Who owns the copyright of NFT? Can it be used commercially after purchase?

Understanding NFTs and Copyright Basics

An NFT (Non-Fungible Token) is a unique digital asset that represents ownership of a specific item or content on the blockchain. However, owning an NFT does not automatically mean you own the copyright to the underlying digital work. The distinction between ownership of the token and ownership of intellectual property rights such as copyright is crucial.

Copyright refers to the legal rights held by the creator of original works, including the right to reproduce, distribute, display, and create derivative works. These rights are protected under laws like the U.S. Copyright Act and similar legislation in other countries. Unless explicitly transferred through a separate agreement, the creator retains full copyright even after selling the NFT.

What Does Purchasing an NFT Actually Grant You?

When someone buys an NFT, they receive proof of ownership recorded on the blockchain. This ownership can be verified and transferred, but it typically does not include usage rights to the associated digital file unless specified otherwise.

For example, purchasing a digital artwork NFT means you own that specific tokenized version of the artwork, but you do not have the right to reproduce, modify, or sell copies of it. The artist may still retain all copyright privileges and could potentially sell additional versions of the same image as different NFTs or physical prints.

Some NFT marketplaces and creators provide licenses with their tokens. These licenses vary widely — some grant limited personal use rights, while others might allow commercial usage under certain conditions. Always read the terms of service or licensing agreements provided by the NFT seller before assuming what rights you have.

Can You Use an NFT Commercially After Purchase?

The ability to use an NFT commercially depends entirely on whether the copyright holder grants such permission. In most cases, purchasing an NFT alone does not give you the right to use the associated content for commercial purposes.

For instance, if you buy a digital illustration NFT from an artist, you cannot print it on merchandise and sell it without explicit authorization from the creator. To legally use the content commercially, you would need a separate license or assignment of copyright from the rights holder.

Some high-profile NFT sales, such as those involving collectibles or virtual fashion, may come with broader usage rights. However, these cases are exceptions rather than the norm. It's essential to review the smart contract code, marketplace policies, and any written agreements accompanying the NFT to determine if commercial use is permitted.

How Do Smart Contracts Affect NFT Copyright?

Smart contracts are self-executing agreements that govern the transfer and conditions of NFTs on the blockchain. While they handle the transfer of ownership and royalty mechanisms, they rarely include clauses related to copyright transfer or usage rights.

In many cases, smart contracts only facilitate the sale and reselling of NFTs, including automatic royalty payments to the original creator upon secondary sales. They do not encode or enforce copyright permissions unless specifically programmed to do so by the creator.

Therefore, buyers should not assume that smart contract functionality includes copyright licensing. Any usage rights must be clearly stated outside the smart contract, often in the form of a downloadable license or linked document.

Steps to Determine If You Can Use an NFT Commercially

If you're considering using an NFT for commercial purposes, follow these steps:

• Review the NFT’s metadata: Check what information is stored directly on-chain regarding usage rights.
• Read the marketplace terms: Platforms like OpenSea, Rarible, or Foundation may outline default licensing rules.
• Check the creator’s official statements: Look for disclaimers or licenses provided on the creator’s website or social media.
• Contact the copyright holder directly: Ask for written permission or negotiate a licensing agreement if needed.
• Consult a legal professional: For high-value or business-related uses, getting legal advice ensures compliance.

Failing to confirm your rights could lead to copyright infringement lawsuits, even if you paid a significant amount for the NFT.

Frequently Asked Questions (FAQ)

Q: Can I display an NFT I bought on my personal blog or portfolio?A: In most cases, yes. Displaying an NFT for non-commercial, personal use is generally acceptable under 'fair use' principles, though this varies by jurisdiction and depends on the terms agreed upon during purchase.

Q: What happens if the NFT creator violates copyright by minting someone else’s work?A: If the creator did not own the rights to the content they turned into an NFT, then both the creator and possibly the platform could face legal action. Buyers may end up with an invalid NFT and no recourse unless protections like insurance or authenticity guarantees were offered.

Q: Is there a standard license used across NFT platforms for copyright permissions?A: No, there is no universal licensing standard. Each platform and creator may apply different rules. Some use Creative Commons licenses, while others draft custom agreements. Always verify the specific license attached to an NFT before assuming its scope.

Q: How can I ensure I get full copyright when buying an NFT?A: You must negotiate a written assignment of copyright with the creator. This typically involves a separate legal document and may require payment beyond the NFT price. Ownership of the NFT itself does not suffice for transferring copyright.