NFTs: 4 Piracy and Copyright Essentials for Buyers and Sellers

The main attraction of non-fungible tokens (NFTs) is they allow holders to immutably and verifiably prove their exclusive ownership over intangible assets, like a piece of digital art or a song. But while this technology might seem revolutionary, the reality is far more convoluted.

The NFT market is rife with piracy and plagiarism, and buyers still appear to be unclear about the copyright and intellectual property laws that underpin their purchases. Things needn’t be so grim: Read on to uncurl your vexed mind.

1. Check for a blue tick

One simple way to avoid fraud in the NFT market is to buy only from verified projects. Anyone can right-click and save an expensive NFT, and then re-upload that NFT and label it whatever they like.

Crypto’s pull-yourself-up-by-the-bootstraps mentality foists the responsibility of verifying that NFT on the buyer. Platforms like OpenSea get around this by issuing blue ticks for “verified collections” – you can also check the contract address to work out whether an NFT you plan to buy is from a legitimate project. Remember that even if someone’s Twitter profile picture is reshaped to a hexagon, that NFT might not be from a verified project and could be fraudulent.

That being said, a blue tick isn’t watertight – the owners of the project could still defraud or abandon the project if they wanted.

2. Check the artist has actually minted NFTs

But what about newer collections where the seller isn’t verified?

Some NFTs are minted without the permission of the artist – meaning that not only are you not buying from a verified collection, but you are buying an NFT from someone other than the artist. Musician Nat Puff, for instance, reported that NFTs of her tracks uploaded to music NFT marketplace HitPiece aren't hers. As proof, she clarified her opinion of non-fungible technology: “NFT’s are s**t & if you support them you’re indirectly supporting the downfall of independent artistry.”

If you have doubts, try to find their Twitter or other online presence to verify if they are minting NFTs. Many artists will pin tweets signaling whether they have NFTs available for sale. You can also reach out to the artist and ask if an NFT is theirs.

Bot-driven art theft is prevalent enough that DeviantArt has created a project specifically to scan and report art theft on large platforms.

3. If you buy an NFT, you probably don’t own the copyright

This is a big misconception that many people have about NFTs.

When you buy an NFT, you are purchasing the ownership of a blockchain-based token that simply points to a file, clip or image’s location. This means holders only possess the right to hold and sell the token, not the copyright over what it points to – unless, of course, you have negotiated in advance with the seller, or special provisions were laid out beforehand that states intellectual property rights move with the token.

Under U.S. copyright law, the artist, by default, owns the copyright to their work.

Nowhere was this more apparent than with SpiceDAO, which bought one of the last copies of Alejandro Jodorowsky's manuscript for his unfinished film adaptation of the classic sci-fi novel “Dune” for $3.8 million. SpiceDAO planned to “make the book public (to the extent permitted by law)” and sell an "original animated limited series" based on the book to a streaming service.

The project drew ridicule after onlookers, like Jamie Powell in the Financial Times, reminded readers that “buying a copy of something doesn’t give you exclusive rights to monetize its content.” BuzzFeed reported that the copyrights for the book’s content “are held by multiple artists and their estates,” and that the decentralized autonomous organization (DAO) must now convince copyright holders to let them play around with the intellectual property.

Read More: What Own When You Buy an NFT

Sometimes copyright ownership is unclear. That’s certainly the case for CryptoPunks. Research from Eric Paul Rhodes last July found that CryptoPunks creator Larva Labs adopted the NFT license in 2019, which would grant non-commercial use, aside from revenue of $100,000 from merchandise, but wouldn’t let NFT holders alter the image. Rhodes found that a separate license agreement was adopted that didn’t include provisions for merchandise sales.

Relating to advice No. 2, you would obviously not own the rights to an NFT minted fraudulently. And if you sell a fraudulent NFT, you could be liable, under section 504 of the Copyright Act, for fines of up to $30,000 for each infringement.

4. You might hold copyright over the asset, but check the terms and conditions first

Sometimes you do hold the copyright. Gremplin, the evil king that rules over the fictional CrypToadz metaverse, has, “To the extent possible under law … waived all copyright and related or neighboring rights to CrypToadz by Gremplin.” CrypToadz was created under a Creative Commons license (CC0), which lets anyone create spinoff projects or modify their NFTs without fear of legal backlash.

The Bored Ape Yacht Club’s creators, Yuga Labs, also outlined that holders own “the underlying Bored Ape, the Art, completely.” So as long as you can prove that you hold the NFT, Yuga Labs grants you “an unlimited, worldwide license to use, copy and display the purchased Art for the purpose of creating derivative works based upon the Art,” like creating T-shirts – so long as you can prove that you own the token.

Read More: How to Avoid NFT Scams