With the exponentially growing complexity, diversity, and immensity of the digital world, the concept of digital ownership has never been more serious and tangible than it is now. To the people who earn them, digital assets are not simple computer codes that have no value outside of a virtual ecosystem. This is especially true if you have paid actual money for an item like a land parcel within a metaverse, or an in-game wearable or avatar. Blockchain technology has provided users with the ability to materialize these digital items in the form of non-fungible tokens or NFTs. As the name suggests, these tokenized assets cannot be exchanged directly. Instead, they are traded for a certain amount of money, usually in the form of a cryptocurrency. Any digital good can be tokenized into an NFT, including artworks, music pieces, pictures, sports highlights, etc. To create an NFT, you need a blockchain network, a wallet, and an NFT specialized marketplace to mint and tokenized your digital asset into an NFT. These NFTs are created and eventually recorded on a blockchain network such as Ethereum. But how many rights do you have regarding your NFTs?
What does owning copyright entail?
When someone owns copyright, it usually includes some or all of six distinct rights:
1. They can reproduce the original work and make additional copies of it;
2. They can create new derivatives from the original work;
3. They can create and distribute copies of the original work to the public;
4. They can perform the original work for the public;
5. They can display the original work to the public;
6. And if possible, they can perform sound recordings publically.
The original creator of a work has exclusive control over most of these rights. For example, you can buy a painting from an artist and bring it to your house. You can display it to your guests but even though you have paid for the painting and physically own it, you can’t reproduce new copies of the painting and you definitely can’t distribute them publically, and you can’t create derivative works from the original painting. But you can sell that painting, trade it, give it to someone else, or even destroy it, so is the case with NFTs.
NFTs and copyright laws
However, the creator of an original work can transfer some or all of his/her rights to a buyer by stating them in the contract. NFTs themselves come with a description in which their associated rights are mentioned.
Some scholars of intellectual property believe that NFTs open up new pathways for creators to connect and collect money from their fans. Scholars such as Tonya Evans believe that the Internet’s capacity for creating infinite replicas of something can be offset by the technology behind NFTs which allows artists and creators to prove the uniqueness of their digital work.
In most cases, Physical copy works enjoy broader rights than digital items and NFTs. For example, you can put your own signature on a sports card or glue a few of them together and make a wallpaper, but you can’t do such manipulations to a virtual NFT card. So the ownership of an NFT does not automatically transfer all the rights to the owner. Most of these rights are still in the firm grasp of the original creator, and the ones that are actually transferred are not as robust and comprehensive as the rights to a physical copy.
The Weird Whales incident is a good example of NFT infringements. The project was started by a 12 year old programmer named Benyamin Ahmed where 3350 NFTs sold out in the blink of an eye, each sold for 0.033 ETH originally, but hours later the prices skyrocketed to 3 ETH each. However, someone figured out with a simple google search that the base image used for this project was copied from another project which caused widespread panic and people immediately sold their NFTs at a loss. It is still not certain if this incident counts as intellectual property theft or not but if it were and the original creator was serious enough, the consequences had the potential to be dire for the 12 year old programmer and the people who were trading it.
NFTs and their relationship with copyright laws and intellectual property violations are still subject to intense legal debate and it is best to take precautions before stepping into the market. Doing independent research into the roots of an NFT project, its developers, and similar projects could be solid first steps. Consulting with an expert attorney is definitely crucial for people who want to make large investments in the NFT market. None of these facts should be discouraging to people who are passionate about entering this new digital environment but should raise awareness about the nuance that is the NFTs ecosystem.