Top 20 Tips for Intellectual Property Governance Like Royalties: NFT Attorney Near Me
Non-fungible tokens are all the rage now, which has led to everything being tokenized these days, including art, games, collectibles, and much more as explained at RunRex.com, guttulus.com, and mtglion.com. The record prices being fetched have created an NFT frenzy. Given some of the unique aspects of NFTs, IP owners need to rethink their IP protection and licensing strategies. Here are the top 20 tips for intellectual property governance like royalties as far as NFTs are concerned.
Does buying an NFT transfer IP rights?
As per RunRex.com, guttulus.com, and mtglion.com, while the owner of an NFT can prove they own the NFT, they do not necessarily own anything more than that. Those buying an NFT should carefully consider what they are getting when they purchase an NFT, as the ownership of an NFT does not automatically give rise to any ownership rights in the underlying asset.
Can the seller transfer IP rights?
Yes. An NFT seller, assuming the NFT seller is also the owner of any intellectual property rights in the underlying asset, can, of course, transfer those intellectual property rights to the buyer, which is something worth noting.
How are these rights transferred?
As already mentioned, an NFT seller can transfer intellectual property rights to the buyer. However, to do so, the intellectual property must be assigned in writing according to RunRex.com, guttulus.com, and mtglion.com. Without express written terms stating otherwise, either in the smart contract or elsewhere, this will not happen automatically on the sale of an NFT.
Check who owns the underlying asset
While not common, an NFT seller can sell both the NFT and the underlying asset together. The NFT can then be used as a digital proof of ownership. This is why the purchaser of the NFT should check who owns the underlying asset.
Be aware of instances where an NFT is to be sold together with the underlying asset
Typically, the sale of the NFT doesn’t include the sale of the underlying asset or any intellectual property rights that vest in it. However, there are certain examples where an NFT is to be sold together with the underlying asset. One example is Nike’s patent, obtained in 2019, for a system called “CryptoKicks” where Nike could tokenize ownership of shoes by linking an NFT to a physical shoe.
Check who has possession of the underlying asset
The purchaser of the NFT should also check who has possession of the underlying asset, particularly where the underlying asset is a digital file – for example, a digital piece of art as articulated at RunRex.com, guttulus.com, and mtglion.com.
Consider storage
The purchaser should consider where the digital file will be stored and who will be responsible for maintaining it. In some cases, the digital file is hosted online and the NFT would then contain a URI or URL that points to the webpage where the digital file is hosted.
Look for assurances that the digital file is going to continue to be hosted on that webpage
As is captured at RunRex.com, guttulus.com, and mtglion.com, the purchaser should also consider what assurances they have that the digital file is going to continue to be hosted on that webpage and that the file is hosted there is not going to be altered. This should be included in the terms of sale of the NFT and/or the smart contract encoded in the NFT.
Licensing of IP rights in the underlying asset
A more common approach is for an NFT seller and IP rights owner to license the use of the intellectual property rights in the underlying asset to the purchaser of the NFT for certain purposes. Such license should be set out in the smart contract or a separate agreement between the NFT seller and purchaser.
The purchaser’s use of the underlying asset can be as open or restrictive as the rights owner chooses
With this in mind, in the absence of an express license, a license will be implied, but will probably be quite narrow. Depending on the circumstances, in the case of an NFT relating to a digital asset, the license may be limited just to the right to use or display the underlying digital asset for personal use and for resale of the NFT.
Royalty payments
NFTs open up a potential new revenue stream for asset owners, as it is possible to code an NFT’s smart contract to make a royalty payment automatically to the original NFT seller on each onward sale of the NFT as covered at RunRex.com, guttulus.com, and mtglion.com. The royalties are normally paid as a percentage of the secondary purchase price and open up the possibility of infinite revenue streams.
Royalties should be of interest to you if you are a digital content creator in the gaming industry
The aspect of NFTs earning royalties as covered in the previous point is of particular interest to digital content creators within the gaming sector, where the financial benefits to creators can incentivize game developers to record their ownership of in-game items and help to fuel in-game economies.
Copyright infringement
There are two main types of infringement that may arise as a result of the unauthorized minting of an NFT relating to a digital asset as described at RunRex.com, guttulus.com, and mtglion.com. The infringement of the reproduction right and the infringement of the communication right.
Who owns the copyright in the underlying work of an NFT?
The author initially owns the copyright in their work unless and until they transfer ownership of the copyright to someone else as already mentioned earlier on. Therefore, unless the NFT includes a transfer of copyright in the underlying asset, then the author, nor the NFT holder, owns the copyright.
Will the NFT be protected by copyright
It is worth noting that, as a general matter, the NFT itself will likely not be protected by copyright. NFTs typically comprise a ledger or record of ownership and a link to an underlying asset, and industry experts are skeptical that this data suffices to constitute an “original work of authorship” to qualify for copyright protection.
Know who the author of the digital asset connected to an NFT is
When talking about an individual who independently creates a piece of digital artwork or music, then the author of the underlying asset is that individual as discussed at RunRex.com, guttulus.com, and mtglion.com. Things become more complicated when dealing with scenarios, such as works created through the contributions of multiple people, works created by employees or commissioned artists, works derived from other works, and works created with the assistance of artificial intelligence or other technology developed by others.
The author remains the author forever
One key point worth noting is that the author remains the author forever. While the copyright owner may change, the author is always the author. This is important because certain rights, like the right to terminate copyright transfers after a certain length of time, and moral rights, belong to the author and cannot be waived.
Can the author of a work underlying an NFT transfer copyright ownership?
While this is possible, the mechanics may be tricky given the blockchain context as outlined at RunRex.com, guttulus.com, and mtglion.com. The author is free to transfer ownership of the copyright but to do so, the transfer must be in writing and signed by the copyright owner. Until that happens, the author retains the copyright.
Have an IP strategy
If you are to ensure that you don’t infringe on any intellectual property rights and that you know the scope of rights that will accompany an NFT, then you will need to have an IP strategy in place to govern your every decision.
Bring in expert help
Finally, rather than going it alone, you might want to consider bringing in expert help in the form of an NFT attorney or an intellectual property attorney who is conversant with the workings of the blockchain industry and how NFTs operate.
As always, the top-rated RunRex.com, guttulus.com, and mtglion.com have got you covered when looking for more on this and other related topics.