What You Need to Know to Protect Copyrights
Attorney, Weiss Law LLP
Associate, KP Law
NFTs have created a revolutionary shift in the creative world almost overnight. So much so, that with the current ecosystem, it is now being said that we have entered the “digital renaissance” of art. Not because of the “Bored Apes” and “Lazy Lions,” but because creators and buyers can now confidently prove that a work of art belongs to them—thanks to the immutable technological infrastructure of blockchain. NFTs could hold the potential solution to creators’ sleepless nights and copyright crises if done right.
What is an NFT?
An NFT is an identifiable, non-fungible, non-replicable, and transferrable cryptographic asset recorded on the blockchain that is “minted” to creative content. For purposes of this article, creative content can mean product images, art, designs, drawings, photographs, and the like.
Who owns the copyright?
There is a huge lack of insight into who owns the copyright of an NFT. This confusion likely stems from the fact that an NFT comprises two things: (i) the identifiable, non-fungible, non-replicable, and transferrable cryptographic asset recorded on the blockchain, and (ii) the creative content. The creative content is separate and distinct from the actual asset recorded on the blockchain. As such, the person or entity that created the creative content owns the copyright. The content creator continues to own the copyright, even if the NFT is sold to someone else. It’s analogous to Jeff Koons selling artwork he created—Koons can sell the art to one person to hang on their wall, but since Jeff also owns the copyright, he can sell that same artwork as an image on t-shirts.
What does an NFT purchaser own?
Someone who purchases an NFT only owns the asset recorded on the blockchain. The NFT purchaser does not own the creative content. The content creator continues to own the copyright, even if that NFT is resold a million times over. The only exception to this rule is if the copyright owner assigns the copyright to the NFT purchaser.
Can the copyright of the original artwork be transferred to NFT buyer?
As mentioned above, purchasing an NFT does not mean that the copyright of the underlying creative content automatically transfers to the owner of the NFT. However, the transfer of copyright ownership is possible as long as it is expressly determined in the contract between parties (see, 17 U.S.C. §204 (a)).
How can IP rights of the NFT be managed?
IP rights of an NFT can be managed through a smart contract which assigns ownership and manages the transferability of the NFTs or with a separate agreement that specifies how the proprietary rights of the NFT (including copyright) will be, upon sale of the NFT.
What is NFT copyright infringement?
NFT copyright infringement occurs when someone steals creative content, without proper transfer or purchase as noted above, then mints it as unique digital asset on a blockchain, and then offers it up for sale on an NFT platform.
Who can enforce against an infringing NFT?
Only the copyright owner or someone that is authorized by the copyright owner can enforce against an NFT that is infringing upon copyrights.
What’s an appropriate strategy for NFT enforcement?
It’s important to have a strategy for identifying stolen images on the Internet. Otherwise, a search can be a daunting task when looking through the never-ending sea of the internet. As a first step in identifying infringement with NFTs, it’s important to recognize that the search is limited to the blockchain. Yes, there are millions of NFTs minted on blockchains, but most all NFTs are minted on the Ethereum network. When it’s not the Ethereum network, it’s likely on Polygon. Now, with a more focused strategy, we’ve turned the “sea” into a “pond” for identifying stolen images.
How do I identify NFT infringement?
There are a few tools to use while searching the “pond” for stolen images. Fingible.nftport.xyz is a tool that searches the Ethereum and Polygon networks. It can be utilized by a text or reverse image search. Tineye.com is a popular and advanced image search tool that features the ability to filter your search to a specific NFT marketplace website. Google Reverse Image search is a third tool to use for identification (see BPP, March 2018, Professional Pointer: Reverse Image Searches-Using Counterfeiters’ Images Against Them). Some NFT marketplaces, such as OpenSea, use Google as their image host for NFTs. So, a Google image search will bring back results from these NFT marketplaces.
How do I remove NFT infringement?
The Digital Millennium Copyright Act (DMCA), a U.S. copyright law, designed to protect copyright owners specifically from infringements with regards to the online world. The DMCA section 512 provides a tool for copyright owners and online entities to address online infringement, including limitations on liability for compliant service providers. To remove an NFT infringement, you’ll submit a DMCA takedown notice to the NFT marketplace. The DMCA takedown notice informs the marketplace that they are hosting infringing content and demands that they remove this infringing content.
What do I need to know about the DMCA takedown notice?
The DMCA takedown notice is a powerful tool. There is little cost or effort on the party alleging the infringement. The party needs to meet DMCA notice requirements, which are minimal. The DMCA notice recipient must comply or risks copyright infringement liability. With the ease of use of the DMCA, it is critical to not abuse the DMCA. If the party submitting the DMCA notice receives too much pushback on validity of the claims from the recipient parties, the party is risking (i) its ability to enforce in the future on that marketplace, or (ii) a legal action from the person that received the false allegation of copyright infringement.
I reported the NFT infringement via the DMCA, but it’s not removed. Now what?
Upon receipt of a DMCA notice, the marketplace or image host must remove the infringement within a “reasonable” period of time. There is no set rule for “reasonable,” but if it is not removed within one week, you may need to submit via an alternative method or through an attorney.
Are there best practices for submitting a DMCA request?
Most often, NFT marketplaces or third-parties hosting the infringing content require you fill out a webform to submit your DMCA notice. If you do not receive a confirmation email of your webform submission, you should also send an email of the DMCA notice to the host. An email documents the timeframe window for the response to your DMCA notice and proof of repeat violations, which will be helpful if the matter escalates towards litigation.
How can I benchmark my enforcement efforts?
NFTs are recorded on the blockchain. This means all transactions are publicly available. If you find an infringing NFT, you can look at the activity of that NFT to see every sale that was made of that NFT. This is a huge advantage compared to all other products, where benchmarking enforcement efforts is based primarily upon estimations.
What evidence is easily obtained for infringing NFTs?
With cease-and-desist letters and litigation efforts, it is extremely valuable to know how much money has been made from the sale of an infringement. Since the sale of the NFT is recorded on the blockchain, the copyright owner enforcing their copyright can look to see how much money was made by the party that stole the image and tailor their monetary demands accordingly. It’s also valuable to know the popularity of that NFT—the more trading of the NFT, the higher demand there is for that NFT. The activity section of the NFT shows all the transfers of that NFT, which is information that can also support a higher monetary demand against copyright infringers.
THE BRAND PROTECTION PROFESSIONAL | JUNE 2022 | VOLUME 7 NUMBER 2
2022 COPYRIGHT MICHIGAN STATE UNIVERSITY BOARD OF TRUSTEES