Are NFTs Protected by Copyright?

Here's what you need to know about copyright laws and NFTs.

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Whenever I explain NFTs to someone, the #1 follow-up question I often hear is:

“But what do you get with it, though?”

The short answer is: nothing. You get a few lines of code on the Ethereum blockchain and bragging rights.

But lately, the answer has gotten more complicated. Sometimes, you do get limited copyright uses with the purchase of an NFT. So that begs the question: what is the artist left with? Where’s the line?

So let’s break down everything you need to know about NFTs and copyright.

The Short Version:

  • In the vast majority of cases, NFTs do not entitle the purchaser to any sort of copyright protection.
  • Some NFTs do include limited copyright uses, but they always include written authorization and/or transfer of ownership in the purchase contract.
  • While minting and selling NFTs of art you don’t own is technically illegal, enforcement measures are almost nonexistent.

A Quick Recap of NFTs

In the simplest sense, NFTs are just “certificates of ownership” for pieces of digital artwork that live (mostly) on the Ethereum blockchain.

In addition to some timestamping, NFTs include three core pieces of data:

  • A hyperlink to a piece of art
  • The name of the original artist
  • The name of the person who currently holds the NFT

So, when you pay $984 for an NFT of a bear spinning a burger on its finger, is that all you’re getting? Or do you get some limited copyright uses included in the price?

(And if you’re still wondering why anyone would buy an NFT, check out How to Explain NFTs in Under 30 Seconds).

Defining “Copyright”

Copyright is an original creator’s protected, legal right to:

  • Sell the work
  • Produce, distribute, and sell copies of their work
  • Sell merchandise featuring the work
  • Publicly display and/or perform the work
  • Claim “moral rights,” i.e. object to mutilations, modifications, or derogatory uses
  • Otherwise commercially profit from use of the work
  • And more

Modern copyright traces back to the Berne Convention for the Protection of Literary and Artistic Works (1886). All modern creators should read this document very, very carefully since it’s basically their Bill of Rights.

The Berne Convention has a “principle of automatic protection,” meaning the moment the work is completed, it’s automatically copyrighted. In most cases, that protection extends to 50 years beyond the creator’s death, at which point it becomes public domain.

If you’re an artist seeking a little extra protection, you can also register your creative works with the U.S. Copyright Office. This additional layer of defense will help to prevent copycats — and make it easier to sue them — but it’s not 100% necessary.

It’s still your work from the moment of inception.

Now that we’ve refreshed NFTs and copyright, let’s see if and where they intersect.

What Copyright Protections Are in Place for NFT Buyers?

At least, not 99.9% of the time — none.

In the vast majority of cases, purchasing an NFT is no different from purchasing an 8” x 10” print from a booth at an art fair. There’s no contract with the artist, no negotiations between lawyers, none of that. You might not even get a receipt.

Instead, the transaction couldn’t be simpler. You give the artist money, she gives you something to hang on the wall.

But let’s dive deeper. What exactly does owning an NFT entitle you to? Conversely, what would be an overstep and open you to legal action?

OK, So What Does Owning the NFT Entitle Me To?

Not much.

Generally speaking, NFT holders have the same rights as people who buy physical art. They can either:

  1. Display it, or
  2. Sell it

Anything beyond that would likely tread into legal no-no territory.

That being said, NFT holders do have some pretty interesting options within the “display” category.

First, you can actually set any NFT you own as your verified Twitter profile picture. It’s a neat feature they added in January, and gives your profile a unique hexagonal shape.

Source: @ParisHilton/Twitter

There are some caveats. First, you need to pay for a premium Twitter Blue account, which costs $3 a month. Then, you’ll need to purchase or borrow an iPhone since the feature is only available on iOS. Lastly, you’ll need to connect one of three compatible wallets: MetaMask, Coinbase Wallet, or Rainbow.

Related>>How to Buy and Sell NFTs

The second “display” option comes from Mark Zuckerberg. During his metaverse keynote from Connect 21, he discussed virtual art galleries where NFT owners can proudly display their collections.

Two months later, photo editor Pixlr announced Pixlr Genesis: “The preeminent 100% decentralized art museum to rival the Louvre.”

Source: Pixlr Genesis

(This doesn’t extend to other virtual public art galleries, as they would likely still fall under “fair use” since their core purpose — “nonprofit education” — remains unchanged.).

Here’s a quick summary of what NFT holders can and can’t legally do.

RightsOriginal artistNFT holder
Sell the NFTX
Mint a copyX
Sell merchandiseX
Charge for a viewingX
Reproduction in other creative worksX
Set as your verified Twitter profile pictureXX
Display in a Metaverse galleryXX (supposedly)

With that said, there are three exceptions to the “display and sell only” rule:

  1. Written authorization. Sometimes, an NFT purchase might actually include express written permission from the artist for limited copyright uses — even a full transfer of ownership, which moves all of the Xs in the above chart to the right hand column. One famous example is Bored Apes. The “Apeholders” who own Bored Ape NFTs are actually allowed to profit from their specific Ape and make derivatives.
  2. Commissioned works. If you commission an artist to mint an NFT on your behalf and agree to a transfer of ownership upon its creation, you would own the copyright of that NFT. Contrary to popular belief, commissioners don’t own copyrights by default.
  3. Public domain. Finally, if you own the NFT for an artwork that lives in the public domain, there’s technically nothing stopping you — or anyone — from modifying or selling copies.

