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Do NFTs require IP protection?

Nov 1, 2022 | Intellectual Property

If you are considering creating or trading NFTs (non-fungible tokens), you need to be clear about who owns the rights to the intellectual property (IP) prior to creation. If the IP doesn’t belong to you, someone else could receive a portion or all of the proceeds.

In regular creative work, basic IP law is well-known. If you create a piece of traditional art such as a photograph, you, as the creator, typically retain the IP rights. You could, of course, choose to sell those rights entirely. Or you might give someone else the right to use the image for specified purposes.

For example, you could allow a t-shirt company to print 10,000 t-shirts with your image on them. Or you could charge a company to use the image in their publicity. Yet just because someone buys the photo from you does not necessarily mean they own any IP rights.

What about NFTs?

When someone creates an NFT, they own the IP rights to it, provided that the work covered by the NFT is original. You cannot just create an NFT for someone else’s work and then claim that you now own the IP rights.

Typically when artists sell NFTs of their works, they retain the IP rights. So the holder of the NFT cannot make money by charging someone else to print t-shirts using that work. If the t-shirt company wanted to use the work, it would need to deal with the NFT creator who holds the IP rights.

Times are changing

Some who create NFTs are moving away from this model. They are giving away partial or complete IP rights to those who buy the NFTs., allowing those buyers to monetize their purchase.

If you are unsure, it is best to seek legal help to understand the current situation and how any future changes could retrospectively affect your decision.