06-Oct-2022
Written by: Faisal Amaan
The growth in popularity of non-fungible tokens a digital asset has been one of the most high-profile technical stories of recent time. A non-fungible token is a one-of-a-kind digital asset (token) that is created, recorded, and exchanged on a blockchain and may be used to verify the validity and ownership of a certain asset or object such as without limitation an artwork, a music album, a tweet, and possibly even tangible property (The “NFT”).
People are started investing in NFTs through purchasing and selling it in a form of cryptocurrency. There are several examples where NFTs are sold and trade. For example, Twitter CEO Jack Dorsey sold an NFT of his first tweet for USD 2.5 million. An NFT of a collage of works by digital artist Beeple was auctioned at Christie's and sold for about 70 million USD to another crypto entrepreneur. The renowned meme of Nyan Cat, an animated colourful cat whose body is in the shape of a pop tart, was selling for 300 ETH (the cryptocurrency created by the Ethereum system), which is over USD one million. Grimes' digital artworks are said to have sold for about USD 6 million.
Even though NFTs are a new and unknown sort of art, copyright law will regard them the same as any other traditional work of art. When an artist creates a new work of art, they instantly own the copyright to it. Copyrightable subject matter can be found in some NFTs, such as those for artwork or music. And copyright holders have exclusive rights to reproduce, publish, create derivative works, and distribute copies of their work. As a result, since "production of an NFT might be classified as a copy or even a derivative of the original work," a copyright owner have a exclusive rights to manufacture an NFT based on an original piece of artwork.
Furthermore, without authorization, creating and selling an NFT that contains or comprises another person's copyrightable work may infringe on that person's copyright in the underlying work.
In this context we should note that trading with NFTs does not give trader the ownership of NFTs unless such NFT is the original work and is being sold by the original author on the platform (for example if a painting is published on a relevant platform and sold by the original author to an NFT trader then the ownership of such painting will be transferred from the original author to the trader) Using; publishing and trading with others NFTs without the consent of the original author is an infringement of such author’s intellectual property rights (for example if a person purchase an artwork from store or attribute to himself an artwork and publish it for trading as an NFT on the relevant platform, such person will be infringing the original author’s intellectual property rights).
Under this article we will define the NFTs and will highlight (1) how they are traded; (2) there impact on intellectual property rights; and (3) how we can protect original artistic work from the infringement of intellectual property while purchasing and selling NFTs.
As a matter of fact, NFTs are digital assets accompanied with an authenticity certificate, that are analogous to crypto-currencies such as bitcoin. However, these NFTs cannot be traded for similar tokens. For example, while a bitcoin is fungible which can be traded one for another bitcoin, and the person dealing with bitcoin will have exactly the same thing; an artwork is non-fungible and if traded for a different artwork, the person will obtain a different assets, which is not similar to the earlier artwork.
We note that NFTs are popular among crypto traders and art aficionados. It may also be utilised for digital material, gaming products, investment collateral, and domain names. They are stored on the Ethereum cryptocurrency's blockchain which is a type of currency used in the NFTs transaction. NFTs are used to represent digital assets on the blockchain, such as images, films, audios, creative work, and other sorts of digital data. It generally relies on Blockchain Technology (as defined below)
A blockchain technology is a system of storing data that makes it delicate or insolvable to manipulate, hack, or defraud the system.
It is a digital log of deals that is copied and distributed throughout the blockchain's complete network of computer systems. Each block on the chain comprises a number of deals, and whenever a new sale happens on the blockchain, a record of that sale is added to the tally of each party (The “Blockchain Technology”). Each NFT has the potential for a variety of applications because of its individual structure.
As NFTs are built on blockchains, they may also serve as identity management systems in addition to removing middlemen and connecting artists with audiences, they are more useful than typical art works. It can be traded on internet markets or exchanged directly between persons. They provide a range of unique incentives for artists, such as royalties. NFTs grant fans and collectors a new opportunity to support their favourite artists. It is even feasible to utilise NFTs as unique tickets, providing owners with exclusive benefits. Because NFT ownership is traceable on the blockchain, they open a whole new universe of possibilities for collaboration between creatives, companies, and fans.
However, we should highlight that, It is difficult, but not impossible, to remove NFTs from the relevant platform once it is published or sold.
In the event of any NFTs’ infringement to an author’s intellectual property rights then once such author get the knowledge about such infringement then he can request the infringer to cease and desist from the infringement and to burn the infringed NFT.
Nevertheless, such process is not that easy. What actually happens when an NFT is sold, the ownership of such NFT (not the ownership of intellectual property) goes to the bidder, and the original trader who is the infringer loses control over the sold NFT. The only way to burn it would be for such original trader- infringer- to purchase back the NFT from the subsequent owner, which might not be possible because of high price due to change in value of the crypto-assets, or new owner refusal to sell it back. In such event such new NFT possessor shall take the permission of the original author, owner of the intellectual property rights, to use such artwork otherwise he will be violating the intellectual property rights of original author.
This is said, how can an NFT trader avoid copyright infringement while trading with NFTs.
There are several means by which an NFT trader can avoid Intellectual property rights infringements:
- The first option is to just create your own designs. Artists that want to sell their creative works may use NFTs of there own material as it is probably the safest solution to keep their tokens protected under IP law;
- If you want to make an NFT out of someone else's work or an organization's branded materials, you'll need to make sure you have the rights to copy, distribute, and/or perform their work;
- Use previously public domain content- When a piece of art is no longer protected by copyright, it enters the "public domain." Art may acquire public domain in a variety of ways. When the copyright expires, it first becomes public domain;
- Request a copyright license from the content's copyright owner as once you obtain the license from the original owner you will have the right to use the content which is created by the original author;
- Buy licensed content from licensed digital libraries or collecting groups, and double-check that the license authorizes you to reproduce and sell the artwork for NFT purposes.