Whether you love it or hate it, cryptocurrency has quickly turned from a niche hobby interest for computer-savvy individuals into a full-blown cultural touchstone that has entered the mainstream. From your younger nephew to your grandmother, they may have heard of cryptocurrency in one form or another.
The rise in popularity of cryptocurrency has ushered in the arrival of NFTs in the past year, which has opened up a bevy of exciting scenarios involving copyright protection. Here's what you need to know about copyright law and NFTs!
What Are NFTs?
NFTs stand for non-fungible tokens, which are unique metadata that typically can represent authentic items. NFTs act as digital tokens that are somewhat like the equivalent of certificates of authenticity for a particular asset or even function as a form of identification for an individual.
The appeal with NFTs is that they are embedded in the crypto blockchain, which, to avoid having a much longer in-depth explanation of cryptocurrency, is a complex system of records that helps authenticate your NFTs to make sure they have not been tampered with in the slightest.
The Concerns With NFTs
With any new asset that enters the marketplace comes questions of their legality and understanding how to ascertain their value. While on paper, NFTs can act as an effective digital method of acquiring and transferring assets without the risk of paying for an item without receiving it, there is a lot left to be desired in execution.
NFTs in digital marketplaces are not inherently breaking laws as there are cases in which NFTs distribution is perfectly legal, at least within the United States and most countries at the time of writing. Digital content creators upload their own work into the blockchain and sell NFTs are within their right to distribute their work without worrying about potential copyright infringement.
Where Things Get Tricky
However, there are cases in which NFT creators take work from the public domain or even from other artists, unbeknownst to them, and step into trouble. With any media, you need to be wary of licensing agreements set by various companies, as even something as simple as a photograph of a public building can be protected under licensing agreements.
In recent months, the issue with NFTs has come in the form of copyright violation where the creator of an NFT uses work that is not their intellectual property and distributes tokens without the owner's knowledge. Some confusion arises because NFTs are described as tokens, not actual reproductions of the original work.
Currently, NFTs can fall in a sort of a gray area in which some judges may defend individuals' rights to distribute NFTs as they can be seen as simply hyperlinks or metadata that is not derivative of the original work, so not in breach of copyright law. However, that has not stopped some companies from legal action against NFTs creators by stating they are hurting their company image or brand.
What Happens Next?
The short answer is that cases around NFTs are relatively new, and as lawsuits contain significant companies that seek compensation for copyright infringement, this will set a precedent for handling copyright cases involving NFTs. What can be difficult is understanding that these are cases within the United States, and we have not begun to even factor in how an NFT can potentially violate copyright laws in other countries, and the situation can get more complex as these are digital assets that can easily be exchanged across the globe.
If you find yourself in a position where you feel your work has been sold without your permission, contact Nick Lotito & Seth Kirschenbaum at (404) 471-3177 and we can help schedule a meeting with one of our copyright & trademark attorneys.