The legal side of NFT: a simple guide to copyright and ownership.

Understanding NFT Ownership vs. Copyright

1. When someone purchases an NFT, they are acquiring a unique digital token verified on the blockchain. This token acts as proof of ownership of a specific digital item, such as artwork, music, or a collectible. However, owning the NFT does not automatically grant copyright to the underlying content.

2. Copyright typically remains with the original creator unless explicitly transferred through a legal agreement. For example, if an artist mints a digital painting as an NFT and sells it, the buyer owns that specific token but cannot reproduce, distribute, or create derivative works from the image without permission.

3. The distinction is similar to buying a physical painting. The owner possesses the canvas, but the artist still holds the rights to reproduce the image on posters or merchandise. In the digital space, this separation is less intuitive, leading to frequent misunderstandings.

4. Some NFT projects do offer expanded rights as part of their sale terms. Bored Ape Yacht Club, for instance, grants commercial usage rights to NFT holders, allowing them to monetize the ape image. These rights are defined in the project’s license agreement, not by the NFT itself.

5. Buyers must carefully review the terms associated with each NFT drop. Assuming full creative control based solely on token ownership can lead to legal disputes and unauthorized use claims.

How Licensing Works in the NFT Space

1. Licensing determines how an NFT’s associated content can be used. Creators can attach different types of licenses when minting NFTs, ranging from restrictive personal-use-only terms to broad commercial rights.

2. Creative Commons licenses are sometimes referenced, but they rarely apply automatically to NFTs. A creator must explicitly state that their work falls under a CC license for it to be valid. Most NFTs operate under custom licensing agreements defined by the project team.

3. Projects like CryptoPunks initially had ambiguous licensing terms, which led to confusion. Yuga Labs later acquired the brand and retroactively granted full commercial rights to holders, illustrating how licensing can evolve post-mint.

4. Smart contracts can embed licensing information, though enforcement remains challenging. Legal jurisdiction, platform policies, and user agreements play a larger role in determining whether a usage is permissible.

5. Buyers should treat the NFT marketplace like any other intellectual property transaction—reviewing terms, understanding permitted uses, and seeking legal advice when necessary.

Risks of Unauthorized Use and Infringement

1. Many creators mint NFTs using copyrighted characters, logos, or artwork they do not own. This includes fan art of popular franchises like Star Wars or Disney characters. While such NFTs may sell, they exist in a legally precarious position.

2. Rights holders can issue takedown notices or pursue litigation against both the creator and, in some cases, the marketplace hosting the infringing NFT. OpenSea has removed thousands of listings due to IP complaints.

3. Even if an NFT is purchased in good faith, owning it does not shield the holder from liability if the original creation violated copyright. Courts have not yet established clear precedent on secondary market responsibility, but risk remains.

4. Brands are increasingly protective of their IP. Nike, for example, filed lawsuits against individuals selling NFTs of its sneakers, asserting trademark infringement. These actions signal that companies will defend their rights in digital spaces.

5. Due diligence is essential—verify the authenticity and legal standing of an NFT before purchasing, especially if intended for commercial reuse.

Frequently Asked Questions

Can I trademark an NFT I own?Trademark protection applies to brands, logos, and names used in commerce. Owning an NFT does not give you the right to trademark its image unless you have separate branding intent and legal ownership of the design. Even then, pre-existing trademarks could block registration.

If I create an NFT from a public domain work, do I own the copyright?Digitizing a public domain piece—like a Shakespeare play or a Beethoven symphony—does not grant new copyright over the original content. However, if your version includes original creative elements (e.g., unique animation or arrangement), those additions may be protected, but not the underlying public domain material.

What happens if an NFT platform shuts down?The blockchain record of ownership persists even if the marketplace closes. However, access to metadata, images, or hosted files may be lost if they are not stored decentralized. Always verify whether media is stored on-chain or linked via URLs that could break.

Can two people claim ownership of the same NFT?Blockchain verification ensures only one wallet holds the authentic token at any time. Duplicate NFTs on different blockchains or fake copies on marketplaces are not the original asset and lack verifiable provenance. True ownership is determined by the blockchain ledger, not visual similarity.