NFT And Copyright - Does The Piece Fit The Puzzle?

• Published date: 04 August 2021
• Subject Matter: Intellectual Property, Technology, Copyright, Fin Tech
• Law Firm: Sujata Chaudhri IP Attorneys
• Author: Mr Urfee Roomi and Rishikaa .,

Intellectual property protection challenges to digital collection

NFT'this acronym has the whole world buzzing! NFTs are being sold globally at unimaginable prices. Recently the New York Times sold its column on NFT, titled 'Buy this Column on the Blockchain', as an NFT, for $563,000. Auction houses are not behind either. Sotheby's and Philips launched NFT auctions and sold NFTs worth millions of dollars in minutes. As of the year 2017, a whopping $174 million has been reportedly spent on NFTs. According to a recent article in Time magazine, art collectors have spent almost $200 million on NFTs in February 2021 alone.

But what exactly is an NFT?

In simple words, Non-Fungible Tokens or NFTs are a type of digital asset or a certificate, the ownership of which is recorded on a blockchain. Unlike other digital assets that can be interchanged/exchanged, NFTs are not interchangeable, due to their non-fungible nature, and are considered a digital collectible of the work they represent, such as, tweets, art, music, games, etc. Due to their non-fungible nature, NFTs are scarce and are not available in abundance, making them an extremely desirable asset.

With great power comes great responsibility, particularly legal. While it is essential to understand the meaning of NFTs, it is also essential to understand what their ownership entails from a legal standpoint. Owning an NFT does not confer ownership of the underlying work that the NFT represents. The difference between buying an original artwork and buying an NFT is the non-transfer of copyright in the original underlying work.

An NFT is merely a digital copy of an underlying original work and provides ownership in that digital copy only. To illustrate this point, let's take an example of an artist of an oil painting, painted on wood canvas, who has created several unique NFTs of her oil painting on a blockchain. Each of these NFTs could represent the original painting. But selling such NFTs would grant ownership only in the NFTs and not what they represent. Clearly, given their very nature, an NFT holder cannot publish, distribute or earn royalties from the oil painting because only the owner of the copyright in the painting would have such rights by virtue of the law governing copyrights. While...