Reed Smith In-depth

With new NFT projects granting commercial usage rights and copyright assignments to holders, we are beginning to see the friction between the promises of web3 and the rigidity of traditional copyright principles. Where NFTs are traded like stocks on open marketplaces, what do buyers and sellers need to know? We take a look from an English law perspective.

Authors: Nick Breen

NFTs and ownership

For the vast majority of art and collectible NFT projects, buyers are granted little more than a narrow, non-commercial licence to display or reproduce the associated content for personal use (such as for a profile picture on social media or to hang in a virtual gallery). In fact, for a significant number of projects, no express usage rights are granted at all.

This has made NFTs an easy target for critics, who boast that they can simply ‘right click, save’ the NFT image that is trading for thousands of pounds. Unswayed by these criticisms, NFT collectors are quick to reply that: (a) this is the same case for buying physical art from a gallery – a buyer is not granted any intellectual property rights, nor do they expect to be; and (b) for certain projects, the artwork is half the story – the NFT acts as a key to unlock other benefits, such as access to private community messaging groups, in-person events, utility or governance tokens, air-drops, early access to other projects, and more.

What’s more, with blockchain technology enabling artists and creators to emulate property ownership through artificial scarcity and provable provenance, intellectual property rights were not at the top of collectors’ minds in the early days of NFTs and were not determinative of a project’s value. But, the NFT space moves quickly…