A surge in copyright-related issues has shaken the NFT world. Because of this, it’s more important than ever to seriously consider IP matters when minting non-fungible tokens with underlying artistic assets. In this article, we’ll take a look at how IP law relates to NFTs and what creators can do to protect themselves.
IP Laws and NFTs
One current issue is the fiasco surrounding Spice DAO, which sought to create an animated series based on the original manuscript of the movie Dune, claiming that their purchase of that manuscript at an auction gave them rights to reproduce the content. However, that was not the case, and they now face a great deal of public mockery due to their three-million dollar mistake.
Meanwhile, lawsuits are becoming more frequent, such as Nike’s action against StockX, which they claim violated trademark laws, or the various suits being prepared against OpenSea for selling NFTs that infringe on copyrights. More lawsuits are likely to come in the future.
It goes without saying that the IP-related risks of minting or selling NFTs are significant. Legal fees, damages, and so forth can all create a hard time for people operating in the space.
IP Rights You Need to Create an NFT
If you intend to create your own NFT for creative work, you need to make sure you have the requisite intellectual property rights. Four of these rights are the most prominent for non-fungible tokens.
1. Right to Reproduce
The first is the right to reproduce the content underlying your NFT. The right to reproduce in copyright law refers to the owner’s right to make decisions regarding making copies of the work. Since minting an NFT for a creative asset may involve duplicating the work in question, this right is likely to become a central component of potential legal complaints.
This is easiest if you are the creator, but these rights can also be secured from other creators if needed. They will need to give permission, of course, and you should do your best to make sure it is well-documented if they do.
2. Right to Create Derivative Works
Some NFTs may involve creating derivative works of existing pieces of art. Given that only the copyright owner can authorize the creation of works based on the protected asset, that right must be secured prior to minting the token.
3. Right to Distribute
Distribution is frequently an integral aspect of minting an NFT tied to creative works. Distribution rights include the right to sell, license, and transfer protected works. Authorization to sell these works to the public must be secured prior to minting an NFT and listing it on the market.
4. Right of Public Performance
When it comes to music and film in particular, public performance rights may be implicated. Songwriters and other content creators have a right to authorize the performance of their work, including showing or broadcasting the work in public places. An NFT with music or other performable assets underlying it should be minted after having this right secured from the original creator.
Tips for Avoiding Run-Ins with IP Law
In terms of avoiding legal complications, here are a few pointers to consider.
1. Make Your Own Stuff
The first is to simply make your own creations. NFTs can be great for artists looking to monetize their creative works, and minting your own content is probably the safest way to keep your tokens within the bounds of IP law.
2. Go the Extra Mile to Secure Rights
Of course, if your intention is to create an NFT using another individual’s creations or an organization’s trademarked materials, you’ll need to be extra sure that you have rights to reproduce, distribute, and/or perform their works, not to mention derivative rights if you want to create something transformative. Make no assumptions about what rights you have secured—work with the other party and make sure those rights are conferred in writing.
3. Get Solid Agreements in Place
When negotiating for IP rights, it helps to make sure those rights are clearly outlined in your agreement with the artist/organization. A clearly and tightly written licensing contract can make sure all parties know what rights are being bestowed, how they are to be used, etc. This helps to avoid future disputes, and it can solidify your position in the event that a dispute does occur.
4. Watch Out for Copycats
Finally, being vigilant for potential copycats can not only protect your own work but also help improve safeguards against future IP violations. Avoid purchasing NFTs that are clearly unauthorized copies of existing art (or even other tokens), warn others, and do everything possible to support the original artists. Some platforms even offer AI-assisted tools that can detect illegal reproductions of copyrighted material.
By creating an environment where scammers and other shady actors have a harder time selling counterfeit works, you can help make NFTs more advantageous for creators everywhere.
IP Law and NFT Protocol Development
As legal actions continue to arise in the NFT and crypto space, they will naturally inform improvements and adjustments to protocols in this area. In turn, IP law may also evolve to account for the unique nature of crypto-assets, even as it guides development on NFT platforms.