As non fungible tokens continue to take the world by storm by giving creator and digital artists unprecedented possibilities, the jury is still out whether a non fungible token can be interpreted as proof of copyright ownership. When people ask: does NFT ownership equal copyright ownership? Put simply, if I own the tokenized digital art do I also own all the intellectual property with it connected, including the right to copy it, share it, etc? The question is complex and there’s many changes happening that might make it more likely for the development of NFT copyright. However, as of today, the answer is no: owning an NFT does not entail dictating over the fair use of the digital asset. For example, the NFT owner of Jack Dorsey’s original Tweet does not have the right to cite people that make screenshots and re-shares of the asset for copyright infringement. However, the question demands a proper explanation as the NFT craze turns people’s heads across the globe.
Let’s start with a couple of clarifications: both fungible tokens and non fungible tokens exist thanks to blockchain technology. Most non fungible tokens (NFTs) exist on the Ethereum blockchain, and people buy and trade them on an NFT marketplace, a platform specifically designed for the trading of any digital asset. An NFT is a token tied to a digital artwork that represents a proof-of-ownership of the artwork. However, whether the NFT owner has exclusive rights of fair use of the underlying asset is unclear.
Any NFT buyer should understand a simple distinction, that is, NFTs represent a digital artwork, but are separate from the asset itself. NFT art is, in itself, a digital copy of the artwork that is excluded from copyright law as we know it. There are, however, regulations in place which differentiate the creator, team, and NFT owner. This is what’s known as an NFT license. The owner of the token performs an NFT transaction that is secured by smart contract and registered on the blockchain. The process is transparent and clear to all parties involved, as such, all parties cannot claim the terms were unclear before the purchase.
It gets murkier in cases where we have a conflict of interests between the copyright owner and the NFT owner. In most countries, the state protects literary, dramatic, artistic, or musical works from being copied and distributed in a similar format. However, as recent cases have shown, NFTs can take multiple forms, as a digital asset is virtually unique.
For the original work that an NFT represents, this protection is ensured. When artwork is generated and auctioned on an NFT marketplace, the copyright works essentially identically to how it would in person, with the artist keeping the copyright. However, the present platforms are unable to exchange NFT copyrights due to a lack of copyright trading infrastructure that complies with international law.
The grey area is precisely because of the hybrid, unique nature of nonfungible tokens. Quite literally, anything that can be digitized can also be tokenized into NFTs. Digital art, music, memes, and even social media posts. What’s next? If you think it, you might as well digitize it, and if you digitize it, you might as well tokenize it. Of course, the tokenization can be characterized as a digital copy of the original – a derivative works process.
Unfortunately, it’s also thanks to this grey area that fraudsters take the opportunity to trick consumers and creators. The process of minting allows creators to “sign” their original art, but sometimes minters might lie about being the creators of the artwork. Minters can, in a way, also mint a digital asset that was not created by them in the first place. The status of intellectual property rights on a digital item is disputed.
Despite the uniformity mandated by international treaties, the NFT market does not comply with the diversity of copyright law around the world. However, here’s the issue for this nascent ecosystem International to conform to existing international copyright law and intellectual property law. The NFT world embraces decentralization on a large scale, even when it comes to intellectual property. Since copyrighted work can also be minted into a digital copy token, it’s confusing to figure out just who retains the right of fair use of the creative work.
All in all, we will inevitably see conflict between NFTs and copyright law in place – even though the market is in a way already acting as gatekeepers and reducing violations. Ultimately, it seems what is generating attention and disdain from real world actors is the high amount of liquidity and returns that are involved with each NFT transaction. There is real money and real opportunities in non fungible tokens, which is why big players feel ‘tricked’ or left out. However, every innovation, every significant change brings with itself the seeds of potential discord. People will need to learn to adapt and reap the benefits of what the market will offer.