NFTs and Intellectual Property – a ‘caveat emptor’ for the 21st century


The first quarter of 2021 saw a spike in the interest in NFTs with high profile sale of NFTs including that by Grimes and Kings of Leon. We have looked at NFTs generally in a previous blog. The technology behind NFTs is moving fast presents a new challenge for the law, including Intellectual Property (IP law).

This is something which is already clear to Marvel and DC comics. While both companies have previously allowed artists to sell original paper drawings from the comic books, they have been clear that the same allowances will not be made for NFTs. Both companies have issued notices to artists asserting the companies’ IP rights in the drawings. However, it was too late for a purchaser who had already bought a NFT of an artist’s work which featured Marvel IP. When Marvel issued a copyright takedown notice, under US IP law, on Rarible, the online marketplace that used to sell the NFT, Rarible removed the buyer’s ability to view his purchase or sell it on.

So what does IP law say and how do NFTs fit into it?

Minters and Sellers require to have the necessary IP rights

As the Marvel example teaches us – it is necessary that those minting and selling NFTs hold the necessary rights to do so. Marvel own the IP in the image sold. While they appeared to have had a policy of not enforcing those rights when their artists sold paper drawings, they have been clear that they will enforce them when it comes to NFTs. This is a policy decision on the part of the company, but the law remains the same in both the ‘paper’ and NFT world – if an artist wishes to create and sell an image, they must do so without infringing upon anyone else’s IP.

Do platforms have a duty to protect other’s IP?

Again, as we saw in the example of Rarible, IP owners may require platforms to take down material which infringes upon their IP. Platforms will need to have adequate procedures in place to respond to these requests. There may then be questions in relation to the rights of the purchaser – who will have lost access to their NFT (despite apparently “owning” it, according to the Blockchain) and spent the cryptocurrency equivalent of $6,000 purchasing it.

This is clearly an emerging, ever growing market and the law is playing catch up. Lessons can be learned from the Marvel situation – it is important for minters and sellers to have the necessary IP rights. However, beyond this, it may be important for buyers to take legal advice and confirm that the seller does hold the necessary IP prior to purchasing an NFT. Without such confirmation, a buyer may find themselves as the buyer in this situation did – thousands of dollars down and with no access to their NFT.



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