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NFT Copyright Issues

People are spending a lot of money on digital artworks because they assume, incorrectly, that they own the rights to the work they are buying. This popular misconception requires clarification. NFTs aren’t actually assets, they only represent assets. NFT owners own a unique hash on the blockchain with a transactional record and hyperlink, often in the form of a QR code, to the artwork’s file. It’s nothing more than a digital certificate of ownership representing the purchase of a digital asset. This article will explore these NFT copyright issues in more detail.

NFTs have become popular due to their non-fungible nature. This is not the same as regular currency, where individual units have the same value. NFT has the ability to assign individual ownership to the data which was purchased. A single NFT can’t be duplicated, but its value isn’t linked to the amount of money used to purchase it. It’s only worth as much as someone is willing to pay to have that data file transferred.

International Copyright Law

In terms of copyright issues surrounding NFTs, the situation is complicated, and there are no clear laws in place. Under international copyright law, the copyright holder retains their rights unless there’s a signed agreement waiving those rights. This means that the original artwork’s creators can theoretically sue anybody who purchases their work if they’re not happy with how their creations are being used. The absence of clear regulations regarding NFTs makes them open to exploitation.

Copyright owners have no other rights to the work apart from owning the digital file it’s stored on. This lack of rights, under international copyright law, includes the inability to communicate the work to the public, to adapt or reproduce it. Think of it in terms of owning an actual physical collectible, such as a signed sports jersey. Ownership wouldn’t give you the right to then use the team’s image, nor would it allow you to sue others who bought similar jerseys or who sold photos of the player wearing the jersey.

Online content can be difficult to manage because it is easy to share, copy and reproduce. Buyers of NFTs need to understand that they would be infringing the copyright if they engage in such activities without the permission of the right holder. This is why a digital asset needs to have a valid license that contains the terms of use and/or distribution, a matter which is (in)conveniently unavailable when purchasing NFTs.

Fan Art Confusion

Some brands will allow fan artwork to be sold, but only after the creator obtains written consent from the brand. If the fan art bears any resemblance to the original work protected by copyright, permission is also required before monetizing the work. For example, listing an NFT of a bear dressed in yellow/purple basketball uniforms with the number 24 would be a violation of both the LA Lakers’ & the late great Kobe Bryant’s intellectual property.

nft copyright issues punk
This NFT contains numerous copyright violations.

Trading cards are a popular NFT category. There are a lot of unofficial trading cards out there that blatantly rip off characters’ names and brand logos, and are then passed off as looking original. The problem with this is that it’s unethical to charge premium amounts of money for unofficial merchandise, and it’s up to the copyright owners to decide how & if they wish to monetize their creations in the form of NFTs. Always buy only official trading cards. Don’t buy fan art NFTs. There’s every chance that the item will be delisted once the copyright owners find out.

Spin-Off Collections

CryptoPunks & Bored Ape Yacht Club’s high value has led to many NFT artists trying to piggyback on their success. The regulations are extremely vague with these types of NFTs. OpenSea briefly touches upon these so-called “spin-off, homage, or remix collections” allowing them only if they fall under the fair use policy. Fair use is any use that’s not covered by copyright, including reproductions. Millions of dollars have been spent trying to define what qualifies as fair use, but there are no clear rules, only general guidelines, and varied court decisions. Fair use generally can be classified as commentary/criticism or parody, not visual reproductions. If you’re worried about whether work is violating copyright, the bottom line is that it probably is. Fair use only allows for segments of text to be used. The fact that CryptoPunks & BAYC let so many spin-off collections go unchallenged is a completely different issue.

Platforms should have to take more responsibility to protect copyrighted work, but they also need to make the copyright guidelines much clearer. It’s not always easy to figure out what exactly is and isn’t okay nor is it in their best interests to do so as they are profiting. There have been reports of copyrighted work being taken down for the reasons listed in this article, there is a report button beside every collection where users can report items that infringe upon others’ intellectual property. There is currently a legal void whereby people can use the work of other people and make money from it, while platforms essentially turn a blind eye. We may still be in the very beginning stages of what will eventually be a significant change in the digital art industry. It is still very early days and we are seeing the first hints that things are going to be changing.

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