5 Things to Know About NFTs and Copyright Law
Non-fungible tokens (“NFTs”) are digital assets that can represent art, music, and videos and are becoming an increasingly popular way to buy and sell digital works online, often with cryptocurrency. Like traditional works, NFTS often represent “one of a kind” works or are part of limited runs. While NFTs are relatively new, U.S. copyright law treats NFTs the same as any other traditional work, which has led to many misunderstandings among those who mint, purchase, and sell NFTs. Here are the five things to know about NFTs and U.S. copyright law.
You Don’t Own Copyright Just Because You Purchased an NFT.
Just like traditional art, such as an oil painting, purchasing an NFT only gives you the right to possess and display the NFT. Purchasing an NFT does not transfer the copyright in the underlying work, which remains with the author of the work unless copyright is expressly assigned to you in writing by the author of the work.
Minting an NFT Requires Ownership of Copyright or Permission from the Copyright Holder.
You can only mint NFTs from your original works, works for which copyright has been assigned to you, or works for which you have a license from the copyright owner. Minting an NFT from an existing work is reproducing and/or creating a derivative work of the original, which only the copyright owner or its licensee has the right to do. Thus, minting an NFT using someone else’s work requires that you own copyright or have a license from the copyright owner.
You Can’t Reproduce an NFT Unless You Also Own Copyright.
The copyright owner has the exclusive right to reproduce and make copies of a work. Thus, an owner of an NFT who do not also own copyright in the NFT is prohibited from reproducing or making copies of the NFT. Again, this is no different than owning any other type of work such as a painting or book.
You Can’t Display or Sell an NFT That Infringes Someone Else’s Copyright, Even If You Own The NFT.
When purchasing an NFT, it is important to verify that the creator of the NFT had proper copyright ownership or license to create it. If so, you can re-sell the NFT under the First Sale Doctrine, which allows someone who legally purchases a copyrighted work to sell, display, or otherwise dispose of that particular copy of the work. However, the First Sale doctrine does not apply if copyright in the NFT was nor properly owned or licensed to the creator of the NFT and/or the person who sold you the NFT. This is because the seller of the NFT can’t transfer rights to you that the seller doesn’t possess. In that case, you would be liable for copyright infringement for displaying or selling the NFT, even though you purchased it.
NFTs Are Not Automatically “Fair Use”
Whether use of an existing work as part of an NFT is covered by the fair use doctrine is subject to the fair use test as any other type of work. The fair use test is complex and uncertain and the subject of many misconceptions. If you intend to rely on the fair use doctrine, you should consult with an experienced copyright attorney before doing so.