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NFT Copyright Infringement – An Exclusive Guide

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Manish Jindal

January 11, 2024

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NFT Copyright Infringement – An Exclusive Guide

Are you wondering what is NFT copyright infringement?

In the rapidly evolving world of digital art, the emergence of Non-Fungible Tokens (NFTs) has created an unprecedented buzz, opening up new horizons for artists and collectors alike.

While this revolutionary technology offers exciting opportunities for creators to monetise their works and secure their intellectual property moral rights, it has also given rise to a myriad of legal complexities, particularly in the realm of copyright infringement.

As NFTs continue to reshape the digital landscape, it’s crucial for artists, collectors, and enthusiasts to understand the intricate web of issues that surround these unique digital assets.

Join us as we dive into the fascinating world of NFT infringement, exploring the challenges, legal implications, and practical considerations that will help you navigate this brave new world with confidence and ease.

An NFT

An NFT, or Non-Fungible Token, is a unique digital asset that represents ownership, provenance, and authenticity of a specific item or piece of content, such as digital art, music, videos, virtual real estate, collectibles, or even tweets.

NFTs are created using blockchain technology, which ensures the security and immutability of the digital asset’s information, making it nearly impossible to alter or tamper with the data.

The term “non-fungible” means that each NFT is one-of-a-kind and cannot be exchanged on a one-to-one basis with another NFT, as they each have distinct characteristics and values.

This is in contrast to “fungible” tokens like cryptocurrencies (e.g., Bitcoin or Ethereum), which are identical and have the same value, allowing them to be easily exchanged.

NFTs have gained immense popularity in recent years, as they allow artists and creators to monetise their digital works and provide collectors with verifiable proof of ownership.

When an NFT is bought or sold, the transaction is recorded on the blockchain, creating a transparent and traceable history of the digital asset’s ownership.

This helps to establish provenance, prevent counterfeiting, and ensure the authenticity of the digital item associated with the NFT.

NFT and Copyright Infringement

NFTs and copyright are closely interconnected, as the sale and ownership of an NFT often involve the transfer and use of digital works protected by law.

When an artist or creator mint an NFT representing their digital work, they’re essentially attaching a unique digital certificate of ownership and authenticity to that work, without necessarily transferring the underlying copyright.

It’s important to note that owning an NFT does not automatically grant the buyer full ownership of the digital work associated with it.

In most cases, the creator retains the copyright and reserves the right to reproduce, distribute, publicly display, or create derivative works from the original piece.

When purchasing an NFT, the buyer generally acquires a limited license to use, display, or resell the digital work, subject to the terms and conditions set forth by the creator.

The intersection of NFTs and copyright can give rise to potential legal issues, such as infringement, when unauthorised parties create, sell, or buy NFTs linked to works without the permission of the owner.

This can occur when someone mints an NFT of someone else’s artwork, music, or other copyrighted content and sells it without proper authorisation.

In such cases, the original copyright owner can take legal action against the infringer to protect their intellectual property rights.

To avoid copyright infringement in the NFT space, it’s essential for creators, buyers, and sellers to understand and respect the intellectual property rights of others.

Creators should ensure they have the necessary rights to the content they’re minting as NFTs, while buyers should verify the legitimacy and provenance of the NFTs they’re purchasing to avoid unintentionally supporting copyright infringement.

Further Reading: What is Copyright Infringement

NFT Art Copyright Infringement

NFTs, or non-fungible tokens, have gained significant popularity in recent years as a means to buy, sell, and trade digital art and other digital assets on blockchain networks.

However, the rise of NFTs has also raised concerns about copyright infringement, particularly in the digital art world.

Understanding copyright: Copyright is a form of intellectual property protection that gives creators the exclusive right to reproduce, distribute, display, and create derivative works from their original creations.

This applies to various forms of creative works, including visual art, music, literature, and more.

NFTs and copyright: Owning an NFT does not automatically grant the owner copyright or the rights to reproduce or distribute the underlying artwork.

The NFT simply represents a unique digital asset, which may be a piece of digital art, but the copyright remains with the original creator unless explicitly transferred.

Infringement concerns: The NFT market has seen numerous cases of copyright infringement, where artists’ works have been tokenised and sold as NFTs without their consent or knowledge. This raises legal and ethical issues, as the unauthorised sale of NFTs infringes on the copyright holder’s exclusive rights.

