The legal aspects of creating an NFT | SOPRG

Just because you have an idea, or you own a piece of paper or a digital image file, doesn’t mean you can (or should) create an NFT. As far as the law on the matter is concerned, you own a digital asset on the blockchain, but you may or may not have a legal right to be considered as the owner of this asset. This is the reason why you should always look out to protect what you ultimately create.

The blockchain has been a great innovation because now you can finally attribute ownership of a digital piece art through an NFT. Among other things, this means that copyright law can finally be enforced in the digital landscape. Art can be murky in terms of copyrights. Think of music and hip-hop, where ‘sampling’ is commonplace. Meaning that producers are using parts of a song to create a new one. Just as commonplace as sampling are lawsuits to protect a musician’s right that may have been infringed as other artists. When you create an NFT, you are going to want to avoid unlawful sampling of other people’s work, making sure that you can earn a living from your artwork.

So, in case you haven’t noticed, it’s not as straightforward as just minting your artwork to create an NFT. There’s a lot more to be done if you want to avoid a visit to the courtroom. From the creation of the artwork and its minting, to the inheritance rights, and to the person or business you authorize to represent you as an artist and show your work; there’s some work to be done in terms of legal compliance.

What are your rights?

First off, if you are the author of the NFT art, it’s all fairly simple. You attach a token to a .jpeg file and make it a Non-Fungible Token. Then, you publish it in one of the secondary markets. Now, some copyrights allow for the use of a work o art to reproduce, prepare derivative works, distribute copies, display the work and perform the work. It’s hard to imagine that when one buys an NFT off a secondary market, those copyright permissions fall into the hands of the new NFT owner.

If you are the heir to a work of art, you would have the same rights as the author of the piece. Meaning that you can mint straight away and earn some money from secondary sales from marketplaces. If the author has been dead for at least 70 years and you own a piece of his or her art, then you can make an NFT out of it. Otherwise, you would require some consent from the copyright heir.

So, as you can see, it’s not as straightforward. You can’t simply grab an image from the Internet that’s not been minted yet, screenshot it, and then mint it as a work of art. This is especially true when you stand to profit off of someone else’s work. You can’t just reproduce and make derivative works just because you bought someone’s art.

What problems arise in the NFT space?

Also, even though the blockchain promises that artists have the ability to have ownership of the work they produce and be recognized as the actual creators of said art. But still, you have an old problem arising: Copycats claiming to be the owners of the art and wanting to profit off of it. On July 2021, Larva Labs submitted a Digital Millennium Copyright Act (DMCA) takedown request to the NFT marketplace Foundation regarding an NFT of a Cryptopunk that was being offered by Ryder Ripps as a work of his own. Ryder Ripps also has legal battle with the creators of Bored Ape Yatch Club (BAYC) who are also the new owners of the Cryptopunks intellectual property (IP): Yuga Labs. The alleged copycat is being sued for offering an NFT similar to the BAYC collection which Yuga Labs says has devalued the price of their collection. Ripps is hoping for a protection of Freedom of Speech and Artistic Freedom so that the lawsuit does not prosper. This case will definitely be a test for what one can do in the NFT environment and if there is difference in the protection of IP.

One should always have the understanding that the transfer of a good does not entail the transfer of the copyright of said good. When one buys a book, it does not grant the right to reproduce and sell it. The same is applied with buying an NFT.

Having the right partner

When it comes to handling the legal aspects of art, it can be a quite gruesome endeavor. This is why SOPRG, as an art gallery that represents artists as they jump into the NFT space, has taken upon itself to help artists with the legal compliance process.

Part of the partnership with SOPRG involves legal counsel and making sure that the work that is produced has the adequate protections, with views that the artist’s work is always protected. When you have such a protection on the underlying art of an NFT, you can guarantee that the work is unique. And that’s what allows a higher valuation for the NFT.

Having the right legal counsel is what is going to prevent a copycat from profiting off your hard work. Such a protection will also give peace of mind to collectors. It will also guide you to avoid breaking law by mistake, and get things right at the first time of trying.

NFT painting Drozdová
NFT painting by Stela Drozdová