All you need to know about NFT copyright, by one of the best
The digitization of media has been a market with many threats for artists, musicians and other creators. Uncontrolled digital copying online of what they have created has meant that unscrupulous people have made money on the pieces of art while the artists got nothing.
The recent development of the NFT market (short for non-fungible token) on blockchains has proved to be a welcome opportunity for creators to make money in a controlled way with royalties each time an NFT is sold. It’s a huge opportunity but it’s also a new market where both selling artists and buying collectors have to make sure they have enough information about the market and the rules.
The selling of NFTs as digital arts, music, etc. started rather gently via online auction houses but have the last year grown dramatically both on digital marketplaces and more traditional and established auction houses like Christies.
Collectors are drawn to the new NFT market: It’s trendy and it’s easier than collecting physical objects as the ownership is safely locked in a blockchain of computers with no alarmed showrooms or galleries needed. Collecting in NFTs is not less expensive but rather much easier and it seems to satisfy collectors’ wish to own.
Record price so far for NFT art is – as far as we know – USD 69 million for one online collage of sketches called — “Everydays The First 5000 Days” by Mike Winkelmann, online called Beeple and sold in an online auction by auction house Christie’s.
Who bought it has never been announced. If the owner of this treasure has secured all rights to use it, show it or whatever, we don’t know. And, we don’t really know how much of the original rights to his piece of art that Beeple has secured. It’s a new market with many, until now, unknown factors.
To sort out what sellers and buyers should know, Moonshot News has the pleasure and honour to host an interview with Ashli Weiss, the go-to lawyer when it comes to technology and blockchain companies.
A How-to Guide on intellectual protection for NFT artists
Ashli, I want to thank you immensely for responding positively to my request for an interview; time is valuable and you specialize in an area that is very popular and challenging right now, so your input is of big value for us and I really appreciate your taking the time to have this talk with me. Shall I start by asking about you and your background?
I grew up surrounded by creative individuals. My mother was always sculpting unimaginable creations out of clay and I’d fall asleep listening to my father create music on his synthesizer. Having this background helped me tremendously as an attorney for technology and creatives.
Prior to leading Weiss Law LLP, I worked with Fortune 500 companies, including Louis Vuitton, Tory Burch, Western Digital and Benefit Cosmetics. I’m committed to supporting the NFT industry. I published a How-To guide on intellectual property protection for NFT artists, which led to features in NBC News and The Guardian. As a go-to attorney for NFTs, I’m lined up to speak at the biggest NFT conference and contacted for guidance by Senators, lobbyists and more.
NFTs are a new technology that combine art and code. From living in San Francisco for 14 years, and being married to an engineer, I know a fair amount about coding. Combining this with my artistic background and over 10 years’ experience with clients in the creative industry, I quickly became a subject matter authority. And, working with the NFT industry just feels comfortable and authentic.
With new technology comes quite a bit of confusion. Could you start out by explaining to us what exactly is being sold when someone creates and sells an NFT?
It will be helpful to first explain that an NFT is a combination of two things:
(i) the non-fungible token, which is the asset recorded on the blockchain, and
(ii) the creative content.
When someone sells an NFT, they are only selling the non-fungible token. The purchaser owns the non-fungible token, so they can destroy it, resell it, give it away, or anything else. But, the purchaser does not own the creative content. The purchaser has only bought a license to use the creative content. The content creator owns all right, title and interest to the creative content.
How ownership dictates monetization
Why is it important for an artist or purchaser to know about the details of ownership and license rights concerned with an NFT?
Ownership dictates a huge part of monetization.
As the owner aka “creator” of the NFT’s creative content, I could attach a royalty to the NFT, so that every subsequent sale of the NFT results in me receiving a percentage of subsequent sales.
As the owner, I also have the rights to stop someone else from infringing on my intellectual property. For example, if someone steals my artwork, mints it as an NFT and lists it for sale, I have the right to remove the listing.
If I am not the owner, I only hold a license to the creative content of the NFT. I am limited to how I can use the creative content.
As the owner aka “creator” of the NFT’s creative content, I could attach a royalty to the NFT, so that every subsequent sale of the NFT results in me receiving a percentage of subsequent sales.
