The concept of NFT still presents many gray areas to the public, particularly in relation to intellectual property, an ambiguity that concerns both artists and collectors.
Abbreviation for non-replaceable symbol, a NFT So it is a token linked on the blockchain: each token has unique properties and cannot be reproduced. It is this uniqueness that is interesting because it is associated with a commodity, the token embodies a Certificate of ownership Digital, and potentially indestructible when released on a well-distributed blockchain, such as Bitcoin or Ethereum.
Thus an NFT can represent a work of art (graphic, music, video, digital art), real estate, an entry ticket. Its digital and tamper-proof characters make the concept attractive because the property then becomes easily transferable. In addition, the vast majority of the blockchain is public, and the history of transactions related to NFTs can be easily checked.
Ownership of the token to be distinguished from business ownership
Of course, as required by blockchain technology, true possession of the token is only achieved by owning the private key corresponding to the address in it; Once the NFT is hosted by a third party service, the assumed NFT owner is exposed to the latter default.
Above all, owning a token does not imply ownership of the asset associated with it. On the subject, Emmanuel Ronco, Intellectual Property/IT/Privacy Partner at the Paris-based law firm Eversheds Sutherland explained: “Access to a physical or virtual work offered by NFT does not confer any rights; the rights depend on the intended use by the sender of the work.” Several types of cases exist, as Emmanuel Ronco writes:
- NFTs are based on so-called “original” works or “cryptographic art”, in the case where the author creates a work for the purpose of issuing NFTs and defines the parameters of the smart contract himself. This does not constitute a copyright issue because the same person owns the rights and the NFT.
- NFTs are based on pre-existing works (not initially created for the purpose of issuing NFTs) but it is the author himself who decides to issue NFTs. Again, this will not present any particular problem since there is a match between the author and the NFT source
- NFTs relating to works that have fallen into the public domain (in France, more than 70 years after the death of their author), cases where economic copyright no longer applies, and only moral rights over pieces.
- NFTs that hold copyrighted works issued by persons other than their authors. In this case, it will be necessary to identify the authors or their heirs and verify the chain of rights and that these cover the possibility of using the work in the context of NFT production.
“Collectors got a license instead of intellectual property”
In any case, it must be emphasized that it is very rare for the owner of intellectual property rights to concede them: “This is the most favorable case for the buyer; in the worst case, the smart contract does not indicate any terms and in the most common case, we are talking about a license. Thus, it is left Users are in the dark because they may have thought they had acquired the intellectual property through NFT when in fact they had obtained a license,” continues Emmanuel Ronco.
Several types of licenses exist and some of them can be in favor of an NFT holder; This is especially the case Introduced by Yuga Labs studio in August For groups he bought in March 2022, Cryptopunks and Meebits. Thus, the owners of these two groups have the right to use the work associated with their token for commercial purposes, without restrictions on the amount, both for virtual and physical activities.
Conversely, other licenses limit the maximum amount of turnover generated by the use of the work: this is the case of Glue Factory Show, an animated series developed by Australian company Centaur Studios with Hollywood actors and screenwriters, whose NFT group offers a limit Marketing up to $100,000 per work: “The license does not extend to the use of our brand name and there are also caveats about what can be done in the entertainment and animation sector to avoid confusion with the series we are creating,” to JDN Sam Korotkov, founder of the studio.
On the contrary, the VeeFriends group released by investor Gary Vaynerchuck does not provide for their owners Only right for personal and non-commercial purposes. Finally, others, such as the creators of Moonbirds, chose the Creative Commons intellectual property symbol 0, synonymous with free use for all, after initially announcing that they would be waiving the rights to the group’s owners. A decision misunderstood by Raphael Malavil, co-founder of the World of Women group, who believes he “took rights from the owners of Moonbirds”. Conversely, he and fellow painter Yam Karakai have opted for a “contract to transfer intellectual property to all our NFT holders”, allowing them all kinds of use, except for those that spread messages of hate, violence or intolerance. “We found that collectors are not adequately protected and we wanted to encourage them to buy art,” continues the French entrepreneur.
