Is your NFT giving what you want it to give?

Before we get into what you got with your NFT purchase, it is important to remind ourselves of what an NFT is. The key word to focus on is ‘fungible’ which means interchangeable, substitutable, or exchangeable.  As you guessed, non-fungible means the opposite; unique, one of kind, irreplaceable. In the context of this article, a token may be described as representation of a digital asset. Fungible tokens are often used to represent monetary value. Think of your $20 bill that you loaned to your friend. Your friend then repaid you with a different $20 bill which you willingly accepted since it had the same value as the one you loaned.  Non fungible tokens cannot be replaced and that makes them one of a kind. At the very least then, when you buy an NFT you should be getting a unique representation of a one-of-a-kind digital asset.

What to expect? What do you actually get?

The NFT space is currently focused on art, and music and on that on basis we will focus our comments in this article on those two forms of intellectual property. The creation of art and music automatically vests in the creator of the art, and music copyrights. Copyrights consist of several individual rights. The economic rights involved in copyright are listed below:

• the right to copy the work
• the right to distribute copies of the work
• the right to adapt the work
• the right to publicly perform the work
• the right to publicly display the work.

These copyrights are usually vested for a set number of years by law with a minimum of 50 years as the international standard. Some jurisdictions such as Jamaica protects a known creator of art up to 95 years from the end of the calendar year of the death of the creator of the work. Jamaica also provides protection for 95 years for sound recordings calculated form the date of creation, or from the date it was first made public if earlier.

With the purchase of an NFT one expects access, and ownership to the digital asset. However, it is important to know how exclusive your ownership is. Copyrights usually remain with the creator when work the work has been sold. Therefore, as the delighted owner of the art NFT, your right is limited to the physical custody of the art, or music. This means, while you can display your art NFT, you cannot make copies of it to give to your friends who may also like it. Similarly, while you can certainly play your music NFT, you cannot perform it publicly for money.

Can you get more if you want it?

Absolutely. However, this is something you must negotiate with the creator of the NFT who should be the holder of the copyrights. In negotiating to get copyrights you should be clear about which copyrights you are being assigned, and for how long. The creator/copyright holder should be specific about the copyrights being assigned to you. Are you being given a limited license to use specific copyrights or an exclusive all-encompassing license? Whichever copyrights are assigned, you should consult a lawyer for advice on whether the this needs to be in writing. Many jurisdictions including the USA, and Jamaica require the assignment of copyrights to be in writing and signed by the individually assigning the copyrights to you.

What can’t you get?

The creator of the NFT/holder is at liberty to assign to you the collection of economic copyrights we listed above. However, there are moral copyrights which usually cannot be assigned, or transferred in countries such as the U.S.A, and Jamaica. What are moral rights? These are rights which allow the creator of the art, or music to always claim the status of creator and have it recognized. Moral rights also allow the creator of the work to prevent the art or music from being used in a manner that is prejudicial to the reputation of the creator.

Ensuring your NFT gives what you want it to give

Copyrights being an important factor regarding the extent of your rights in dealing with the NFT for which you have physical custody, it is important to ensure that the seller of the NFT is in fact the creator and can legally sell you the NFT. If you would like to obtain additional copyrights, be sure to get legal advice on what is required to validly transfer, or assign those rights to you.

Disclaimer by the author: Nothing in this article is to be taken as legal advice. You should consult an attorney regarding your specific case. All liability with respect to actions taken or not taken based on the contents of this article are hereby expressly disclaimed.