Is it yours? Can you print copies of it and sell them outside your local Whole Foods? Can you put it on a beer can label and sell it as the face of your new IPA? As always with most legal answers, it depends!
A quick refresher, the most common NFTs (non-fungible tokens), are blockchain-based tokens that resemble some sort of image. The first element of an NFT is its unique tokenID number that is written upon creation of the token. The second element is the contract address, a blockchain address that can be read using a blockchain scanner. The combination of the tokenID and the contract address is what makes each NFT non-fungible – no other NFT has that specific combination and therefore each NFT is one of a kind and cannot be replaced.
In addition to the aforementioned two bits of data, most NFTs also contain the wallet address of the creator, and a link to where the original work can be found.
Unfortunately, there is a misconception about what a buyer actually owns after the purchase of an NFT and some of this can be credited to the average consumers lack of copyright knowledge (we have you covered if you think trademarks and copyrights are the same thing… they’re not).
The other cause for buyer confusion can be attributed to the disagreement amongst NFT creators. Some NFT collectors believe that the NFT is sold to a buyer with its intellectual property (IP) rights while other NFT creators believe they should retain control of the IP.
Team “NFT Creator’s Keep IP”
For example, Larva Labs, creators of CryptoPunks, does not attach IP rights to its NFTs and only allows the buyer to use the NFT for “personal, non-commercial use” by way of a specific NFT License. This means that you can use your CryptoPunk image in any way so long as you are not making money from it. Larva Labs itself signed with United Talent Agency to sell rights for CryptoPunks and a few of its other collections for TV, video games, etc. Hypothetically speaking, a CryptoPunk owner could be watching TV and see their CryptoPunk on a commercial but will not receive any money for it.
This might seem a little backwards when looked at in the NFT vacuum, but if this situation is applied to other art, for example a Harry Potter poster, it does not give you the right to make a bunch of copies of that poster and sell it to others for monetary gain (fun fact, that’s illegal).
Team “NFT Buyer’s Get IP”
Yuga Labs, creators of Bored Ape Yacht Club, does attach the IP rights to each NFT and in turn give “complete” ownership to the buyer. This means you can use your Bored Ape for pretty much whatever you’d like, even if you make a financial profit from it. There’s even a virtual band named KINGSHIP made up of four Bored Apes that has signed with Universal Music Group.
Yuga Labs might give buyers the rights to use their purchased Bored Ape NFT image any way they like, but that power is limited solely to the purchased NFT. Yuga Labs does not allow anyone to use Bored Ape’s name, logo, or branding without permission. Therefore, an NFT buyer can print images of their Bored Ape on clothing and sell them for a profit, but that same buyer cannot use the Bored Ape name for a profit.
To make things even more confusing, some NFT creators choose neither of the two mindsets discussed above, and instead attach a Creative Commons CC0 license to their NFTs. A CC0 license means that the creator of a work of art has “dedicated the work to the public domain” by waiving any and all copyrights they may have in connection to the work and giving it up for the public.
In sum, there is no general consensus on how NFT creators should handle the IP rights attached to their creations. Therefore, it is up to the creators to make sure that buyers know exactly what is and what isn’t allowed. If the NFT creators do not specify before minting, it can cause quite a mess. A great example of this mess is RTFKT (pronounced as artifact).
RTFKT failed to inform buyers of the IP rights before the NFT drop happened. It wasn’t until after all the NFTs were sold that RTFKT stated most NFTs were allowed up to $1 million in commercial use, but a small number of “rare” NFTs had no IP rights attached to them and the buyer was prohibited from using the NFT image for any commercial use.
When buying an NFT, put yourself first and make sure you know exactly what IP rights come with your NFT (if any) before making any big decisions.
At the time this article was written, Larva Labs was still the owner of CryptoPunks. Since then, Yuga Labs has purchased the IP rights of CryptoPunks and has stated that it plans to give CryptoPunk owners the same commercial rights that Bored Ape holders have.
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