Non-fungible tokens, or NFT (acronym in English for the term “Non Fungible Token”), are one of the hot topics in the world of crypto assets. To a large extent, due to the ignorance that exists about them. So who owns the copyright, the creator or the buyer?
According to Lokesh Rao, CEO of the NFT-based Trace Network protocol, recognition of asset ownership has yet to be agreed in court.
And, unless NFTs are recognized as equal to a paper or digital certificate, the scope of this concept will be limited to digitally owned and consumer goods.
Understanding NFT’s ownership of copyright
According to United States copyright law: “The creator of the original expression in a work is its author. This individual is also the copyright owner. Unless there is a written agreement whereby the author assigns the copyright to another person or entity.
However, copyright laws were not written with the NFT in mind. And while the general concepts of copyright law can be applied to NFT artworks, there is much more to consider when it comes to the intellectual property (IP) aspect of NFTs.
Since non-fungible tokens are a new phenomenon, the laws and protection that legal systems around the world must consider will take some time to fully understand how to protect all parts of the NFT economy.
Therefore, for the foreseeable future, it is important that all participants in the NFT space perform due diligence to protect themselves before selling and buying NFT.
Remember, although the buyer has acquired the original work from NFT, this ownership does not entitle him to make and sell copies of the work that was purchased.
What do I get when I buy a non-fungible token?
In fact, there are those who think that when you buy an NFT (for example the representation of a painting), what you acquire is a kind of digital equivalent to the painting in the physical world. But, the thing is more complex.
Once the NFT is created, when it is sold, what you do is transfer ownership of that token. That is, the power to dispose of the token, solely and exclusively.
By the way, the rights that ownership of the token confers on the underlying asset or the service it allows access to are independent of the token.
Thus, to know what to buy when purchasing an NFT, it is necessary to go to external sources. That is, a contract where the creator of the NFT indicates which rights over the work are those that he is transmitting or incorporating into the NFT. Or what specific services the token gives access to.
Examples of NFTs and the rights they confer
When the NFT is purchased, the ownership right to the token in question is acquired. As we see in these examples:
The first New York Times article was sold to an NFT collector. This collector has digital ownership of this item, but not copyright to it. If I purchase an NFT of a digital artwork, I will be able to access the asset and have the certificate of ownership on it. But I will not be able to exploit the work commercially. Whoever acquires the NFT of the film “Killroy Was Here”, by Kevin Smith, will acquire the rights of exhibition, distribution and transmission of the film. In this sense, the NFT is the complete film and the rights conferred by its acquisition.
In short, the NFT certifies the authenticity of the asset and its originality (provided that whoever tokenized it is its original creator). It is a property title, limited by intellectual property, on a digital asset.
What do the lawyers think?
Now, according to the writing of a group of lawyers, the owners of an NFT will only own the digital element itself. And not of any underlying intellectual property rights.
In particular, the statement is part of the explanation shared on April 2, 2021, in the publication in The National Law Review.
In fact, the text indicates that the owner of this type of token will have limited rights to exploit the property of the NFT, apart from its resale. Unless additional license fees are added to the collectible.
By the way, lawyers acknowledge that FinCen has issued little guidance on NFTs. In fact, the Financial Action Task Force (FATF) raised a review of its guidance on virtual assets, which could include certain NFTs.
“NFTs can be a real win, for sellers and buyers alike, as well as for the artists and musicians who use them. However, care must be taken to ensure that NFT transactions are implemented on clear and transparent terms.
In closing, it is clear that incorporating NFTs into the business of copyright protection on a large scale will require a few years of legal precedent. What do you think about it? Let us know in the comment box.
I say goodbye with this phrase from Kant Immanuel: “Law is the set of conditions that allow the freedom of each to accommodate the freedom of all.”
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