NFTs and Copyright Protection


In the rapidly evolving landscape of digital assets, non-fungible tokens (NFTs) have emerged as a groundbreaking technology, revolutionizing the way we perceive and protect copyright. To begin with, NFTs represent unique, indivisible digital assets that are stored on blockchain technology, providing an immutable and transparent ledger of ownership. This innovation has profound implications for copyright protection in the digital age.

NFTs have introduced a new approach to authenticating and protecting digital content. By linking ownership and provenance to a blockchain, NFTs create a tamper-proof record of the original creator and the entire transaction history. This feature not only protects the rights of content creators but also enables them to monetize their work directly through smart contracts, ensuring fair compensation for their intellectual property (IP).

The decentralized nature of blockchain technology contributes significantly to copyright protection, so copyright protection measures do not appear as compelling as, for example, for fungible artistic work. Moreover, unlike traditional centralized systems, which are susceptible to hacking and manipulation, blockchain ensures a high level of security and transparency. This decentralized approach minimizes the risk of unauthorized duplication and distribution of digital assets, providing a robust defense against copyright infringement.

Moreover, NFTs empower artists to retain control over their IP throughout their lifecycle. By encoding specific terms and conditions within smart contracts, creators can dictate how their work is used, ensuring that their artistic vision and intent are respected. This level of control was challenging to achieve in the pre-NFT era of digital content.

However, the rise of NFTs also raises challenges and issues such as potential infringement of traditional copyright laws, the environmental impact of blockchain technology, and the need for global standardization in NFT copyright regulation require careful examination. Striking a balance between innovation and legal frameworks is crucial to harness the full potential of NFTs for copyright protection.

Which are, presently, the main legal instruments for copyright protection in relation to NFTS?

The metaverse functions as a virtual empire where avatars, manipulated by either humans or computers, exercise control over virtual assets like vehicles, weapons, or furniture, all of which may showcase trademarks or copyrighted content. Since IP laws pertain to the intangible aspects of both physical and virtual objects, it logically follows that creators of the metaverse must uphold the rights of inventors, designers, and owners of distinctive symbols, mirroring the obligations in the physical world. Consequently, a rights holder retains the authority to pursue legal action against the unauthorized use of their IP in the metaverse, for instance, when integrated into a virtual accessory or garment designed for digital avatars.

A parallel conclusion can be drawn concerning NFTs as they are digital files that can encapsulate creative works or other materials, such as videos or artworks. Given that copyright gives an exclusive right over original works of authorship, distinct from ownership of any digital entity containing these works, anyone employing, say, a sound recording or a snippet from a video game in an NFT must obtain prior authorization from the copyright holder of the respective work. The applicability and legitimacy of existing regulations to NFTs and the metaverse seem to be widely accepted.

Legally, the Berne Convention for the Protection of Literary and Artistic Works, ratified by 181 countries, establishes that signatories must confer exclusive rights to authors over their works, regardless of the nature or form of expression. Supplementary international agreements, including the WIPO Copyright Treaty adopted in 1996, have complemented the Berne Convention, adapting it to the digital landscape. The Agreed Statement concerning Article 1(4) of the WIPO Copyright Treaty makes it explicit that storing a protected work in digital form in an electronic medium (such as an NFT or a file displayed in the metaverse) constitutes reproduction, necessitating prior approval from the copyright holder. This underscores that legal frameworks can adapt swiftly to technological advancements.

Legal Frameworks:

Within the United States, Non-Fungible Tokens (NFTs) are generally safeguarded under the existing copyright framework. Copyright law, established to protect original works of authorship, encompasses NFTs, which often serve as representations of digital art and other creative content.

The protection of NFTs within the U.S. copyright landscape involves several key considerations:

  1. Digital Millennium Copyright Act (DMCA): The DMCA stands as a central legislative piece, offering a structure to address copyright matters in the digital domain. It incorporates provisions for the removal of infringing content and provisions against the circumvention of digital rights management (DRM) technologies. NFT platforms and creators have the option to leverage the DMCA to address issues related to copyright infringement.
  2. Copyright Act: The U.S. Copyright Act confers exclusive rights to creators, encompassing the reproduction, distribution, display, and creation of derivative works based on their original creations. When artists or creators mint NFTs, they essentially tokenize their copyrighted work. Although the ownership and transfer of the NFT may be distinct from the underlying copyright, the copyright holder maintains control over the utilization of the original work.
  3. Legal Precedents: Established legal precedents concerning copyright infringement extend to NFTs. Unauthorized reproduction, distribution, or public display of an NFT without the copyright holder’s consent could be deemed copyright infringement, warranting legal action by the copyright holder.

Within the juridical framework of the European Union (EU), NFTs receive protection under copyright law, governed by both EU directives and the individual legislative measures of member states. The subsequent elucidation underscores key facts concerning the safeguarding of NFTs in the EU within the context of copyright law.

Copyright Directive: The EU adheres to a meticulous Copyright Directive aimed at harmonizing copyright laws across member states. This directive integrates provisions relevant to the preservation of digital content and the entitlements of creators, forming the foundational basis for delineating copyright protection, including elements applicable to NFTs.

Moral Rights: Within the EU, a notable emphasis is placed on moral rights, encompassing the right of attribution and the right to object to derogatory treatment of a work. These moral rights assume heightened significance in the context of NFTs, where accurate attribution to the original creator is of paramount importance. Artists retain the entitlement to be recognized as the authors of their work, even in the tokenized form as an NFT.

National Implementation: Despite a harmonized approach through directives, individual member states within the EU are entrusted with transposing and adapting these directives into their respective national legal frameworks. This autonomy may lead to variations in the application and enforcement of copyright laws across distinct countries within the EU.

Database Rights: Extending beyond copyright, the EU upholds a sui generis database right designed to protect non-original databases from unauthorized extraction and reutilization of their contents. This becomes relevant when considering databases associated with NFTs.

Online Content Sharing Platforms: The EU Directive on Copyright in the Digital Single Market (2019) holds significance in addressing concerns related to online content sharing platforms. This directive has the potential to influence the procedures for sharing and distributing NFTs in an online environment.

Recognizing the ever-changing legal landscape is key, especially when it comes to applying copyright laws to new technologies like NFTs. People involved in NFTs, such as artists, collectors, and platforms, should keep up with changes in copyright regulations and might find it helpful to seek legal advice for comprehensive protection and compliance.

In summary, NFTs mark a new era for protecting copyrights in the digital realm. The decentralized, transparent, and automated features of NFTs effectively address challenges in safeguarding IP rights. As this technology advances, collaboration between the legal and tech communities is crucial to establish frameworks promoting responsible and ethical NFT use. This collaborative effort aims to strike a balance between fostering innovation and ensuring copyright protection in our digital age.


Article authored by Alexandra Curea, Associate at Cosmovici Intellectual Property.

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