IP Protection for NFTs and Blockchain Assets Is Still Unclear

As blockchain projects diversify into sales marketplaces for creative works, many find themselves dealing with copyright problems due to uncertainty as to how existing law applies to things like NFTs (non-fungible tokens) and DAOs (decentralized autonomous organizations). For instance, while purchase of an NFT confers certain rights, copyright isn’t one of them, unless the buyer applies for a standard copyright license. Spice DAO spent $3 million to purchase director Alejandro Jodorowsky’s 1970s illustrated pitch for an unfilmed version of “Dune,” only to have the “Dune” copyright holder block the ability to turn the storyboards into an animated film.

That’s just one of many examples. Director Quentin Tarantino is embroiled in an ongoing legal battle with Miramax over whether he can sell an NFT of his personal copy of a “Pulp Fiction” script.

In a detailed exploration of blockchain assets and copyright, The Verge writes of “a particularly tragic” mishap in which bereaved father Andy Parker “created an NFT of TV video footage depicting his daughter’s murder.” Parker came to believe creating an NFT “would give him enough of a copyright in the footage to have it removed from sites like Facebook and YouTube,” but “the television station that filmed the footage owns the copyright, and minting an NFT” didn’t change that.

As Congress begins regulating the crypto sector some of these rights may eventually be expressly defined. In the meantime, some basic rules will be set as a result of litigants slugging it out and establishing case law. For now, it’s a tangled mess, with rampant theft of NFTs — by right-clicking or a process known as “mimicking,” which is essentially cloning — and attempts to tie off-chain assets to blockchain code, known as “tethering,” as yet untested legally.

“When it comes down to it, NFTs are really just tokens with a bundle of metadata. This data about data carries with it all the necessary information for someone else to locate and use it,” writes Cointelegraph. Whether you can sue someone for using your NFT depends on various factors, including “if the NFT was related to original artwork of the claimant, the documents they could produce in support of their answer,” and so on, Cointelegraph says.

“Legally speaking, a creative work is not the same thing as any of its copies — someone can own a copyright but not a specific copy of their work, or vice versa,” writes The Verge, explaining “that’s because a copyright is a limited set of exclusive rights that’s not tied to any specific physical object.”

In its NFT intellectual property explainer, Reuters writes that “NFTs may be subject to IP protections, including copyright, design patent and trademark rights. As such, NFT purchasers should pay attention to what IP rights, if any, come part and parcel with the NFT.”

Related:
Seth Green’s Stolen ‘Bored Ape’ Muddles NFT Legal Ownership, Bloomberg Law, 6/8/22
Seth Green’s Stolen Bored Ape ‘Saga’ Exposes More Woes Regarding NFTs, Paste, 6/3/22
DeviantArt Is Expanding Its System for Flagging Stolen NFT Art, The Verge, 5/17/22
The NFT Slump Is Real, TechCrunch, 6/8/22
Is NFT Art Any Good?, The Verge, 6/8/22