Introduction-
NFTs, or non-fungible tokens, are one-of-a-kind tokens that are becoming increasingly popular as investment option around the world. Fungible tokens, like money, are assets having a fixed unit that may be swapped instantly. Non-fungible tokens, on the other hand, are assets that cannot be directly exchanged. NFTs are decentralized digital assets based on the blockchain that cannot be traded or exchanged for anything of equivalent value. Because it grants consumers entire ownership of a digital asset, NFT is based on blockchain. If you’re a sketch artist, for example, and you convert your digital asset to an NFT, you’ll have Blockchain-backed proof of ownership. To put it another way, you pay a gas price to access the Blockchain when you advertise your NFT on a marketplace, and your digital art is then registered on the Blockchain, confirming that you (your address) own the specific NFT. This gives you complete control over your content, which no one may modify, including the marketplace owner. The bulk of non-fungible tokens is metadata files encoded with a work that may or may not be copyright protected, or even a public domain work. Anything that can be digitised can be transformed to an NFT; the initial effort is only required in the first step of the process to produce the unique token ID and contract address pair. As a result, in principle, NFTs have very little to do with copyright. However, there is a great deal of interest in NFTs from a copyright standpoint, partly because many of the works being exchanged as NFTs, such as works of art, are protected by copyright, but also because there is a lack of clarity about what constitutes a copyright-protected work and what a person gets when he purchases an NFT. This paper attempts to answer these questions by elucidating the intersection between intellectual property rights and NFTs[1].
Uncertainties Regarding the Extent of Ownership-
One of the most significant difficulties is the widespread misunderstanding about the rights that buyers obtain when they purchase an NFT. Some customers believe they are purchasing the underlying work of art as well as the rights to it. They are, however, only purchasing the metadata linked with the art, not the work itself. The amount of money spent on the tokens may have contributed to some of the confusion. When pixel art sells for over a million dollars, it’s safe to think the buyer got more than just a piece of code. When reporting on the sale of NFTs, the mainstream press is increasingly perplexed as reporters frequently think that the work has been sold, which is not the case. It is implausible that buyers of NFTs would pay such a high price for what amounts to a metadata file and a short string of numbers and letters with questionable artistic merit, but that is exactly what most NFTs are. Copyright may, however, come into play, at least in some NFTs. One possible application for these tokens is in some kind of digital rights management mechanism.[2]
The Intersection-
In the same way that blockchain may work as an immutable record of ownership claims, operating as a means of confirming or assessing validity, all NFTs might be considered as a type of registration. However, this concept immediately runs into practical issues, not least the fact that anyone with enough technical expertise and the right tools may create their own token, which can contain any information entered by the author. This means that anyone can create false ownership claims and have them recorded in the blockchain. From a copyright perspective, there is growing interest in NFTs, in part because many of the works being exchanged as NFTs, such as works of art, are protected by copyright, but also because there is a lack of understanding about what you get when you purchase an NFT. Owning an NFT entails owning a specific digital copy of the work, and it is a blockchain-based digital certificate that verifies ownership of only the digital version. The property itself is not transferred which means that, unless the underlying copyright is likewise transferred with the NFT, the creator of the actual work retains the copyright. NFTs appear to be a danger to copyright holders’ rights. The works of the authors are already being plundered and minted into an NFT without the author’s permission[3]. In light of this, it’s important to explore the several remedies accessible to copyright holders. In most nations, however, cryptocurrencies exist in a legal grey area. This allows unethical actors to appropriate or steal other people’s creative works. As a result, in the lack of a specific statute dealing with NFTs, copyright holders can only seek redress through their separate Copyright Acts. However, one barrier to accessing these remedies is that NFTs have the ability to be fully anonymous; those who buy and trade NFTs frequently use pseudonyms, making it difficult, if not impossible, to trace them down. As a result, enforcing copyright against unauthorised minting and selling of NFTs becomes difficult without knowing the infringer’s identity[4].
The Way Forward-
NFTs offers an exciting new way to communicate with and find new followers in a new market, while also potentially making money. As an artist or brand owner, you must be aware that you are putting your intellectual property in danger, with unforeseeable and unpredictable consequences. Meanwhile, artists and enterprises interested in participating in these markets should proceed with caution and, as always, be aware of potential risks when it comes to intellectual property rights. Although it is unclear what impact NFTs may have in the long run on both domestic and international copyright laws, it appears that the traditional barriers to copyright owners still persist, albeit with some extra benefits. Only by establishing a regulating framework to identify actual creators will these issues be rectified. What is needed is for all governments throughout the world to increase their administrative capacities in order to properly protect copyright holders’ rights while simultaneously fostering NFTs as a means of commercialising creative works.
[1] Mehab Qureshi, What are NFTs? How is it different from cryptocurrency?, The Indian Express (22 February 2022) https://indianexpress.com/article/explained/what-are-non-fungible-tokens-nft-7783662/.
[2] Andres Guadamuz, Non-Fungible Tokens (Nfts) And Copyright, WIPO MAGAZINE (December, 2021) https://www.wipo.int/wipo_magazine/en/2021/04/article_0007.html.
[3] Gregory J. Chinlund and Kelley S. Gordon, What are the copyright implications of NFTs?, Reuters (29 October, 2021) https://www.reuters.com/legal/transactional/what-are-copyright-implications-nfts-2021-10-29/
[4] Anshita Agarwal, Interface between NFTs and Copyright Law, Indian IP Law Resources (3 August 2021) https://iprlawindia.org/interface-between-nfts-and-copyright-law/.
