Introduction to NFTs
The digital revolution has given rise to digital immersive environments recognized as the Metaverse. It is a virtual reality space where users interact with each other. At the core of this metamorphosis lies NFTs, i.e. Non-Fungible Tokens. NFTs are associated with metaverse as they provide digital ownership of goods in an immersive cyberspace.
According to Sam Dean, “A non-fungible token (NFT) is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable.”
Non-Fungible Tokens derive from the term ‘Fungible’ referring to the units that are interchangeable. For example, a hundred rupees note can be changed into two notes of rupees fifty, holding the same value. Whereas, non-fungible are the assets which are unique in nature and are not replaceable. For instance, a Mona Lisa painting which has several copies but the original one, which is painted by Leonardo da Vinci is unique and is irreplaceable.
Evolution of NFTs
NFTs came into existence in 2014 when the first NFT, Quantum, was created. It was an octagonal generative piece of art but the idea of NFTs revolutionised completely and became widely known after Jack Dorsey, the former Twitter CEO, put his first tweet for an auction as an NFT which was sold for $2.9 million in 2021. The estimated value of NFT’s market is forecasted to reach US $504.3 million in 2025.
NFTs are distinct from the cryptocurrency as cryptocurrencies such as Bitcoin are Fungible, whereas NFTs are inherently non-fungible. Data, once verified across the distributed nodes of the blockchain is immutable as any alterations to the stored information would render all following data invalid. Ethereum is the most widely used blockchain platform used for NFTs which provides a secure environment for executing smart contracts.
NFTs are derived from the smart contracts of Ethereum. Smart contracts are designed to validate, expedite, or implement the digital negotiation process. They enable the parties and the decentralized participants to engage in fair exchanges without the need of the trusted third party. Artists also earn royalties for each time their NFT is resold. The token was established to create digital scarcity.
NFTs as Digital Ownership
Mike Winkelmann, known as Beeple, put together 5,000 digital pieces every day for 13 years into one NFT called ‘Everydays: The First 5000 Days.’ This artwork was auctioned in Christie’s in 2021 for more than $69 million and it is the highest priced digital artwork to date.
A question might pop up in your mind that why buyers pay significant sums of money if they can simply screenshot or download a picture from the internet, the answer to this is the copied version lacks the originality and the authenticity which is provided in metadata.
As stated by Dean, “An NFT is like a certificate of authenticity for an object, real or virtual. The unique digital file is stored on a blockchain network, with any changes in ownership verified by a worldwide network and logged in public. That means that the chain of custody is marked in the file itself permanently, and it’s practically impossible to swap in a fake.”
NFT is a legitimate way of transferring digital ownership. It is similar to a digital certificate which states that this wallet owns a specific unique art. NFTs are gaining significance in recent years but the legal systems across the globe are not well equipped to address and protect the rights of the creators. This is becoming clearer as their popularity continues to grow. It has been noted that the average 24-hour trading volume in the NFT market is 4,592,146,914 USD, whereas the total 24-hour trading volume for the entire cryptocurrency market is 341,017,001, 809 USD.
Intersection of NFTs and Intellectual Property
People who invest in NFTs are influenced by its decentralised system; they often confront its downside when their NFT gets stolen as there is no legal authority to seek redressal. The said problem is solved in the physical world through the Intellectual Property Rights. Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.
NFTs are units of data secured by cryptography, featuring distinct metadata. Therefore, each NFT can be identified individually and can store various forms of information, such as the identities or artworks of different creators. This uniqueness allows them to be bought or sold, with a digital ledger keeping track of all transactions. Intellectual Property Rights safeguard creators by providing them exclusive control over their creative works or technical innovations. In intellectual property terms, this distinction refers to the corpus mysticum (the intangible asset) versus the corpus mechanicum (the tangible representation) of that asset. NFTs are categorized as corpus mysticum, meaning they are intangible assets with a distinct creation, intellectual property laws will pertain to the subject matter, granting the rights holder the authority to utilize the IP rights that belong to them.
For example, Hermès International vs. Rothschild addressed that MetaBirkins NFT in this case, which was not a physical asset, was considered trademark infringement on physical Hermès bags. Even the Nike vs StockX case revolves around a valid trademark infringement in an NFT.
There is a misconception that acquiring ownership of an NFT provides the owner access to the copyright underlying content. Acquiring an NFT does not inherently grant the purchaser the rights to reproduce, distribute, or alter the content unless those rights are explicitly provided through a licensing agreement. There was a survey conducted of 100 NFT holders where 68% believed that NFT ownership included copyright. There was an instance in the year 2015, Alison who was Mr. Andy Parker’s daughter was a reporter and was shot down by a gunman during reporting live on air. Her video was circulated in the media and Mr. Parker tried to remove it but was unsuccessful. He, then, turned that video into an NFT believing that he would acquire the copyright of it but later found out that he was not granted such license. This principle can also be explained via an illustration, if you buy an art piece from an art gallery, you can display it, you are the owner of it but you do not possess the right to reproduce or make copies of the same.