Is There Anything Stopping an NFT Creator From Duplicating Your “Exclusive” NFT?

Yes and no.

For starters, they can’t duplicate your exact NFT because by nature, it’s non-fungible. It has unique identifiers etched into its very code that would prevent an exact copy from being made.

However, there’s nothing stopping an artist from making multiple NFTs from the same work of art. Snoop Dogg, for example, has minted 824 NFTs so far of his song Diamond Joint:

Source: Crypto.com

Crucially, however, Snoop Dogg set the expectation upfront that the cap would be 20,000 editions. That way, nobody purchased an NFT under the false pretense of exclusivity.

If he had claimed that only 100 would be made — and then made 19,000 more — he could be taken to civil court for false advertising.

Threat of legal action aside, NFT creators just don’t do this because it would torpedo their reputation and jeopardize future sales.

Speaking of creators, what copyright protections are in place for them?

What Copyright Protections Are in Place for NFT Creators?

As a creator, all of the automatic copyright protections afforded to you by the Berne Convention still apply to the NFT world.

After all, NFTs are “reproductions” that only you, the original creator, are legally allowed to produce and commercially profit from.

And since you’d be profiting from them, you’d better make darn sure that you 100% own the IP.

Per digital law group Renn & Co, every aspiring NFT minter should ask themselves these three questions:

  • Is the artwork you want to mint original and unique, and created by you? ‍
  • Have you created the artwork underlying the NFT yourself, or in collaboration with other artists?
  • Are you the owner of the artwork’s intellectual property rights? ‍

If the answer to all three questions isn’t a resounding “yes!” then you could be stepping in hot water if you try to sell the NFT.

Has Anyone Been Sued For Reproducing NFTs?

There’s already “a considerable amount of NFT litigation brewing” writes law group Frost Brown Todd. Here are just some of the dozens of high-profile examples:

  • Roc-A-Fella Records is suing its co-founder for allegedly attempting to mint Jay-Z’s album Reasonable Doubt as an NFT.
  • Miramax sued Quentin Tarantino for auctioning off seven “exclusive scenes” from Pulp Fiction as NFTs.
  • Nike is suing online retailer StockX for selling NFTs of limited-edition Nikes (not sure how they’d get away with that one).

Even though the verdicts haven’t been reached, the simple fact that judges are accepting these cases should bring NFT creators some level of comfort.

This means that despite the fact that NFTs are jumbles of code, they’re still considered reproductions of someone’s art — and that 19th century copyright protections absolutely apply to these 21st century innovations.

Unfortunately, that doesn’t mean that every NFT thief will see their day in court.

What’s Stopping Someone From Minting NFTs of Art They Don’t Own?

“It seems to me that [OpenSea are] making some money on illicit behavior. They have a $13bn valuation and they’re trying to go public. How much of their valuation is from stolen art?”

At present, nothing.

OpenSea’s own tutorials show how the process for minting and selling an NFT on the platform involves four easy steps:

  1. Upload any JPG, MP3, etc.
  2. Give it a name
  3. Set a price
  4. Link your wallet to receive funds

There’s no form of ownership verification, no checkbox to certify that you’re the rightful owner, nada. There’s not even a reminder not to steal like you’d find on YouTube’s upload window:

Source: YouTube

Not only that, the sample JPG that OpenSea uses in their “How Do I Create an NFT” article is an illustration of a burglar holding (presumably) stolen pieces of art.

Source: OpenSea

 

Now, while it’s true that both YouTube and OpenSea allow you to upload someone else’s copyrighted work, YouTube doesn’t let you monetize it so easily. Plus, YouTube has automated copyright enforcement tools like Copyright Match and Content ID to help creators protect their content, even before another creator tries to profit from it.

YouTube’s moderation bots are controversially strict, but at least they’re on the right side of the law. In the NFT world, bots are used to expedite crime.

One artist, Aja Trier, discovered 87,000 fraudulent NFTs of her work for sale on OpenSea. In fact, 500 were minted in just one night, implying the use of automation.

She told The Guardian that by the time her takedown requests were processed, 37 of the NFTs had been sold. And allegedly, OpenSea kept the 2.5% commission.

“It seems to me that they’re making some money on illicit behavior,” Trier said. “They have a $13bn valuation and they’re trying to go public. How much of their valuation is from stolen art?” ​​

OpenSea is reportedly working on its own “smart moderation” tools, but until then, the NFT marketplace overall is “one huge mess of theft and fraud and inauthenticity.”

Are Your NFTs Protected by Copyright?

NFTs are a double-edged sword for artists.

On one hand, they give them a novel — sometimes lucrative- – way to monetize their creations without giving up the copyrights. On the other hand, they’ve made life for plagiarists and forgers almost comically easy.

If you’re considering investing in an NFT, please ensure that the NFT minter owns the original artwork- – for both of your sakes.

Disclaimer: The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available are for general informational purposes only. 

Learn more about NFTS>>

Chris Butsch

Chris helps young people prosper - both mentally and financially. In addition to publishing personal finance advice for Investor Junkie and Money Under 30, Chris speaks on the topics of positive psychology and leadership through CAMPUSPEAK and sits on the advisory board of the Blockchain Chamber of Commerce.

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