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Digital Assets

NFT Ownership and Copyright

By:

Hugh Meyer

Friday Focus Part 2:  NFT Ownership and Copyright

Copyright Law

In the US, copyright law protects original works that are created in any tangible medium. The law recognizes eight categories of tangible medium that are automatically protected by copyright: literary works; musical works; dramatic works; pantomimes and choreographic works; pictorial, graphic, and sculptural works; motion pictures and other audiovisual works; sound recordings; and architectural works. Any artist has enforceable copyright protection for any of these forms of work once they have produced a tangible form of the work. They do not have to do anything else to receive copyright protection.
Images associated with NFTs are protected under the portion of the law that protects pictorial and graphic works. These copyrights give the copyright holder the exclusive right to reproduce, display publicly, distribute, perform the work, and create derivatives from the work. Copyright also gives the copyright holder the right to tell others they cannot do any of those things.

First Sale Doctrine

Under the First Sale Doctrine (FSD), a copyright holder forfeits their exclusive right to distribution once they transfer ownership of a legal copy of their work to a third-party purchaser. The FSD has huge exceptions when it comes to digital property rights. Because of the wording of the FSD, NFT owners are led to believe that they own the content pointed to by the NFT when they actually only possess a license to use the property.

Transferring Copyright

Copyright holders have the right to transfer their copyright to someone else if they so choose. The transferal of copyright must be done in writing and must be signed by or on behalf of the person transferring the copyright. No statutory form is required for transferring copyright, but most digital copyrights are transferred using an IP Assignment Agreement.

Why this matters to You!

When you purchase an NFT, you are actually buying a license to use the image the NFT points to. The person or NFT Project with copyright to the image retains ownership of the image. To transfer actual ownership of the image, the NFT Project must agree to the transfer of the copyright. Otherwise, you own a license that dictates how you may use the image or graphics associated with the NFT.

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