NFTs are tokens with a unique set of data that allows them to represent unique digital assets such as digital art. Each NFT contains a link to the asset being represented. By purchasing an NFT, you get the right to own a specific copy of the work. You pay for the ownership of a unique item in your collection, but you don’t own the copyright and you cannot distribute, copy or reproduce the work without the permission of the author. The terms of the NFT transfer are largely determined by the marketplace you are using.
Marketing Manager at IdeaSoft.io, a software development company providing complex business solutions. DeFi | NFT | DEX
From the very beginning of the rise of the NFT market, the world has split into two camps: those who were impressed with new opportunities, and those who wondered why the world was going crazy and people were paying money for something abstract. One of the most confusing things about non-fungible tokens is intellectual property rights. When you buy an NFT, do you really get all the rights to an item, and if not, what is the value of an NFT at all? I’ll try to clear things up with this post.
Once Again About the Nature of NTFs
NFTs are tokens with a unique set of data that allows them to represent unique digital assets such as digital art. These tokens are generated on the blockchain, which makes it possible to track the ownership and transaction history of each non-fungible token. Each NFT contains a link to the asset being represented.
Thanks to these properties, NFTs have become especially popular among digital creators who have been able to easily and quickly earn money by converting their work into NFTs and selling them. The process of generating NFTs is quite simple thanks to NFT marketplaces, special platforms that allow you to upload your work, create an NFT, and immediately put it up for sale.
NFT and Intellectual Property Rights
The sale and purchase of NFTs are governed by smart contracts, software protocols that determine the fulfillment of the terms of the deal. Smart contracts and NFTs are not yet subject to existing legislation in most countries, but each author from the moment of creation of a work has some moral rights following the Universal Copyright Convention. Among them are the following:
- The right to use or permit the use of a work
- The right to promulgate or permit the promulgation of a work in any form
Also, an author has a number of property rights, including reproduction and distribution. These rights can be transferred to a third party, but can this be done using NFTs?
The answer is yes and no. The terms of the NFT transfer are largely determined by the marketplace you are using. For example, the OpenSea user agreement makes it clear to us that by publishing your work on the platform, you are giving OpenSea a non-exclusive license to use, copy, reproduce, manipulate, adapt, modify, publish, transmit, display and distribute by any means. However, this agreement doesn’t grant OpenSea any proprietary or resale rights.
So, What Do You Get When You Buy an NFT?
Like OpenSea, most platforms don’t provide transfer of property rights when transferring NFTs. By purchasing an NFT, you get the right to own a specific copy of the work. For example, a person who acquired Beeple for $69 million in March 2021 got a specific digital copy of the painting, and not the right to create souvenirs with this image or use it for other commercial purposes. That is, by purchasing an NFT, you acquire rights to a specific, unique version of the work, but not ownership of each copy or version of the underlying work.
Wait, then what do you get when buying an NFT and why do people buy NFTs?
By purchasing NFT, you acquire a token that represents a unique item, the right to a certain digital version, and hence, no one else can own this copy unless you decide to sell it and transfer the rights to it. Buying an NFT is a lot like collecting. You pay for the ownership of a unique item in your collection, but you don’t own the copyright and you cannot distribute, copy or reproduce the work without the permission of the author. Collectors buy NFTs for the same purpose as physical art, to own something unique from artists, brands, and the like.
However, it is possible to transfer the rights to the original work using NFTs if such a clause is included in the contract. A creator may accompany the transaction with documents such as a sales contract, a copyright transfer deed, or a copyright license deed that stipulates what rights a buyer obtains within a transaction.
Currently, many NFT buyers and sellers don’t fully realize what rights come with non-fungible tokens. Usually, unless otherwise provided by the contract, you get the opportunity to own a certain digital copy, and not the rights to the underlying work. NFTs cannot undermine copyright laws, so when you buy NFTs, you need to find out exactly what rights you get and whether you are satisfied with these terms.
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