How to protect digital art copyrights with the NFT
Non-transferable tokens (NFTs) have conquered the world and given impetus to a new generation of digital artists, many of whom have become internationally renowned millionaires. In addition to combating costly intermediaries, NFTs offer radical new ways to express themselves, attract fans, and spread the word.
As NFT prices continue to break records and legitimate content rights holders enter the market, discussions about who actually owns the intellectual property rights are likely to come to the forefront. If content creators or collectors are unfamiliar with the basics of intellectual property law, they can inadvertently give up their rights, or they can get in trouble by unintentionally infringing on the rights of others. In addition, NFT authors should carefully review the terms and conditions of the site with which they intend to collaborate. It would be foolish for traditional intermediaries to be replaced by blockchain intermediaries.
This article only touches on some of the most important features of copyright law in the United States. The article does not cover other equally relevant topics such as trademarks and licenses (including open source and Creative Commons licenses). Each of the topics presented above deserves its own treatment.
What do I get as an NFT collector?
The copyright owner has the exclusive right to copy, distribute, modify, publicly perform and publicly display the copyrighted item. Unless the copyright has been intentionally assigned to a third party, it remains with the original author of the work.
In most cases when acquiring an NFT, collectors gain the right to use the copyrighted work for personal use only; in addition, collectors gain a “sense of pride” from owning a genuine, non-interchangeable token. When an NFT is transferred from an author to a collector, it is assumed that the collector will not use the NFT for any commercial purpose other than resale. Taking the music industry as an example, when music is sold to users, the copyright in the song and its reproduction remains with the original copyright owner (usually the musician or record company).
It is also worth noting that the terms of service differ from site to site. For example, Dapper Labs restricts the use of purchased NBA Top Shot moments for “advertising, promoting or selling any third-party products or services.” Whereas on the CryptoKitties platform, it says that users are allowed to use purchased NFTs for commercial purposes, with a revenue limit of $100,000 per year.
In the case of the generative art platform, EulerBeats, purchasers of the “original” NFT get the exclusive right to use it commercially, while purchasers of “prints” get the right to use the NFT for personal purposes only.
How does an NFT author protect his or her copyrights?
When launching your own NFT collection, authors should pay attention to several possible issues, including protecting their own copyrights and unintentional infringement of others’.
Copyright law comes into play when a work is “submitted in tangible form.” It is not obligatory to register the work in the US, but it is necessary to sue for damages and attorney’s fees if the case is won; NFT registration in the US is also a good way to prove if the work is copyrighted. It is also advisable to register a work if more than one author was involved in its creation.
It is crucial for NFT authors to review the terms of service of the marketplace that they are working with in order to make sure that their copyrights are reliably protected. Most marketplaces require that the NFT author grant them the non-exclusive right to use, reproduce, modify, publish, display and distribute their “content” worldwide at no charge. Usually, these rights are needed so that the owners of the marketplace can put the author’s NFT for sale, use it to promote the marketplace, or compile a directory in order to improve the user experience and make it easier to find NFT on their site.
While most marketplaces are limited to these uses, some go further and may even transfer their allocated rights to third parties. This means that authors retain copyrights with respect to collectors, but intentionally transfer to the venues on which they sell their art.
Among other things, moral rights protect the author’s rights of attribution and inviolability of the work. The right of attribution implies that a work may be published under a pseudonym or anonymously. Whereas, the right of inviolability of the work prevents the destruction of the work, deliberate distortion or other alteration that may harm the author’s reputation. Personal property rights laws generally apply to works of fine art produced in a single copy or to works produced in limited editions of no more than 200 copies, signed and numbered by the artist.
Not long ago, one collective released Banksy’s painting “morons” in NFT format, burned a physical copy of the work, and then sold the NFT for nearly four times the price of the physical. Logically, Banksy could have sued for copyright infringement for commercial use of the work without his consent. If the original work (rather than one of the 500 copies) had been burned, Banksy could also have sued for non-property infringement.
What is fair use?
Fair use is a legal doctrine in the U.S. that allows limited use of copyrighted material without first getting permission from the copyright holder. Without going into too much detail, this means that you can use another author’s material for purposes such as commentary, criticism, news reporting, scholarship, research, and/or parody.
Returning to our NFT theme, Beeple’s use of characters from The Simpsons or Buzz Lightyear in his work can be viewed as interpretive works of art created under the doctrine of fair use because they represent an evaluative judgment (commentary) on the role these characters play in contemporary culture and have no adverse effect on rights holders.
Once we move beyond the mere release of media files on blockchain and harness the real power of Web 3.0, we will see how NFT, through interaction with the DeFi industry, is transforming the value of data, opening up new revenue sharing mechanisms and bringing us to a level of engagement that we have not yet encountered.