Protecting your work: Artists and creators can take steps to protect their works from copyright infringement in the NFT space by registering their copyright, applying watermarks, or using digital rights management (DRM) tools.

Additionally, creators can use blockchain-based platforms that verify the authenticity and provenance of artworks before they can be tokenised.

Legal recourse: If copyright infringement occurs in the NFT market, the copyright holder can take legal action against the infringer, seeking remedies such as monetary damages, injunctive relief, or the removal of the infringing NFT from the marketplace.

Responsible NFT buying: As an NFT buyer, it is crucial to ensure that the NFT you are purchasing has been created or authorised by the original artist or copyright holder.

This can be done by researching the NFT’s provenance, checking the artist’s social media profiles, or verifying the authenticity of the artwork on trusted platforms.

NFT Legislation Background on Copyright

As NFTs continue to gain prominence in the digital world, the relationship between NFTs and copyright law is becoming increasingly important.

The copyright law framework for NFTs is still in its early stages, and the unique nature of these digital assets raises several legal challenges that need to be addressed.

Copyright law exists to protect the rights of creators by granting them exclusive control over their original works, including reproduction, distribution, public performance, and the creation of derivative works.

The law applies to various forms of creative expressions, such as literature, music, art, and software, provided that they are original and fixed in a tangible medium.

In the context of NFTs, the digital work associated with the token, such as a digital painting or a music file, is typically protected by copyright law.

When an NFT is minted and sold, it is crucial to understand that the copyright ownership of the digital work is separate from the ownership of the NFT itself.

The creator of the digital work usually retains the copyright, while the buyer of the NFT acquires a limited license to use, display, or resell the digital work, subject to the terms specified by the creator.

There have been cases of copyright infringement in the NFT market, where individuals mint and sell NFTs linked to copyrighted works without the permission of the copyright owner. This unauthorised use of copyrighted material can lead to legal disputes and potential liability for the infringer.

As the NFT market continues to evolve, it is likely that lawmakers and courts will need to adapt and clarify copyright law to address the specific challenges and complexities arising from the use and sale of NFTs.

This could include establishing clearer guidelines on the rights and limitations of NFT buyers, sellers, and creators, as well as developing mechanisms to prevent and address copyright infringement in the NFT space.

Until then, participants in the NFT market should exercise caution and familiarise themselves with existing copyright laws and best practices to avoid potential legal issues.

Issues in NFT Copyright Infringement 

1. Unauthorised minting of NFTs

Unauthorised minting of NFTs is a significant issue in the world of digital art and collectibles.

When an individual creates an NFT linked to a copyrighted work without obtaining proper permission from the copyright owner, they are violating the owner’s exclusive rights, such as reproduction, distribution, and public display.

This unauthorised use of copyrighted material not only disrupts the market for the original creator but also poses legal risks to the infringer.

Unauthorised minting can occur in various scenarios, such as when someone takes a popular artwork or digital creation, mints an NFT using the work, and then sells it for profit without the original artist’s knowledge or consent.

This act robs the creator of potential revenue, undermines their control over their work, and may damage their reputation.

The consequences for the infringer can be severe, as the copyright owner has the right to take legal action against them.

This may include filing a lawsuit for copyright infringement, seeking monetary damages for the financial losses suffered due to the infringement, and demanding an injunction to prevent further unauthorised use of their copyrighted work.

In some cases, infringers may also be subject to criminal penalties, depending on the nature and extent of the infringement.

To avoid unauthorised minting of NFTs and the associated legal risks, it is essential to respect the intellectual property rights of creators and obtain proper authorisation before minting and selling NFTs linked to copyrighted works.

Platforms that facilitate the creation and sale of NFTs should also implement measures to verify the legitimacy of the works being minted and ensure that copyright owners are adequately protected.

As the NFT market continues to evolve, it is crucial for all participants to be aware of the legal implications of their actions and to act responsibly to maintain the integrity of the ecosystem.

Further Reading: Copyright Issues in Digital Library

2. Misattribution of Authorship

Misattribution of authorship occurs when NFTs are minted and sold with incorrect or misleading information about the creator of the associated digital work. This misrepresentation can lead to several problems, both for the true creator and the buyers of the NFT.

