“What are the IP issues involved in NFT licensing?” - D.R., NFT Owner

The NFT marketplace is worth hundreds of millions of dollars. You've probably seen celebrities and big name brands frantically getting into the NFT business over the past 2 years.

But with all the buzz about cryptocurrency these days, it's easy to forget what made NFTs attractive in the first place.

So what was it? The simple rule of supply and demand. When the supply of anything is low, the demand for it goes way up.

Non-fungible tokens (NFTs) are pieces of computer code that signal where a piece of (often very rare) digital art can be found on a blockchain. Usually, that digital art was derived by the creator from a piece of art that exists in the "real world."

When that "real world" art gets digitized (or "minted" in blockchain terms), only the digital version of it retains any value as intellectual property.

Because an NFT merely points to the location of that digital art on the blockchain, and because an NFT is created by another algorithm, the NFT itself is not intellectual property. At least this is how US courts have interpreted the copyright statute 17 USC 101...for now.

So, when an NFT owner licenses their NFT to another person, that person usually does not get any intellectual property rights to the underlying art. Unless, of course, the relevant licensing agreement(s) in place between the licensing parties--and the original artist!--states otherwise.

The language for this kind of licensing can be tricky. If you're thinking about getting into NFT licensing, contact me to discuss.

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