An NFT or non-fungible token is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, a network of computer record transactions giving the buyer proof of authenticity and ownership. This digital record can be sold and traded. Types of NFT data units may be associated with digital files such as photos, videos, and audio. In other terms NFTs make digital art unique, and therefore sellable.

If a digital photo, for instance, is bought through use of an NFT, who owns the intellectual property (IP) rights? This is important to know because even if you own the digital file it does not mean you own the IP rights to make, use, or produce, the image contained in the digital file. You can look at the digital photo, produce it in physical copy to be mounted on your own wall, but you cannot use the image on a mug, t-shirt, or any other item of commerce to sell for a profit.

The creator or owner the IP rights to the file/photo, which would be in the form of a copyright registration, holds the rights to reproduce the photo and sale products with its image, just as they did to you through sale of the NFT. The same is true for a registered trademarked branded product. Just because you own an NFT with a brand associated with it does not mean you hold the rights to the brand. The registered trademark owner still retains those rights.

Many individuals and companies trading in the NFT space have sought copyright and trademark registrations to protect their digital creations and brands in the digital space. Even Nike, the sports apparel and footwear icon created CryptoKicks and secured a patent around tokenizing exclusive shoe designs. When a customer buys a pair of CryptoKicks they also receive a NFT digital asset unique to that pair of shoes that may be bought, sold, or traded.

Creators should make sure they have IP registrations in place before trading NFTs for their assets via copyright, trademark, or patent protection. A copyright registration is used for works for art such as photos, images, music, works of literature, and video content. A trademark protects a brand name or logo associated with a product or service used in commerce. A patent protects an apparatus or method, with a design patent protecting with an item looks like.

For anyone interested in NFTs, IP rights should be top of mind. IP rights can be licensed from owners in exclusive or non-exclusive licenses. But any re-use of the registered trademark, copyright, or patented item or method without permission would be an infringement of the IP holder’s rights.

Tricia Brzostowicz

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Tricia is a Registered Patent Agent with over twelve years’ experience in patent searches, drafting, filing, and prosecuting applications with the US Patent & Trademark Office. Find out more about Tricia here.