NFTs have stormed into the investing world and made a significant impact on crypto investments. Their increasing popularity has inspired individuals and businesses to take part in trading or purchasing them. 

Like many investments, NFTs have their own set of benefits and risks. Whether you’re currently dealing with NFTs or plan to sometime in the future, it’s important to understand any potential legal consequences that need to be factored in so you can make the best decisions possible. 

A common question that goes around is whether there is copyright in NFT and who owns it. In this article, we’ll go through how copyright works in the world of NFTs and how this may affect your business. 

What Is An NFT?

An NFT is a non-fungible token. This means they are an original and singular piece. One NFT  cannot be traded for the same kind of NFT as each one is different. 

They must also be bought or sold whole. They cannot be split into numbers like many other types of investments. In other words, they are non-divisible. 

A huge range of things can be considered an NFT as long as it was created digitally, such as art, music, video clips and even memes. 

How Does Copyright Work?

As NFTs are original pieces of work, you may be wondering whether copyright applies to them. While NFTs cause several issues with respect to copyright protection, the short answer is no. 

We’ll go through the reasons why copyright protection isn’t necessarily given to NFTs. But first, let’s go through the basics of copyright. 

Copyright refers to the legal protection that an owner of an original piece of work is entitled to. It often applies automatically, as long as it satisfies certain criteria. 

These rights allow the owner the exclusive ability to retain, sell or licence their copyrighted material as they please.  

If another person infringes on someone’s copyright by plagiarising it or making something extremely similar, the owner of the original work has the ability to pursue legal action. 

Is Copyright Automatic?

Yes, copyright is applied automatically. Once you create an original piece of work – which can be anything like a song, book, poem or painting – the copyright for that work applies immediately.  

In order to protect their copyright or alert people of it, owners may put a copyright disclaimer or use the copyright symbol © somewhere on their work. 

Who Owns The Copyright In NFTs?

Like we mentioned before, copyright laws get tricky when it comes to NFTs. Generally, there isn’t copyright in NFTs as it does not meet the criteria for copyrighted material. 

However, an NFT owner may be afforded the same rights as a standard copyright owner under a smart contract, which is often found in the NFT. 

So, even in the absence of copyright, NFT owners are still entitled to similar rights under contract law rather than copyright law. This, of course, will then depend on the specific terms of that smart contract, and may also be subject to additional terms and conditions that apply to the NFT. 

We’ll go through these additional T&Cs later in this article. 

Can You Get Copyrighted On NFT?

Unless there is a contract or T&Cs that explicitly give the NFT owner rights to the NFT, you cannot get copyrighted on NFT. 

Otherwise, the rights would still belong to the original artist. 

How Do NFT Smart Contracts Work?

If you have ever dealt with NFTs, then you’ve probably heard of smart contracts. 

Smart contracts are how ownership is assigned to an NFT. In order to be on the crypto block chain, an NFT is minted which officially makes the artwork into an NFT through coding and programming. 

Once it is minted, the smart contract is applied, determining ownership of the NFT. 

What Is A Smart Contract?

A smart contract should not be confused with a traditional contract, simply because of the word ‘contract’ in it. As a matter of fact, smart contracts are a program of the NFT blockchain. They don’t need to be read or signed like the contracts you may be used to hearing about. 

This is not to say smart contracts are not useful. They are a program designed to facilitate relatively smooth business transactions in the online world. Smart contracts are able to help authenticate the transaction and establish ownership of NFTs. 

In essence, they are a sale agreement between the seller of an NFT and the buyer. 

However, smart contracts are limited in what they are able to achieve, which is where you may need additional legal protection.    

Smart contracts may include specific clauses which entitle NFT owners to additional ownership or licensing rights. These may also be found in T&Cs for the sale of NFTs. 

Do I Need A Licence Agreement For NFTs?

There is no legal requirement to get a Licence Agreement for your NFTs, however, it is something worth considering as a smart contract may not be entirely sufficient.

Remember how we discussed how NFTs are still subject to the rules of copyright laws? Well, a smart contract can guarantee you a sale of that particular NFT, however, it does not fully grant the same rights as that of a copyright owner. 

This is where you’d look at separate agreements to provide additional rights and protections. 

If you are looking to purchase an NFT and would like to have rights such as licensing and selling rights, then you will likely need an agreement that explicitly allows this. 

Where Can I Get A Licence Agreement For My NFT?

It’s always best to have a legal professional draft a Licence Agreement for your NFTs. Licence agreements can be catered to your unique needs and make sure that everything is covered, so you’ve got the legal protection you need. 

A Licence Agreement generally addresses: 

  • The territories or regions the terms of the contract applies in 
  • Payments
  • Exclusivity of the licence
  • Length of the licence 
  • Whether it can be transferred
  • The purpose of the licence  
  • Under what circumstances the licence can be revoked (if at all) 

Our lawyers at Sprintlaw can help you draft a Licence Agreement so that you are entitled to additional rights with respect to your NFTs. 

Do I Need Terms And Conditions For My NFT?

You can also consider getting terms and conditions written up for your NFTs. Terms and conditions dictate the way something can be used and can also limit your liability if anything goes wrong. 

If you’re running a business website that engages in the sale of NFTs, then the terms and conditions on your website can also be useful in dictating the conditions of a sale for an NFT. 

For example, if you are the original owner of an NFT and you are selling copies of your work, your website terms and conditions can address this, letting consumers know that you own the original copyright for everything on your website. 

If you need terms and conditions for your NFT business, our lawyers can help you out. We can chat about what rights or protections your NFT may need, and draft T&Cs to meet these needs. 

Key Takeaways

NFTs are a popular way for people to engage in the crypto world, however, it’s important to be aware and prepared for potential legal ramifications. To summarise what we’ve discussed: 

  • NFTs are non-fungible tokens of digital creations
  • Copyrights gives the owner of an original work the ability to exclusively use it and is applied automatically
  • Copyright generally cannot be found in NFTs, however, additional T&Cs and Licence Agreements can grant rights for you as the owner
  • The original creator of an NFT usually owns the copyright – if an NFT has been created by infringing on a different piece of work, then it can be copyrighted
  • Smart contracts are essentially the sale agreement for NFTs and it can only cover a limited amount of matters

If you would like a consultation on your copyright in NFTs, you can reach us at 1800 730 617 or for a free, no-obligations chat.

About Sprintlaw

Sprintlaw's expert lawyers make legal services affordable and accessible for business owners. We're Australia's fastest growing law firm and operate entirely online.

(based on Google Reviews)
Do you need legal help?
Get in touch now!

We'll get back to you within 1 business day.

  • This field is for validation purposes and should be left unchanged.

Related Articles
What Is IP Australia & How Do They Work?
The Legal Side Of Chatbots And ChatGPT