Dinusha Mendis, Professor of Intellectual Property and Innovation Law and Acting Vice Dean (Research), Faculty of Media and Communication, University of Bournemouth.
Source: Adobe / alexskopje
NFTs, or non-fungible tokens, first caught public attention when a digital collage by an artist named Beeple sold for $ 69 million at Christie’s in March 2021. Since then, the use of these devices to store digital Content bought and sold through online ledgers called blockchains exploded.
Since the first attachment to art, NFTs have been used in several other ways. Most notably, many of them are traded as collectibles on exchanges like OpenSea and Rarible. For example, a recent series of 8,888 adorable “Pudgy Penguins”, each reflecting their own unique characteristics, caused quite a stir. One copy was sold at the record price of 150 ETH (approximately $ 5 million).
Pssst, do you want a penguin? OpenSea
But whether it’s a remarkable digital work of art or a cute digital penguin, NFTs are essentially marketable jpegs or gifs. Unlike physical collectibles, an NFT owner cannot display the item in their home – except on a screen. He might think he could put it on a website, but that’s not necessarily the case. So what do you get when you buy an NFT, and what do you actually own from a legal perspective?
The new frontier
To understand NFTs, it is important to understand what is meant by “fungible”. Fungible is derived from the Latin verb fungi, which means “to perform”. In a broader sense, it means interchangeable and refers to whether something can be exchanged.
Money is changeable in the sense that you can buy a product worth £ 10 with any £ 10 note; it does not matter what bill you use. NFTs, on the other hand, cannot be exchanged for the same value. They are separate or a copy of a limited edition.
Content sold as NFTs can be created in many ways. They can be computer generated, which was the basis for the production of 10,000 unique CryptoPunks in 2017.
They may reflect a collaboration, such as the English singer-songwriter Imogen Heap’s series of music NFTs, “Firsts”. She improvised with images by artist Andy Carne. However, NFTs can also represent a single work, e.g. B. the work of art by Beeple, or a number of objects such as. For example, Kings of Leon’s “NFT Yourself” series offered music albums with unique features and special concert tickets.
NFTs allow the owner of a limited work or collection to reach their audience directly. While it used to be impossible to sell something like the very first tweet, taco-gif or artwork online, any individual, business or cultural organization can now do so as long as they are the rightful owner.
The author can do this because under British copyright law, copyright arises automatically when a work is created – provided it reflects “the author’s own intellectual creation”. This means that the creator of a work owns the copyright and can do whatever they want with it.
When someone buys an NFT from the Creator, they acquire ownership of it in the sense that it becomes their own. Finally, an NFT is a digital ownership certificate that represents the purchase of a digital asset and can be tracked on a blockchain.
However, the NFT holder has no further rights to the work. These include the rights granted by copyright, such as the right of communication to the public (ie the right to make the asset available to the public) or the rights of adaptation or reproduction.
The situation is the same when you buy a physical collectible. Owning a painting does not automatically entitle you to display it in public. Nor does it entitle you to sue for copyright infringement if someone reproduces the image of the painting without permission. To obtain such rights, you must either be the copyright holder of the work or obtain a copyright transfer (in writing and signed) from the creator.
The problem with online content is that due to its digital nature it can be easily shared, copied and duplicated. Buyers of NFTs should be aware that they would be violating copyright law if they engaged in such activities without the permission of the rights owner. The only way to transfer such rights is through the terms of the NFT in the form of a license.
There are some NFTs where the buyer has been given the right to use the copyright to a limited extent. For example, CryptoKitties NFT holders have been allowed to earn up to $ 100,000 in gross revenue annually. In other cases, the authors have expressly restricted the commercial use of the work. For example, Kings of Leon has determined that their NFT music is for personal use only.
CryptoKitties allow owners to earn up to $ 100,000 a year. VectorFactory
Buyers should therefore be aware that the main reasons for buying an NFT are speculative investments and the pleasure of owning something unique from an admired artist, brand, sports team or whatever. If conditions do not allow it, buyers have only a limited opportunity to share the creative work on public platforms or to duplicate it and make it available to others.
Buyers should also be aware that blockchain can not determine with absolute certainty whether a creative work is authentic. Someone can take another person’s work and use it as Tokenize NFT thereby infringing the rights of the copyright holder. You need to make sure you are buying something that comes from the creator.
In short, NFTs are likely to catch on, but they clearly raise issues of ownership in the form of copyright. This may not be immediately obvious to most people, and it is important that you understand the limits of what you are getting for your money.
This article was republished by The Conversation under a Creative Commons license. Read the original article here
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