NFT in Perspective of Intellectual Property Rights in Indonesia




Non-Fungible Token known as an NFT comes from two distinct part of word, namely non-Fungible and token. Non-Fungible means that is not easily replaceable with something else with the same type, and token means item that can associated with smart contract for selling the digital asset. Definition of NFT is a digital asset that non-replicable pieces of art and it is typically coded on the blockchain using a smart contract.

NFT are token used to signal a digital asset of artwork in a blockchain. The digital asset of artwork itself can be image, song, meme, short moving picture that loops constantly like a video, but in picture form or known as Graphics Interchange Format (GIF), art, music, video game items (character), digital trading cards (limited edition baseball cards), short clips of significant moments in sports history (groundbreaking slam dunks or game-changing touchdowns) or any type of artworks that have an economic value. In other words, NFT is an artwork which transmitted in a digital form that can be traded.

NFT as digital assets is traded by using cryptocurrency as a transaction tool in the blockchain. In other words, NFT as a digital asset can only be bought or sold by using digital currency and blockchain as a system will recognize and record regarding or transfer of ownership by transaction between the seller and the buyer of NFT. Therefore, blockchain will inform someone to know the original owner of NFT.

Regulation of NFT in Indonesia

There is not a specific regulation regulating NFT in Indonesia, it’s different with crypto that has been regulated by The Regulation of the Minister of Trade Number 99 of 2018 concerning General Policy for the Implementation of Crypto Asset Futures Trading. In the meantime, the Ministry of Communication and Information of the Republic of Indonesia has issued a Press Release No. 9/HM/KOMINFO/01/2022 on Sunday, January 16, 2022 concerning to the Supervision of the Ministry of Communications and Informatics on Non-Fungible Token (NFT) Transaction Activities in Indonesia, in this Press Release the Ministry of Communications and Informatics of Indonesia asked the Platform of NFT does not to facilitate the content of NFT that violates laws and regulations, whether in the form of violations of the provisions on the Protection of Personal Data Law and also the violations of Intellectual Property Rights Law. Whereas if it is known that the platform violates the law, then the operator of the NFT platform may be the subject to administrative sanctions in the form of termination of platform access for users from Indonesia.

NFT and Intellectual Property Right in Indonesia

Since NFT is a digital asset of art work, therefore, NFT can be categorized as an object of Intellectual Property Rights Protection, specifically in copyright. In Indonesia, an object that can be protected under copyright are Copyrights protecting various objects, namely books, pamphlets and all other written works, song and/or music, drama, musical drama, dance, choreography, puppet, pantomime, painting, image or picture, carving, architectural works, maps, photography works, portraits, cinematograph works, translations, interpretations, adaptations, anthology, databases, adaptations, arrangements, modifications and other works resulting from the transformation, compilation of Works or data, whether in a format that can be read with Computer Programs or other media, video games and Computer Programs and other artworks as stipulated under the Law Number 28 of 2014.

The creator or copyright holder has the exclusive right to publish the work, reproduce the work in all its forms, translate the work, adapt, arrange or transform the work, distribute the work or copies thereof, show the work, announce the creation, communicate the work and/or rent the work. Therefore, since the NFT is a copy or even a derivative of the original work transform the original work into digital work, thus, the owner or the copyright holder is and should be the only one with the authority to transform the original work into an NFT as stipulated in Article 9 Paragraph (1) of Indonesian Copyrights Law Number 28 of 2014.

If an artist or creator creates a new piece of artwork, they will automatically acquire a copyright of that new artwork. There are certain rights that are acquired by a copyright owner automatically upon creation of a copyrighted work. A copyright owner has exclusive rights to reproduce, modify, distribute, perform, and/or display the work. Thus, a copyright owner has exclusive rights to make an NFT based on an original piece of artwork because creation of an NFT can be categorized as a copy or even a derivative of the original work.

The creator or copyright holder may conduct a legal action to the party who infringe their exclusive right. Legal action that can be taken are civil lawsuit by seeking a compensation claim by filing a lawsuit to the commercial court as stipulated in Article 95 jo. Article 100 of Indonesian Copyrights Law Number 28 of 2014, and/or criminal lawsuit by reporting to the Civil Servant Investigator of Directorate General of Intellectual Property or Investigator of Police of Republic of Indonesia as on suspicion of a criminal act of copyright infringement as stipulated in Article 112 – Article 118 of Indonesian Copyrights Law Number 28 of 2014.

This article informs the reader that if the party transmitting the original or prior artwork into NFT as digital artwork and commercialize it without any consent from the creator or the copyright holder of the said NFT, the said activity can be categorized as a copyright infringement and the infringer potentially must pay compensation or imprisoned. For example, if you have an NFT the same applies when you buy an NFT, if that marketplace does not have a license that give you those rights, you do not actually have those rights of purchaser or owner of NFT. All you have is ownership of that particular copy and NFT is a digital asset just like a painting. It is an asset that you have a copy of your one copy and you do not have right to have to make copyrights use of that items. So, you cannot use the said painting and scanned it and upload it and sell it as an NFT.

Therefore, we must ensure that the NFT is truly belong to us or at least does not violate the other’s copyright before selling it since copyright law will treat NFT the same as any other traditional artwork. In short, appreciate the work of others as your work would be appreciated by others. Otherwise, you will be in conflict with copyright law.

About the Firm

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