NFTs in Intellectual Property

Many people are wondering how NFTs can be connected to intellectual property law as the news cycle has become increasingly focused upon them.

You can put it this way: An NFT client doesn’t get IP rights to the item under the NFT. However, most NFT platforms offer terms of service that grant NFT buyers nonexclusive and nontransferable permissions to copy, use, and display the creative work associated with the NFT for their personal use.

Non-fungible token (NFT), is a term that refers a public digital record that is kept in a blockchain. Blockchain is a distributed ledger that tracks digital transactions across multiple computers.

Blockchain is a type if secure public records that is used most frequently to track bitcoin transactions but is also being used increasingly to track NFTs.

NFTs cannot be traded because they are unique and can’t be traded for any other NFTs. This is in contrast to crypto which can be swapped with any other bitcoin.

When someone “mines” an NFT, they create a smart contract that is integrated into the blockchain they are utilizing.

The NFT’s properties are defined by the smart contract code, which either includes a connection to the underlying work or info about where the work is held “off-chain.”

NFT buyers will be able to obtain a digital receipt that proves exclusivity of certain rights related to a property.

NFTs are able to be used to make tangible items such as books but they are most often used to create intangible goods like tweets and digital art.

The significance of the NFT in the context of property ownership is that it functions as a digital memento, allowing the owner to brag about owning the “original” thing with which it is related, such as the first Tweet, which sold for $2.9 million.

NFTs are often used as proof of ownership. However, buyers must verify that the seller is real and have the correct licenses in order to get rights that can withstand scrutiny.

NFTs are a better option than other types of proof because it is easy to track the chain of ownership after it has been purchased from a verified source.

The rise of NFTs is especially interesting in intellectual property law. IP law often secures intangible assets like an invention (patent law), a trademark (logo law) or a song (copyright laws).

NFTs can mostly be bought on websites like SuperRare that sells visual art and NBA Top Shots that sells NBA highlights footage.

The terms of service of these markets determine the Intellectual Property rights that are associated with an NFT buy.

This is the most commonly used type of license. It grants you a non-exclusive, untransferable right under the NFT to display the item for domestic use.

To put it another way, you can showcase a copy of the meme you bought like an autographed football, but you can’t charge another individual a license fee to access or display the meme.

The IP rights will remain with the original inventor. This is similar to the way that you only get the artwork when you purchase a piece. You cannot sell copies. This right is retained by the painter.

Dapper Labs, which runs the NBA Top Shots marketplace, suggested the NFT License 2.0.

The purchasers receive a non-exclusive and non-transferable right to display the item under the NFT for their own use. They also have the right to earn up to $100,000 per year from any work that influences the NFT.

Other licensees could adopt this license in future. However, for now, NFTs of LeBron James dunks from NBA Top Shots might be able to benefit from the licensing of the video.

Like any industry in development, there are strange things that happen when it comes to value. This includes the $69 million sale of a piece digital art by Beeple.

Buyers see the NFT’s value as being able to buy something unique. It doesn’t make a difference that all of us can access Twitter to read the first tweet.

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