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The growth of the non-fungible token market has created confusion about its relationship to copyright law. Part of it is due to the inexperience and misunderstandings of those minting NFTs, but a lot also has to do with current copyright laws and existing license restrictions.

One possible solution is to create a special license for NFT. For now, the lack of clarity will likely expose creators and traders to costly lawsuits.

NFTs and Copyright: Common Misconceptions

Many in both NFT minting and trading believe that the NFT owner owns the copyright of the minted image, but this Incorrect. The law concerns his two kinds of rights: possession of physical objects and representation thereof.

For example, if you own a coffee mug, you can sell it to anyone, but once you sell it, you lose ownership and have no further rights. However, you can also take photos, make as many copies as you like, and sell the copies without selling the mug. You can also allow others to copy your photos. This is copyright. A set of restricted rights related to reproduction of assets.

Copyright owners can license rights and set license terms to one person, everyone, or only for specific purposes. There are also derivative rights.

For example, a book author typically sells the rights to publish the book alone, but retains the rights to make film or television adaptations for later sale. There are also secondary rights, such as the television rights to the film adaptation of the novel, or the right to show the film in theaters, on DVD, or upload it to streaming services.

Importantly, the sale of physical objects does not include copyright unless specifically included in the transaction. This is most evident in the case of novels, where authors can sell their manuscripts without selling their copyright. Or if you sell a cup of coffee, the new owner doesn’t automatically get the right to make and sell a picture of his cup of coffee.

How U.S. Copyright Law Affects NFTs

With the advent of the Internet, the situation has become even more complicated.

Under U.S. copyright law, according to James Grimmelman and Yang Zhi of Cornell Law School and Tyler Kell of the Cryptocurrency and Contracts Initiative found that if a mug is photographed and scanned into a computer, it creates another copy. It will be.

When an image is uploaded to the web, another copy is created on the server where it is stored, and then another copy is created each time someone visits the website and views the image. Therefore, even if you purchase an NFT of a photo, you may be in a position where you do not have the legal right to view it.

Prior to the advent of NFTs, this was not considered a problem. After all, even the highly litigious music companies sending takedown notices over short snippets of songs playing in the background of videos shot in public have people criticizing them for listening to previews of their uploaded songs on iTunes. would be difficult to sue.

But now, NFT owners believe they own the copyright to the work they minted or purchased, and are trying to sue or license nonexistent rights.

Nearly 20 years ago, Barbara Streisand sued the photographer and the website he worked for for trying to remove photos of her home from the Internet, which she took to document coastal erosion in California. was defeated. Still, she couldn’t have been more successful had she made NFTs of her images and sued people who downloaded or shared them for copyright infringement.

International Copyright Considerations for NFTs

Copyright confusion is widespread internationally, as copyright laws vary from country to country. A work that becomes an NFT can be protected by copyright on the one hand and the public domain on the other. In some countries there are other laws governing such things as royalty rights.

This is not something copyright lawyers and companies have not addressed, but confusion over the copyright status of NFTs could affect the market value of tokens. With the NFT market potentially worth billions of dollars, this could be a big dark cloud.

Who owns the art?

A similar issue is that while NFT ownership is on the blockchain, the minted digital art is there is no such source. Legal owners of copyrighted works can sue for gross earnings and damages. AI-generated works can create even more complications.

Currently, the U.S. Copyright Office states that AI works are no copyrightbut it is unclear what it is rights of creators If their work is used to train AI or sampled by AI.

Special License Proposal for NFT

One possible solution to this confusion is for copyright holders to create special NFT licenses tied to their tokens so that the licenses are automatically transferred along with the tokens. The license is inseparable from his NFT and may be recorded as part of the blockchain during token minting.

This license may be automatic (compulsory) if the copyright holder does not provide otherwise. This may help protect their rights and avoid confusion and disputes.This is the approach taken by Dapper Labs NFT license, grants the purchaser of the NFT certain rights. However, the NFT license does not follow his NFT ownership.


New legislation is unlikely to address these issues. The existing intellectual property regime is so strong that major interest groups such as record labels and movie studios will fight to the death to maintain the status quo.

Given these complexities, NFT creators and traders should learn about copyright law and ensure that it stays within its boundaries to avoid legal complications. While it won’t taint the industry like the unfair association of cryptocurrencies with money laundering and other crimes, litigation and breach damages will be costly and limit investment.

Disclaimer: The information provided in this article does not, and is not intended to, constitute legal advice. Instead, all information, content and materials provided herein are for general informational purposes only. Information in articles may not be the most current legal or other information. This article contains links to other third party websites. Such links are solely for the convenience of the reader, user or browser.

By Jules

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