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NFTs & intellectual property–what creators need to know

Education

Voice CEO Salah Zalatimo moderated a panel at NFT.NYC on this important issue. The below is a recap and is not legal advice. 

Jumping headfirst into NFTs can sometimes feel like wading into the ocean; thrilling, exciting, but a little dangerous. As with any emerging industry, we are experiencing a real-time adoption of our existing societal structures to keep up with technology. 

On stage at NFT.NYC 2021, discussion around the following question ensued: What should creators know about minting, from a legal perspective? 

According to panelist Dave Rodman, Founder and Managing Partner of The Rodman Law Group, the major thing to keep in mind when minting NFTs is copyright, which falls under the umbrella of intellectual property law. 

Not familiar? A quick summary below, but we recommend doing further research. 

A copyright is a collection of rights that automatically vest to someone who creates an original work of authorship like a literary work, song, or movie. These rights include the right to reproduce the work, to prepare derivative works, to distribute copies, and to perform and display the work publicly. (Source: Copyright Alliance)

Creators should only mint NFTs of works they own the complete rights to, having been the originator of the work or a collaborator. 

NFT platforms must comply with the DMCA, a 1998 United States law that amended U.S. copyright law to address important parts of the relationship between copyright and the internet. Online service providers are protected in certain situations if their users engage in copyright infringement. The notice-and-takedown system allows copyright owners to inform online service providers about infringing material so it can be taken down. (source: Copyright.gov)

But with NFTs being by definition permanently connected to a blockchain, questions remain about what level of deletion is possible. 

Buyers also need to consider intellectual property rights, says Stuart D. Levi, co-head of Skadden’s Intellectual Property and Technology Group. 

Despite NFTs being a relatively new technology, IP law works and applies in most cases. This section of the law has “kept up with technology pretty well in comparison to some other areas.”

Think of it this way: when you buy a physical painting, you buy the work itself, but not the IP. That remains with the artist. It’s the same scenario with most NFTs. 

Most importantly, read the user agreement for whichever platform you’re creating or buying on. 

In the initial days of NFT projects, like earlier in 2021, the popular method was to be very clear about what rights you don’t get, says Levi. For example, projects almost always don’t allow you to use the name of a project or name of a character in derivative works.

But as the space evolves, more recent projects aim to empower the user community by giving collectors certain rights which previously weren’t granted in most NFT projects. Importantly, we’re in an era of no one size fits all.

Much remains to be explored in the legal arena, agreed the panelists, including the question: “Does the agreement that the initial buyer agreed to travel with the NFT?” A prediction: most likely not.  Be sure to check the user agreement for the platform you’re using to see if and how this is addressed. (For example, in Voice’s Terms of Service, the NFT license extends not just to the first collector of the NFT, but to  all the subsequent collectors as well).

Ultimately, communication is key for both buyers and creators, agreed the panelists. Do your research before uploading anything to an NFT platform or purchasing digital art.