NFTs add to copyright confusion

This article explores the intricate intersections between NFTs and copyright law, highlighting misconceptions surrounding ownership and copyright, international complexities, and the potential for new licensing solutions.

The growing non-fungible token market has led to confusion about its relationship to copyright law. Part of this is due to inexperience and misunderstandings among NFT minters, but a lot is also related to the limitations of current copyright laws and existing licenses.

One possible solution is to create a special license for NFTs. For now, the lack of clarity could expose creators and traders to costly lawsuits.

NFTs and Copyrights: Common Misconceptions

Many people, whether minting or trading NFTs, assume that the owner of the NFT owns the copyright to the minted image, but this is not true. In law, there are two kinds of rights involved in the possession of physical objects and the reproduction of physical objects.

For example, if you own a coffee mug, you can sell it to anyone, but once sold, it ceases to be yours and you have no further rights. But you can also take a picture of it and make as many copies as you want, then sell those copies without selling the mug. You can also allow others to copy your photos. That's copyright: a limited set of rights related to the reproducibility of an asset.

A copyright owner can license the rights to one person or proprietors, or only for a specific purpose, and set the terms of the license, as well as derivative rights.

For example, the author of a book will often sell the rights to self-publish the book while retaining the right to make a film or television adaptation for later sale. There are also derivative rights for spin-offs, such as television rights to a film based on a novel or the right to show the film in theaters, make a DVD of the film, or upload it to a streaming service.

Importantly, sales of physical objects do not involve copyright unless expressly included in the transaction. This is most evident in fiction, where authors can sell their manuscripts without selling the rights. Or, if you sell a coffee mug, the new owner doesn't automatically get the rights to make and sell your photo.

How US Copyright Law Affects NFTs

The Internet makes the situation even more complicated.

Under U.S. copyright law, James Grimmelmann and Yan Ji of Cornell University School of Law and Tyler Kell of the Cryptocurrency and Contracts Initiative say if you take a picture of your mug and scan it into a computer, it creates a separate copy. a copy of.

If you upload it to the web, the server storing it has a separate copy, and then every time someone navigates to your site and views that image, another copy is created. So, you might buy an NFT of that image but have no legal right to view it.

Before NFTs, this wasn't considered a problem. After all, even a highly litigious music company that sends takedown notices for a snippet of a song playing in the background of a publicly shot video would have a hard time suing people who listen to previews of their uploaded songs on iTunes.

Now, however, NFT owners are under the impression that they own the copyright to the works they minted or purchased, and are trying to sue or license rights that they don't exist.

Nearly 20 years ago, Barbara Streisand sued a photographer and the website he worked for in an unsuccessful attempt to remove a photo of her house—a photograph documenting coastal erosion in California—from the Internet. Still, she wouldn't be more successful if she made an NFT of that image and sued anyone who downloaded or shared it for copyright infringement.

International Copyright Considerations for NFTs

Because copyright laws vary from country to country, copyright confusion spreads internationally. Works that make NFTs can be copyrighted in one respect and public domain in another. Different countries have other laws that govern things like copyright.

While lawyers and businesses working on copyright have not dealt with this kind of issue, the confusion over the copyright status of NFTs may affect the market value of tokens. With the NFT market potentially worth billions of dollars, this could be a huge cloud hanging over their heads.

**Who owns the artwork? **

A similar problem is that while the ownership of the NFT resides on the blockchain, the digital art being minted has no such provenance. The legal owner of a copyrighted work can sue for gross receipts and damages. AI-generated works can introduce further complications.

Currently, the U.S. Copyright Office says AI works are not subject to copyright protection, but it's unclear what rights creators have if their work is used to train or be sampled by AI.

PROPOSED SPECIAL LICENSE FOR NFT

One possible solution to this confusion is for the rights holder to create a special NFT license tied to the token, so that the license is automatically transferred along with the token. Licenses cannot be separated from NFTs and can be recorded as part of the blockchain when tokens are minted.

This license can be automatic (compulsory license) if no special provision is made by the copyright holder. This helps protect their rights and avoid confusion and conflict. This is the approach taken by Dapper Labs' NFT license, which grants certain rights to purchasers of its NFTs. However, the NFT license does not follow the ownership of the NFT.

in conclusion

New legislation is unlikely to address these issues. The existing intellectual property regime is so entrenched that major interest groups such as record labels and movie studios will do everything in their power to maintain the status quo.

Given these complexities, NFT creators and traders must understand copyright laws themselves and ensure compliance with them to avoid legal disputes. While it won't damage the industry in the same way that cryptocurrencies have been unfairly linked to money laundering and other crimes, the lawsuits and damages from a breach will be costly and limit investment.