For the true creator, misattribution can have several negative consequences:

  • Loss of recognition: When an artist’s work is falsely attributed to someone else, they lose the recognition and appreciation they deserve for their creative efforts. This can hinder their career growth and deprive them of potential opportunities in the art world.
  • Loss of revenue: If an NFT is sold under false pretenses, the original creator may not receive any of the profits from the sale. This can lead to significant financial losses, especially if the NFT becomes highly valuable.
  • Damage to reputation: If an NFT is sold with false authorship information, it may lead to questions about the legitimacy of the creator’s other works, damaging their professional reputation and potentially affecting future sales.

For buyers of the NFT, misattribution can also cause problems:

  • Devaluation: If the true creator of the associated digital work is later revealed, the value of the NFT may decrease, as it no longer represents a genuine piece from the falsely attributed creator.
  • Legal disputes: Misattribution can lead to legal disputes over the rightful ownership of the copyright and the NFT. Buyers may find themselves involved in litigation, which can be costly and time-consuming.
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To prevent misattribution of authorship, it is essential for NFT platforms to implement strict verification processes for creators and their works.

This may include requiring proof of identity, proof of ownership of the associated digital work, and ensuring the creator has the necessary rights to mint and sell the NFT.

Additionally, buyers should exercise due diligence when purchasing NFTs by researching the creator’s background and verifying the authenticity of the work.

As the NFT market continues to grow, it is crucial to address the issue of misattribution of authorship to maintain trust and transparency in the ecosystem, ensuring that creators receive proper recognition and compensation for their work, and buyers can confidently invest in authentic pieces.

3. Lack of Clear Terms and Conditions

Scope of the license: In the absence of clear terms, buyers may not fully understand the extent of their rights to use, display, or resell the digital work. This can lead to inadvertent copyright infringement if the buyer exceeds the scope of their license.

Restrictions on use: Unclear terms can make it difficult for buyers to determine if there are any restrictions on the use of the digital work, such as prohibitions on commercial use, public display, or the creation of derivative works.

Transferability of the license: When reselling an NFT, it is crucial to know whether the limited license attached to the digital work is transferable to the new owner. Ambiguity in the terms and conditions may create uncertainty regarding the rights of subsequent buyers.

Creator’s rights and royalties: Without clearly defined terms, the creator’s rights regarding royalties or revenue sharing from future sales of the NFT may be unclear. This can result in disputes over the division of profits from secondary market sales.

4. Secondary market sales

Scope of the license: In the absence of clear terms, buyers may not fully understand the extent of their rights to use, display, or resell the digital work. This can lead to inadvertent copyright infringement if the buyer exceeds the scope of their license.

Restrictions on use: Unclear terms can make it difficult for buyers to determine if there are any restrictions on the use of the digital work, such as prohibitions on commercial use, public display, or the creation of derivative works.

Transferability of the license: When reselling an NFT, it is crucial to know whether the limited license attached to the digital work is transferable to the new owner. Ambiguity in the terms and conditions may create uncertainty regarding the rights of subsequent buyers.

Creator’s rights and royalties: Without clearly defined terms, the creator’s rights regarding royalties or revenue sharing from future sales of the NFT may be unclear. This can result in disputes over the division of profits from secondary market sales.

5. Fair use and transformative works

Assessing the purpose and character of the use: One of the key factors in determining fair use is assessing the purpose and character of the use of the copyrighted material. This includes evaluating whether the use is commercial or non-commercial and whether it is transformative, meaning that it adds new meaning, message, or expression to the original work. In the context of NFTs, making these assessments can be complex, as digital art and collectibles often blur the lines between commercial and non-commercial uses, as well as original and transformative works.

Proportionality and the amount of copyrighted material used: Fair use typically allows for the use of a limited portion of a copyrighted work, rather than the entire work. In the NFT space, it may be challenging to determine the appropriate amount of copyrighted material that can be incorporated into an NFT without crossing the line into infringement.

Impact on the market value of the original work: Another factor in determining fair use is the extent to which the use of copyrighted material affects the market value of the original work. With NFTs, this can be particularly difficult to evaluate, given the volatile and speculative nature of the digital art and collectibles market.

6. International jurisdiction 

International jurisdiction refers to the legal authority of a particular country or region to make decisions and enforce laws related to a particular issue, such as copyright infringement.

