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NFTs and Copyright Law
A non-fungible token (NFT) is a unique piece of data stored on a blockchain. NFTs are digital files such as photographs, videos, or audio files that can be bought and sold with cryptocurrency. In many cases, NFTs are large files, and, thus, a link to the actual photo, video, or audio file is stored on the blockchain rather than the actual piece of artwork.
While NFTs have been around for most of the past decade, they have dramatically gained popularity over the past year. One reason so many people have become interested in NFTs could be the massive sales prices associated with some NFTs. For example, the most expensive NFT of 2021 was sold for $69 million, and it has been estimated that the monthly sales for NFTs average about $2 billion.
This increased popularity has led some to question the role that copyright law will play in protecting this new type of artwork.
While NFTs are relatively new and may be an unfamiliar type of art, copyright law will treat NFTs the same as any other traditional artwork. If an artist creates a new artwork, they will automatically acquire the copyright of that new artwork. Certain rights are acquired by a copyright owner automatically upon the creation of a copyrighted work. A copyright owner has exclusive rights to reproduce the work, prepare derivative works, and distribute copies of the work. Thus, a copyright owner has exclusive rights to make an NFT based on an original piece of artwork because “creation of an NFT can be categorized as a copy or even a derivative of the original work. NFTs may be newly created art or created by rightful copyright owners. It is also important to analyze how copyright law fits into NFTs based on a copyrighted work that the rightful copyright owner does not create. A non-copyright owner may own a validly acquired re-print of a copyrighted work or may want to create an NFT based on a piece of artwork that they admire. Creating a piece of artwork based on a copyrighted work may only be non-infringing if it is subject to the fair use exception to copyright law or if the non-copyright owner has received a license from the copyright owner.