons offers creators six structures they can use to grant buyers specific permissions. One slightly controversial option they offer is CCO. The company states that the license defines any creative work in the public domain with “no copyright.” This designation means anyone can duplicate, edit or distribute the artwork, even for commercial purposes. The PROOF collective transferred its license from commercial to CCO, a move that received mixed reviews from holders.

NFT’s are even being used by physical retailers due to their ability to show proof of ownership over digital assets. NFTs can enable convenient trade markets for certain products , for example luxury clothing or wine, by creating tokens that are redeemable for the physical goods.

NFTs present several exciting opportunities for the future, but regarding IP rights, there should be clear terms of sale for NFTs and smart contracts within them. As builders continue to develop more practical projects with long-term utility, buyers must be aware of what that utility means.

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