Copyright laws and their enforcement vary across different countries, which can make it difficult to determine which laws apply to a particular case of copyright infringement related to NFT transactions, especially when those transactions are conducted on a global scale.

This complexity can create challenges for individuals or entities seeking to enforce their intellectual property rights and may require the involvement of legal experts who are familiar with the specific laws and regulations in different countries.

Further Reading: How to Report Copyright Infringement

NFT Copyright Infringement Cases

The rise of NFTs has led to a number of high-profile copyright infringement cases in recent years. Here are some notable examples:

Beeple’s “Everydays: The First 5000 Days”: In March 2021, digital artist Beeple sold an NFT artwork titled “Everydays: The First 5000 Days” for a record-breaking $69 million.

However, some artists claimed that their copyrighted works were included in the collage without permission. While Beeple acknowledged the oversight and attempted to rectify the situation, the case highlighted the potential for copyright infringement in the NFT space.

Banksy’s “Morons”: In February 2021, a group called “Burnt Banksy” purchased a physical artwork by Banksy, titled “Morons,” for $95,000.

They then burned the artwork and created an NFT representing the destroyed piece, which sold for approximately $400,000.

This case raised questions about the legality of transforming physical artwork into digital assets without the artist’s consent and the potential for copyright infringement.

Rarible and tokenized tweets: In 2020, a platform called Rarible allowed users to tokenise tweets as NFTs, leading to several instances of copyright infringement.

Some users created NFTs of tweets from high-profile individuals, such as Elon Musk, without their permission. While Twitter has not taken legal action, these cases highlight the potential for infringement when tokenising content created by others.

Jay-Z’s “Reasonable Doubt” album cover: In 2021, Damon Dash, co-founder of Roc-A-Fella Records, attempted to sell an NFT of the album cover for Jay-Z’s “Reasonable Doubt.” Jay-Z and his legal team took action against Dash, claiming that he did not have the rights to sell the album cover as an NFT.

The court granted a temporary restraining order, preventing the sale of the NFT and highlighting the importance of understanding copyright ownership before creating or selling NFTs.

Final Thoughts

In conclusion, NFT copyright infringement is a complex issue that requires careful consideration and action.

As NFTs become more popular, it is important for creators and buyers to be aware of their rights and responsibilities when it comes to intellectual property. It is crucial to take steps to protect original creations and ensure that they are not misused or copied without permission.

The emerging field of NFTs presents exciting opportunities for creators and collectors, but it is important to navigate these new technologies with care and respect for the rights of others.

By working together to uphold ethical and legal standards, we can build a vibrant and sustainable ecosystem for digital art and assets.

FAQs

What is NFT copyright infringement?

NFT copyright infringement refers to the unauthorised use, reproduction, or distribution of digital assets that are protected by copyright laws.

Can NFTs be copyrighted?

Yes, NFTs can be copyrighted if they contain original creative content that is eligible for copyright protection.

How can I protect my NFT from copyright infringement?

You can protect your NFT from copyright infringement by registering your copyright with the relevant authorities, including the US Copyright Office, and by using digital watermarking or other tools to track and monitor your NFTs.

What should I do if someone infringes on my NFT copyright?

If someone infringes on your NFT copyright, you can take legal action by sending a cease-and-desist letter, filing a lawsuit, or working with an attorney to pursue legal remedies.

How can I avoid infringing on someone else’s NFT copyright?

You can avoid infringing on someone else’s NFT copyright by obtaining permission or a license to use their work, conducting a thorough search for existing copyrights, and creating original content that does not infringe on others’ rights.

What are the penalties for NFT copyright infringement?

The penalties for NFT copyright infringement can include monetary damages, legal fees, and in some cases, criminal charges.

Can NFT creators sue for copyright infringement?

Yes, NFT creators can sue for copyright infringement if their work is used without their permission or in a way that violates their copyright.

How long does NFT copyright protection last?

NFT copyright protection generally lasts for the life of the creator plus 70 years, or for a set period of time depending on the specific copyright laws in your country.

Can NFTs be used for fair use purposes?

NFTs can be used for fair use purposes, but the specific circumstances of the use must be evaluated on a case-by-case basis to determine if they fall under fair use exemptions.

Are NFTs subject to international copyright law?

Yes, NFTs are subject to international copyright law, and copyright owners can pursue legal action across international borders to protect their rights.

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