Among the many industries that are gradually beginning to see the NFT and blockchain industry as an interesting development opportunity is the entertainment industry.
Among the various competitors looking at the possible business to be established in the NFT field are such esteemed names and brands as Warner Bros, Disney, DC, and Marvel. As many are beginning to realize, the space within which they can move to develop their ideas in the NFT field is almost infinite.
This flux has led many historians and enthusiasts to define that of recent and future times as entertainment 3.0.
NFT has as its conceptual basis the defense of intellectual property, and this is a concept strongly felt in the entertainment world.
That is the reason for all this interest, but reasoning on this point begs the question: what rights does the purchase of an NFT transfer between those who create the work and those who buy it?
Exclusive rights to the work
Let us start with the first concept concerning the purchase of an NFT. The legal text to refer to is undoubtedly that concerning copyright law.
Here it is indeed established that the creator of any work enjoys certain rights concerning both his own work and the manner in which it is used.
The first right is the right, precisely, to reproduce the work itself as a defense of free profession and as of freedom of expression.
The second right concerns the possibility of creating “derivative” works from the original work. Next, the law recognizes the right to distribute original or authenticated copies of the work and the right to personally reproduce the work (which, let us recall, can cover art as well as music, just think of a piece of music, for example).
Also recognized are the right to public display of the work and to reproduce the work in various formats such as digital audio for record productions.
These are the exclusive rights to the work that every artist and creator enjoys from the moment they last create their work, be it a statue, a painting, a piece of music, a futurist sculpture or, indeed, an NFT.
On these cornerstones, then, rests the defense of artists’ rights and in our case, ownership of an NFT both before and after sale.
The starting image, then, is to regard NFTs as any other work of art both in its production and in its sale.
Just as, in fact, copyright in a painting does not pass from those who create the work to those who buy it, so in the world of NFTs those who buy do not naturally receive rights to reproduce or duplicate the work. Exclusive rights to the work, therefore, protect the artist who can decide, in fact, whether to assign ownership rights at the time of sale as well.
Only in this case does the person who purchases the NFT become both the owner of the work and the rights. Usually this happens in the case of a very small niche of fans to whom the artist grants exclusive terms of sale such as these.
Exclusive rights and copyright
Having seen briefly what rights are granted by law to creators who want to use that of NFTs as a business for their activity, it is necessary to shed light on a part of these rights that, more than the creation of the work, concerns copyright.
In fact, it is common knowledge that there are 4 rights that expressly protect copyright.
The NFT world has already seen legal battles mainly over these rights, namely: the right to reproduce the work, the right to duplicate it, the right to distribute it, and the right to display it publicly.
The topic of copyrights is particularly felt by those who invest in the business world in general, this trend, however, also reverberates in the NFT world.
With regard to the right to reproduce a work, in this case without permission from the artist, it is possible to cite the litigation that is still developing between Nike and StockX.
Indeed, the sportswear giant has filed a lawsuit against the famous online shoe store for allegedly selling Nike’s own NFTs without permission, the famous NFT Vaults.
StockX allegedly intentionally used the globally recognized Nike trademark to mint its own NFTs and in doing so caused consumer confusion.
Those mentioned briefly here are just some of the examples that can be given to understand how important and valuable copyright is in the NFT world and how this industry defends copyright tooth and nail in order to protect the artist first and foremost, even more than his or her work.
The NFT license
Everything, then, seems to revolve around the concept of licensing. In purchasing an NFT, the majority of artists prefer not to assign not only the ownership of the NFT but also the rights or license and subsequent marketing.
This happens for more or less low levels of transactions. It is not ruled out, however, that at high levels, the artist may cede the license to a small group of customers who have demonstrated passion for the artist’s work and brand over time.
Examples such as CryptoPunks or Meebits have in fact introduced the so-called NFT license that provides those who purchase the NFT with the ability to dispose of the NFT and thus copy or display it for commercial purposes.
Of course, there is a limit that continues to protect the artist in that these conditions always coexist with a limit on annual gross revenue that the purchaser can “bill.”
Bored Ape Yacht Club (BAYC)
The first example concerns Bored Ape Yacht Club better known by the acronym BAYC. In fact, Yuga Labs has broken with that closed philosophy regarding copyright by allowing everyone who becomes a brand owner to market the purchased product.
Thanks to this approach, or this business strategy, those who purchase its Bored Ape, become holders of an unlimited license that allows them to create derivative works in a way that is completely legal but, above all, without any profit limitation.
It is worth noting that in this case, the artist continues to retain a certain position of superiority over the purchaser in that he retains exclusivity in the use of his logo. The possibility offered here is precisely that of creating works “derived” from the art being purchased.
World of Women (WoW)
A second example also concerns World of Women. Within this project, the buyer becomes the owner of all rights including copyright. However, commercial terms require the person who buys the NFT not to use it for commercial purposes.
What are "Royalty-Free" NFTs?
An additional problem to be solved in the NFT industry concerns the royalties to be paid to the artist at the time after the first sale of his or her creation. In general, royalties concern the fees that a company or brand receives for allowing the use of its patents or products.
Similarly, NFT royalties pay the artist a percentage of income for each sale involving his or her work.
In this scenario, royalty-free NFTs represent a real novelty in that they do not provide for such a percentage to be paid for each transaction performed with the NFT in question.
In fact, ZINU is the reality that first wanted to introduce this option with its animated 3D NFTs.
Plagiarism and copyright infringement
Some points to be clarified concern the phenomena of plagiarism and copyright violations.
We start from an assumption that is almost transposed by all NFT users, namely that: the purchase of an NFT turns out to be secure and inviolable as far as the parties who conclude the transaction are concerned as much those who sell as those who buy.
What remains to be determined is whether the seller is the actual author of the work. Unfortunately, not many legal sources can be found on this issue and this has resulted, over time, in incidents where users have sold NFT without any specific indication which has led to the assumption that the seller was the actual author of the NFT.
This represents a legal institution known as plagiarism, which is a violation of authorship of the work.
This reasoning leads to a further inference, namely that the seller, since it is plagiarism, does not own the copyright and therefore cannot dispose of it.
The person who purchases such a product, even if the smart contract contains special licenses, does not become the owner of any intellectual rights to the work because the seller is not the author.
Examples of legal issues with NFTs
SpiceDAO is undoubtedly the clearest example to make people understand how important it is when purchasing to verify the actual terms of sale of an object, work, or NFT.
In fact, the company SpiceDAO had spent more than $3 million on the Dune manuscript from which it would later make content and an original animated series inspired by the manuscript’s story.
What SpiceDAO did not realize was that by purchasing the manuscript it was not granting any copyright or permission to dispose of it for the creation of further content for marketing.
Even before this lawsuit, there is a precedent involving director Quentin Tarantino in a lawsuit against Miramax.
The director and the company shared an award-winning film project Pulp Fiction. In the wake of the film’s success, Tarantino had announced that he would sell 7 NFTs concerning the film’s unreleased scripts with the director’s personal comments on the scenes.
The production company filed a lawsuit against the director for infringing the film’s copyright that it owned as well as for causing confusion among consumers by leading them to believe that Miramax had authorized such a sale.
Undoubtedly we are at the beginning of a wonderful collaboration between the world of NFTs and the world of entertainment.
There are many opportunities to create even long-term projects that yield excellent results, but what NFT-related technology must continue to support is the protection of the artist and the work.