IP NFT protection


It is already difficult to imagine the modern digital space without NFT crypto pictures/cards that quickly burst into our lives. Many artists, designers and others have already realized the benefits of the digital world of NFT art, and now it is quite difficult to find a professional who does not have his own released NFT collection of pictures with his work, for example, on the opensea.io platform.

A NFT is a digital asset whose authenticity is verified on a Blockchain ledger. The term “non-interchangeable” means unique or one of a kind.

However, few of the authors of collections think about copyright protection for their digital content. The epiphany usually comes when an NFT picture starts to roam freely on the Internet. So, the author who did not foresee the protection of his rights in advance will not be able to resist this process. Considering the options for protecting copyright in the digital era, you first need to decide on the object of the NFT.

NFTs and intellectual property

NFTs often include images, artwork or designs, or other creations that were previously created in another form and then captured. For example, a picture in the real, material world. This can lead to difficulties regarding usage rights where the owner of the NFT may not necessarily be the owner of the copyright to the underlying creation, or may not be licensed to those underlying rights at all.

When considering the NFTs implications for intellectual property, it is important to distinguish between NFT ownership and ownership of IP underlying. The rights granted by the NFT seller depend on the rights granted by license or assignment, and they may differ depending on each NFT.

IP protection example

For example, you purchased a photo of LeBron James in an NFT form, but the NBA owns the IP. In the IP context, ownership of fundamental rights is transferred only if the author of the original work expressly agrees to transfer those rights to the owner of the NFT. Without such an agreement, ownership of the NFT does not confer ownership of the underlying content or any associated intellectual property rights.

Often, the owner of the NFT may be prohibited from reproducing, distributing copies, publicly performing, displaying, or creating derivative works based on the original. Instead, the copyright owner retains exclusive rights.

 However, all these issues can be resolved before the release of the collection, the launch of the project, or correct errors in already running projects, preventing fraud or loss of copyright. Create conditions for obtaining a constant profit from digital copyright authorship.

Digital content and copyright

Taking into account the specifics of the NFT, through the prism of understanding copyright, the date of the first fact of the publication of digital content may be the date of release of the collection. Additional conditions for this are specified in smart contracts. I draw the reader’s attention that it is possible to issue an NFT token for any digital image, photograph, domain name, script, book, video, text, etc. At the same time, the presence of copyright in the material world differs from their presence in the digital one.

Therefore, in a rapidly developing civilization, it is important to stake out the fact of the first publication of the created masterpiece in the digital  NFT picture. In addition, the presence of a correctly issued NFT picture entitles its owner to receive royalties (remuneration) from each sale. This is possible only if this is indicated in the smart contract.

All actions with NFTs can be tracked through the transaction history. These entries cannot be changed. This creates uniqueness and rarity which gives value to such an asset. The only caveat is that NFTs are not sold for fiat money, only for crypto. For this, a crypto wallet is created. Which is an identifier for the ownership of a particular NFT.

NFT copyright infringement

The most popular service for issuing and hosting NFT collections is OpenSea. The platform is registered and operates in accordance with the laws of the United States. So, any digital content posted here with copyright infringement is subject to removal.

For example, OpenSea operates under the Digital Millennium Copyright Act (DMCA) and supports NFT notices and removals for copyright infringement. To do this, you must fill out the appropriate form. Evidence of prior ownership of the digital asset in the physical and virtual world must be provided. If there is enough evidence, the digital content of the infringer will be removed.

These cases of copyright infringement on digital content are not standard and have a number of features. Therefore, for the preparation of a letter of claim and the collection of evidence better to contact a patent lawyer. In this case, the digital content of the infringer will be deleted as soon as possible.

NFT and royalties

With the advent of Blockchain technology in our lives, many years have passed. The advanced IT community is actively improving in this direction and is constantly looking for new opportunities in collaboration with other areas. such as intellectual property. 

The sale of art objects, as digital copyright content, through the issuance of NFTs tokens is no longer news to anyone. But for some reason, few of the authors understand the possibility of obtaining additional income in the form of royalties from each sale/resale of NFTs.

So, the EIP-2981 NFT Royalty standard was developed back in September 2020. However, it has received its application only now. The OpenZeppelin contracts and libraries have become the industry standard. They help developers minimize risk as their open source code templates are field-tested for Ethereum and other blockchains. Their code includes the most used implementations of the ERC standards and additions and is often found in community guides and how-tos.

Royalty smart contract

In January 2022, in the OpenZeppelin GitHub libraries, we observed the first smart contracts created based on the above standard for receiving and distributing royalties. This news is a harbinger of big changes in the world of protection and monetization of digital intellectual property assets.

In addition, our company has implemented the first smart contract that provides the transfer of non-exclusive rights to a digital intellectual property asset under which NFT is issued with the right to receive royalties from each transaction with this object.

This smart contract applies to the IP&ITdoggieNFT collection, which was released on the online platform https://opensea.io on February 4, 2022 and is aimed at promoting the protection and monetization of an IP digital asset.

NFT Collection Release

Our company has been cooperating with Blockchain enthusiasts for several years. This made it possible to jointly develop and implement smart contracts for the release of NFT collections. Important conditions are:

  • confirmation of the fact of the first disclosure
  • difference in the use of digital content with material
  • conditions of disposal of copyright to NFT
  • terms of protection protection
  • territory
  • distribution of royalties (author’s remuneration)

We placed our unique smart contracts in GitHUB confirming the unique right to them. An example of one of our NFT collections can be viewed here: IpItdoggiesNFT You can order a full range of legal and IT services for the release of an NFT collection, taking into account copyright protection, by writing to us by email: info@sion-ip.com.

Dr. Nataliia Riazanova

patent attorney,
Ph.D. in law,
managing partner at SION patent tax law


SION | LinkedIn

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