Paradox of Perpetual NFT vs Limited IPR
The paradox is that as stated above, NFTs are immutable and perpetual. The intellectual property rights are time limited and expire after a specific period of time. For instance, the lifetime for copyrights is 50-70 years depending upon the jurisdiction whereas, when an NFT is registered on the blockchain it becomes eternal. These NFTs are released in the public domain, when the copyright expires. There is no clear jurisprudence of the relation of NFTs with IPR as IPR laws are subjected to domestic laws whereas, NFT is listed on a global blockchain also concerning the jurisdictional issues.
If Mr. Artist's work expired back in 2020 or before, and through learning about NFTs in 2021, he chooses to sell his expired work, he is not reviving further copyright protection. What he is actually doing is merely auctioning or selling the original work, as physical pieces of art are done. While reproductions of the work can be common online or can even be in the public domain, the actual original work itself is still an asset within the art community. It is this asset that is traded, without any real copyright being transferred or licensed. After the copyright expires, the work generally enters the public domain, meaning that permission is not required for use, except for the author's inalienable moral rights that necessitate appropriate attribution. Violating these moral rights can lead to legal action for failure to acknowledge, misrepresentation, or unauthorized modification of the original work.
CC0: A Reconciliation Tool
In light of foregoing analysis, alternative licensing mechanisms such as Creative Commons Zero (CC0) can act as a tool to resolve the above paradox. When a work is linked with CC0 in the public domain, all the intellectual property rights in that work are relinquished and that work can be freely shared and remixed by anyone as it is in the public domain from the outset. This will help retain the originality and will ensure the provenance of the creator remains perpetual on-chain, not leading to conflicts after the expiration of intellectual property rights. This mechanism will also uphold the true principle of NFT, which is originality, reputation and community support. It provides an effective approach to harmonize the perpetuity of NFTs and the illusory perpetuity of IPR.
Conclusion
This article analysed the paradox between the perpetual NFTs and the illusory perpetuity of intellectual property rights highlighting the conflict between technological permanence and the statutory limitations. It addressed the common misconceptions people assumed of owning an NFT and exhibited various legal disputes. It emphasized that owning an NFT does not grant the person intellectual property rights. While the NFT is perpetual, expiry of IP rights leads to uncertainty for the creators about the extent of rights and control they possess. CC0 may be looked at as a complimentary mechanism that upholds the spirit of NFT while mitigating conflicts between blockchain permanence and limited perpetuity of intellectual property rights.
References
- Ifeanyi E. Okonkwo (2021) ‘NFT, copyright and intellectual property commercialization’ International Journal of Law and Information Technology, Volume 29, Issue 4, Winter 2021, Pages 296–304, https://doi.org/10.1093/ijlit/eaab010
- Pranav Darshan, Rohan J S, Raghuveer Rajesh, Ruchitha M, Sanika Kamath, Manas M N (2025) ‘Intellectual Property Rights and Entrepreneurship in the NFT Ecosystem: Legal Frameworks, Business Models, and Innovation Opportunities’
- Kristelia García (2022) ‘The Emperor's New Copyright’ University Law Review, 2023 Forthcoming, Georgetown University Law Center Research Paper No. 2023/09, https://ssrn.com/abstract=4048315
- Chelsea Lim (2022) ‘The Digital First Sale Doctrine in a Blockchain World: NFTs and the Temporary Reproduction Exception’ Fordham Law Review, Volume 91, Issue 2, Article 12
- Hadar Y. Jabotinsky and Michal Lavi (2023) ‘NFT For Eternity’ University of Michigan Journal of Law Reform, Volume 56, Issue 3
- Mariyah S. Wakhariya (2023) ‘New Frontiers in Technology: Can Traditional Intellectual Property Rights Laws Be Adapted and Applied to NFTs?’ Catholic University Journal of Law and Technology, Volume 31, Issue 2, Article 9
- Sara Sachs (2024) ‘Trademark Infringement: The Likelihood of Confusion of NFTs in the US and EU’ 49:1 Brooklyn Journal of International Law, 330
- Edward Lee (2023) ‘NFTs As Decentralized Intellectual Property’ Illinois Law Review
- Qin Wang, Rujia Li, Qi Wang, Shiping Chen (2021) ‘Non-Fungible Token (NFT): Overview, Evaluation, Opportunities and Challenges’
- https://www.oxfordlearnersdictionaries.com/definition/english/metaverse
- https://www.statista.com/outlook/fmo/digital-assets/nft/worldwide
- https://www.wipo.int/en/web/about-ip
- https://www.wipo.int/web/wipo-magazine/articles/the-metaverse-nfts-and-ip-rights-to-regulate-or-not-to-regulate-42603
- https://www.jipitec.eu/jipitec/article/download/333/326/1691
- https://www.beeple-crap.com/viewing
- https://www.getsmarter.com/blog/markettrends/non-fungible-tokens-nfts-and-the-metaverse-explained/
- https://creativecommons.org/cc-and-nfts/