Protecting Non-Fungible Tokens (NFTs) Under Intellectual Property (IP)

Why Do People Want to Own Digital Art or NFT?

An NFT is the creator’s signature on the content, similar to an autograph on a baseball card, making it rare, special, and expensive. Any digital work that is owned might be a financial investment, have sentimental worth, and establish a connection between the creator and the buyer or collector.

NFTs and Copyright

“Copyright (or author’s right) is a legal term used to describe the rights of creators over their literary and artistic works. Copyright work includes books, music, paintings, sculpture, and films, computer programs, databases, advertisements, maps, and technical drawings.” — (WIPO)

Copyright Infringement of NFTs

There have currently been many instances of copyright violations in the NFT sector. A potential breach of this kind occurred in February 2022. After attempting to produce a minted NFT collection of cards from Magic: The Gathering cards, owned by Wizards of the Coast, a group of cryptocurrency and NFT enthusiasts faced criticism and a solid backlash. These people may have loved the game and possessed the cards they intended to mint, but they undoubtedly didn’t understand their legal obligations. In an email to these fans, they admitted that they had been “working on the false idea that the project would be legal.” As you might have guessed, this flagrant plagiarism of another person’s work is illegal, and MTG’s attorneys quickly intervened to put a stop to this attempt.

The Hermès Lawsuit

Hermès, a leading name in high fashion, sued NFT designer Mason Rothschild in January 2022 for using images of bags that were strikingly similar to Hermès’s renowned Birkin bag. Even Rothschild’s collection’s name, “MetaBirkins,” makes it evident that Hermès’ style influenced him. Hermès claimed that Rothschild’s MetaBirkins NFTs violate the luxury company’s 1984-established Birkin mark in its 47-page case. Hermès asserted that Rothschild’s NFT collection is “likely to induce consumer confusion and error in the minds of the public” as defined by the Lanham Act due to the enormous power of its Birkin mark. Hermès further claimed that Rothschild used its Birkin logo without its consent and that by selling and reselling the NFTs, the company made a clear profit from doing so.

The Confusion About NFTs

Some buyers believe they are purchasing the underlying work of art together with all of its rights. They only purchase the metadata related to the item, not the work itself. The amount of money spent on the tokens may be somewhat to blame for the confusion. It’s simple to presume that the buyer has gotten more than just a piece of code when pixel art can be purchased for over USD $1 million.

Possible Remedies to Protect NFT

  • Cryptographic hash

Conclusion

An NFT creator may be liable for intellectual property (IP) infringement when using someone else’s creations without their consent. Selling artwork that incorporates characters protected by copyright is illegal without the owner’s consent.

References

  1. https://amplify.nabshow.com/articles/do-copyright-and-ip-laws-apply-to-blockchain/
  2. https://www.wipo.int/wipo_magazine/en/2021/04/article_0007.html
  3. https://www.makeuseof.com/nfts-copyright-law-explained-simply/
  4. What are the copyright implications of NFTs? | Reuters. https://www.reuters.com/legal/transactional/what-are-copyright-implications-nfts-2021-10-29/
  5. The Nifty Affair of NFTs and Copyright https://sc-ip.in/2021/07/15/the-nifty-affair-of-nfts-and-copyright/
  6. https://www.wired.com/story/nfts-cryptocurrency-law-copyright/

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Copperpod IP

Copperpod IP

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Copperpod is one of world's leading intellectual property research and technology consulting firms.