NFTs and Intellectual Property, Explained

1. What are intellectual property rights?

In its simplest form, intellectual property refers to something you create with your mind, such as works of art, literature, and inventions.

These protections were relatively easy to enforce in the analog age, but our digital world, where copying and pasting abounds as millions of people create their own content, makes it especially difficult.

Non-fungible tokens are an exciting development that has the power to modernize everything from baseball cards to music albums, from motion picture products to stunning works of art. But, as with any new technology, there are issues that need to be overcome.

The industry is still attacking the rights given to owners of an NFT, and there are other threats that need to be addressed. If a non-fungible token is stolen by a malicious actor, does the victim still have intellectual property rights? And how to counter the risk of NFT copying on a competing blockchain?

2. When you buy an NFT, do I automatically get intellectual property rights?

The short answer to this question is no. It's important to read the fine print to know exactly what you're getting.

Let's run through some quick examples. Jack Dorsey sold his first tweet in NFT form for $2.9 million in March 2021. While there is no doubt that this is historical content, crypto entrepreneur Sina Estavi does not own the intellectual property of this tweet. All copyrights still belong to Dorsey.

The New York Times pulled off an ironic stunt by publishing an article about crypto collectibles, then gave readers the chance to own a token version of the story. It ended up selling for a whopping 350 ETH – worth $560,000 at the time, and around $600,000 in early August 2022. Although this NFT had some upsides (the buyer was lucky enough to be named and photographed in an upcoming piece), it did not include copyright to the article…nor any reproduction or syndication rights.

The potential pitfalls don't end there either. MetaBirkins became particularly popular during the NFT boom - a digital remake of famous Hermès bags. But digital artist Mason Rothschild found himself in hot water with the designer brand, which took legal action after claiming it could confuse consumers.

3. Which NFT collections have granted intellectual property rights to owners?

Some of the largest NFT collections currently available, including Bored Ape Yacht Club, have licensed full intellectual property rights to users.

This is a significant (and one might say very generous) development. This effectively means that those who own Bored Ape NFTs have the potential to profit from them. We saw Eminem and Snoop Dogg team up for a new music video where they transform into their characters. Meanwhile, sites have sprung up where collectors can actually rent their monkey's NFT from brands.

As we mentioned earlier, actor Seth Green caused a stir when he revealed plans to create a TV show themed around his Bored Ape NFT, who he affectionately calls Fred, called White Horse Tavern. Green's beloved collectible ended up being stolen in a phishing attack, and he ended up paying more than necessary to get it back.

BAYC's license states that those who buy NFTs "completely own the underlying Bored Ape, the Art", but doesn't actually mention what happens if stolen. Many pundits believed Green would have been on solid legal footing had he aired the TV show without the NFT, but there are no guarantees.

4. How can the NFT and Web3 protocols facilitate the transfer of IP rights?