The last decade was all about cryptocurrencies, and this decade has begun with a novel type of digital asset – NFT, also known as Non-Fungible Tokens. An NFT is a one-of-a-kind digital token that is managed on a blockchain. While traditional currency is fungible, NFTs are non-fungible (one bitcoin is different from other - fungible; Monalisa's painting is unique – non-fungible). NFTs signify a person's digital assets that are not replaceable and hence unique. Several artists and designers are gaining popularity who didn't have a platform to value their art through these digital assets financially.
Recently, a digital artist' Beeple" also known as Mike Winkelmann, sold an NFT of his digital art for $69 million at Christie's auction in exchange for a digital token. Spice DAO a crypto group, also bought a rare copy of "Dune" book for $3 million. However, Spice DAO thought that buying the book gives them carte blanche to reuse the book's contents for an animated series, make the book available in the public domain, etc. There's a misconception amongst people buying NFT that they can use the digital asset as they deem fit. They cannot because of copyright laws. Section 17 of the Copyright Act, 1957 states that the work's copyright owner is who actually created such work unless he agrees explicitly to withhold his ownership via the exceptions provided in the Copyright act. Also, the Berne Convention of 1886 is an international agreement that guarantees standardized copyright protection when a work is created in any of its signatory countries. One of the well-known IP owners, DC Comics, has sent out a stern warning to freelancers and creative teams employed by DC that unlicensed use of NFTs is not permitted. This warning was sent after an artist made $1.85 million by selling NFTs containing characters he used to draw for DC like Wonder Woman etc. DC Comics absolutely owns Wonder Woman, Batman, and all its characters. As the copyright law permits, it has every right to want to hold dominion over that intellectual property in the industry.
Many NFTs have incorporated the third-party intellectual property in their NFTs (such as DC's Comics example) without permission, with high hopes that NFTs serve as copyright alternatives. An NFT purchaser owns nothing more than a unique code on the blockchain with a transactional record and a hyperlink to the artwork file. Because of the current issue, Intellectual property owners (such as DC) whose content is being used in NFTs without permission are ramping up their enforcement efforts.
NFTs are not the original work itself, and it is just the metadata of the work (a string of code). When pixel art can be sold for over $1 million, it is easy to assume that the buyer has acquired more than a string of code. Although it is difficult to comprehend that a large amount of money is being spent on a metadata file of dubious artistic value, that is precisely what NFTs are.
What about licenses?
However, it is essential to seek permission from the copyright owner because the owner can only grant rights to reproduce, distribute copies, create derivatives, etc. (such as rights to a piece of a particular music or to sell a specific distribution of a book). The NFT owner can utilize the work once he/she seeks permission from the original copyright owner of the product, obtaining a license from the creator or the copyright owner of the work. Such use of the copyrighted work wouldn't amount to a copyright infringement and may be extensively governed by the NFT license, as has been in the case of the NBA Top Shot license. NBA Top Shot is an online exchange that sells NFTs of NBA highlights and is licensed by the NBA to do so, while the purchasers are given a verified ownership URL that links to a site where the NBA highlight is located. Although, without the NBA's license, it wouldn't have been possible because the NBA highlights' copyright owner is NBA itself.
Play it safe
Nevertheless, NFT's present an exciting opportunity for artists to engage and find new audience in a new ground and perhaps make some money in the price. But it has its risks and downfalls. The market is already acting as a doorkeeper, removing possible infringement by encouraging space where creators can offer the tokens they have generated because of the nature of the market and the incentive for significant returns. Still, NFT space might generate a good number of copyright disputes. Although India is likely to amend the Copyrights act, all such technology provisions related to copyrights must be taken care of in the upcoming amendments.
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