In France, the start-up TokenArt was created Its licensing portal In order to illustrate the different possibilities, both for authors and for collectors: “We have simplified the information with pictograms so that anyone can understand the rights they have, and these rules have either been included in the NFT’s internal metadata, or referenced directly in the blockchain,” explains Clement Fontaine, founder of TokenArt. In the United States, Andreesen Horowitz’s Crypto Investment Company A16z also published August 31 A framework of custom licenses for NFT cases.
But whatever license is chosen and advertised, it is important to ensure that the author of the work continues to enjoy his moral rights. In order for him to give up her exercise, this expression must be contracted. In the absence of the writing, only the author can determine if the work can be modified and how it can be used to create a derivative. In the case of an NFT-related work, the author can modify it, especially if the metadata associated with the smart contract is available to him. In September 2021, buyers of the NFT Raccoon Secret Society, for example, were unpleasantly surprised when they saw their painted pictures of a raccoon replaced with a graphic representing a pile of bones. behind this act Developer Team Recommendation who wanted to “tell people what they’re really buying”.
Hosting file access token
This event raises the issue of NFT-related work storage. In the case of digital goods, there are three cases:
- If the NFT artwork is created on a chain (an increasingly rare case on a platform like Ethereum due to the transaction cost where each transaction involves fees), it cannot be destroyed until the blockchain exists. On the other hand, if the blockchain is used little or no private, the risk of change is very present.
- If the NFT work is created off-chain, it can reside on a distributed network of servers, such as IPFS. In this case, the metadata cannot be changed, unless the bulk of the servers are agreed upon or a new file is uploaded.
Off-chain work can also be stored on a central server, such as Google Drive. In this case it is at the mercy of the server owner.
When it comes to sustainability, on-chain NFTs are therefore the safest, and hence the most attractive, asset. Ledger’s NFT Project Manager, Gaspard Broustine in particular evokes examples of groups Autoglyph From Larva Labs (origin of the Cryptopunks group) or Internet brokers By artist Josie Bellini, who has spent more than $250,000 to integrate the various fee layers of a business into the blockchain. He acknowledges that the issue of storing work remains complex: “As a new user, it is true that obtaining this information is complex. To collect works on a chain, you must really be an expert.” According to him, “The standard now is to store metadata in IPFS or Arweave, a blockchain dedicated to storing files, thanks to tools like Nifty Kity or Manifold.xyz (NFT creation tools without token, editor’s note)”.
“A smart contract is neither a contract nor a smart contract”
So both NFT creators and purchasers must be more vigilant to secure their rights, especially since current legislation still has to deal with all use cases of this technology. For attorney Emmanuel Ronco, “There is no need for a complete overhaul of the law but certainly there is a need to adapt certain elements, clarify the law, and certain texts, when there are disputes.” It refers in particular to the proposals From the report of the Supreme Council for Literary and Artistic Property, in particular those relating to “the publication of simplified educational documentation on copyright mobilized by the issuance, purchase and resale of non-fungible tokens and the technical operation of the blockchain in order to inform buyers, platforms, rights holders and authors of the applicable law and the true technological possibilities that they offer.” . The responsibility of markets is often set in general: “Important information, such as licenses, is not sufficiently available,” assures Gaspard Prostin. “The first thing to do is to add the ability to display licenses on the NFT’s purchase page to Marketplace, just as the site displays a link to its terms and conditions,” says Sam Korotkoff. Preliminary judgments but still extremely rare.
The same goes for other NFT use cases, such as real estate. On this occasion, lawyer Emmanuel Ronco recalls that a smart contract is not reliable: “It is neither a contract nor a smart one: in France, in a real estate transaction, one cannot be satisfied at all with NFT, you have to go by a notary with a valid deed.