As we know, with all technology progress comes troubles. What are some of the challenges you are seeing with the NFT community? Do you have any advice on how to overcome these challenges?
There is a huge lack of insight on what a purchaser is receiving when they buy an NFT. Often, the purchaser believes they can do whatever they want with the creative content of the NFT, but they are wrong. The purchaser’s right is limited to what is set out in the license that is attached to the NFT.
To give the NFT purchaser more transparency on its purchase, it’s imperative that the NFT seller clearly state the terms of the license in writing. With a license, the purchaser is now aware of what they can, and cannot, do with the creative content. If you don’t have a license, I’ve created a free open-source license for the NFT community.
It’s also good business practice for an NFT seller to provide a license. It shows that you’re taking into consideration your consumer by providing this clarity on use.
Taking one step back to see the bigger picture, NFTs are an asset on the blockchain. The blockchain is a highly controversial technology, with some countries outright banning cryptocurrency. What should an NFT creator be doing to protect themselves from lawsuits, since they are selling digital assets on the blockchain?
It’s imperative that creators disclaim liability. In the world of blockchain related technologies, there are a lot of unknowns. It’s important that creators make it clear to consumers that they aren’t liable if the NFT technology fails in anyway, including through payment of a Metamask wallet. Creators must place these types of disclaimers in their website’s Terms of Service.
Digital assets on the blockchain also enable automatic royalties placed into your crypto wallet. But, if you’re collecting royalties, you must disclose this in your Terms of Service. Otherwise, you’re facing legal issues.
Let’s talk more about monetization. Why should NFTs be on the radar of artists who are not minting their work as an NFT?
I’m going to loop back to ownership again.
An NFT shows the original owner of the artwork. In the real world, without NFTs, it’s always an issue finding the owner of a copyright. For example, I find a really good digital photograph and want to use it on the cover of my magazine, but I can’t find the owner of the photograph. What happens? I either (i) use the photograph and then risk having the owner sue me for using the photograph without authorization, or (ii) I don’t use the photograph. Now, if that photograph was minted as an NFT, I can easily find the owner and ask for authorization. What results next? I can use this awesome photo and the artist gets paid.
Apart from the rights of NFT creators and purchasers, people also have to respect the intellectual property of others: I am talking about the case where Nike sued someone for selling virtual shoes and someone who created a Meta-Birkin, looking like a Hermes Birkin bag.
Do you think the lines are clear in those cases?
These are two different and very good examples! Let’s take a look from a copyright perspective…
So, in the first case we have someone creating the NFT with a shoe featuring Nike’s logo and subsequently selling it without a license from Nike to use the logo. This one is an easy case of infringement.
In the other case, the one who made the NFT was “inspired” by the Birkin bag and, arguably, used too much of the design without authorization. The question here is, “how much of the design is too much?” This will be very interesting to watch how it plays out….
People will try new things out with NFTs, and brands may or may not like that. I think we are going to see more of these types of cases in the future.
It is exciting indeed and I think we are in a very interesting time. I will ask you a question that is not related to NFTs but being a lawyer in the tech space: I have been very interested in how the physical crime or harassment could translate into the digital world, like for instance the recent cases of reported rapes in the Meta Horizon, or the Personal Space feature introduced to prevent unwanted physical contacts between the avatars.
Do you have any thoughts or any ideas about how real it is the harassment and the wrong-doing in the virtual world versus the real one, and how prevention and punishment can be implemented? Will we perhaps need another legal meta system for it?
I have actually not thought about that, but I am sure that there will be more to talk about very soon!
So, let’s say it will be a topic for an interview with you in a year from now!
And until then, I really want to thank you for your time, all the information and all the work you are doing for artists to be able to expand their creativity!
Ashli Weiss is running the San Francisco based law firm Weiss Law LLP. Prior to that, she worked with Fortune 500 companies, including Benefit Cosmetics, Western Digital, Tory Burch and Louis Vuitton.
Ashli supports WomenTech Network as its Chief Legal Officer and mentors companies through 500 Startups, XRC Labs, and Founder Institute.
She’s regularly featured in global publications, such as Nasdaq, NBC News, The Guardian and General Counsel Magazine.
The free resources she mentioned in her interview can be found here:
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