In the last two years we have seen the popularization of NFTs (non-fungible tokens). A type of digital certificate with Blockchain technology also used in cryptocurrencies, which among other functions, guarantees originality and exclusivity to digital goods. That is, any digital work such as a song or an excerpt of a song, a meme, a video, or an image, when tokenized becomes unique and irreplaceable.
All this has made digital assets a highly profitable business. For example, when the works of artists WhlsBe and Beeple (see in our blog an article dedicated to the artist) were transformed into NFTs, they were sold for a fortune.
For this reason, more and more creators, collectors, and investors are becoming interested in this niche. However, there are still many questions surrounding the legal framework that applies to this universe. Being a relatively new business, rules and laws are under construction around the creation, use and trading of non-fungible tokens.
Acquiring an NFT – What do I Actually Own?
When buying an NFT, the person acquires the Certificate of Authenticity of that work, that is, the digital asset. This allows you to sell it in the future, expose it on your social networks, as well as publicly present yourself as the owner. However, there are restrictions on its use. The authorship, as well as the copyright and intellectual rights of that digital asset is not transferred, unless a contract that transfers such rights to third parties is provided.
In the case of crypto art, for example, the owner cannot use part or all of this work to develop a new piece. Just as with song excerpts, that cannot be used in different musical works. As in a physical work of art, when buying an NFT, its “intellectual property” must be preserved.
According to the World Intellectual Property Organization (WIPO), there are moral and economic rights. Moral rights guarantee the author the right to claim the creation of the work and to oppose any modification that he does not agree with. Economic rights, on the other hand, guarantee the author the possibility to prohibit or not the reproduction of his work, as well as any adaptation or interference in the original work.
NFT of Existing Works
A situation that generates questions is the possibility of creating an NFT from existing work, such as a famous character, such as Superman. In this case, it depends on the usage rights that are assigned to the pre-existing work and whether you are the holder of these rights.
Unless the NFT was inspired by works that have already fallen into the public domain, that is, one that no longer has a property right. Thus, there is no restriction of use for those who want to use it as a basis for other works.
This is the case with the work of Antoine de Saint-Exupéry, “The Little Prince”. Anyone can create crypto art using the story’s images without taking legal risks.
Therefore, it is necessary to always observe the conditions of use of the original work that is serving as a source of inspiration so that there is no violation of intellectual property rights. Although the NFT guarantees a property in a virtual environment because it is an NFT inspired by a previous work, it still needs to respect the current regulations.
Original NFTs
For NTFs created from a digital work without previous references, that is, totally original, it is only necessary that its author establishes and observes the rights he wishes to assign to his work. In this way, these rights can be clearly stated in the contract to which it is assigned when the work is associated with a marketplace.
A positive aspect of contracts enforced for non-fungible tokens are “Smarts Contracts” allowed by Blockchain technology. Its terms are stored in a distributed database and cannot be modified.
In practice, when selling an acquired work, the creator, as well as other owners (if any) receive a percentage on top of this transaction automatically. All this must be provided for in the terms of the contract when it is established.
NFTs on Creative Common Zero: a New Strategy
With all the features that Blockchain technology allows, we observe a trend that at first seems to be contrary to the non-fungible proposal of tokens. Many creators are choosing to issue their works through the “Creative Commons Zero” or ” CC0” license, as a way to waiver their rights. This means that anyone can make derivative works of your work and commercialize them, without prior authorization and free of penalties.
The Noun Project is a great reference for this movement. Anyone can create derivatives and trade their intellectual property, even if they don’t own one of your NFTs.
IThis can make sense in the context of cryptography, where open sharing and remix culture is part of the proposal of many communities, stimulating the creation of derivative works, such as “memes” that when shared, often arouse interest in the original source of that version, reviving something that was already “in the drawer”.
The Loot project (NFTs of exclusive “bags” of RPG adventure equipment) has also joined the CC0. It allows the community itself to decide what to do with their NFTs and how to incorporate them into their platforms and projects through decentralized action.
While Creative Common Zero is no guarantee of NFT success, trends like this help the entire crypto ecosystem mature. And as creators and fans become more familiar with new possibilities, we hope that usage patterns, rights, and licensing models will be better established to make this universe more organized.
*Intellectual property is a concept that aims to affirm rights regarding products and/or processes of knowledge, whether tangible or intangible, against unfair competition and all other rights inherent to intellectual activity in the industrial, scientific, literary, and artistic fields. Source: https://pt.wikipedia.org/wiki/Propriedade_intelectual
Article and research | Roberta Rodrigues Translation | Carol Martins