Digital Golden Egg? The Copyright Controversy Sparked by NFTs

As NFTs (Non-Fungible Tokens) rise rapidly in the digital asset market they are also igniting heated debates over copyright issues. NFTs are a technology that records the ownership of digital works on the blockchain leading many to believe that they can own and trade these works through NFTs. However a significant misconception lies in the fact that what NFTs offer is the ownership of the digital asset not its copyright.

Unauthorized Use and Sale: The Pitfalls of Digital Works One of the most common disputes involves the unauthorized use and sale of digital works. If someone creates and sells an NFT from another person’s digital work without permission it constitutes copyright infringement. Given the ease of copying and distributing digital works creating NFTs without the original creators consent is all too common. However the original copyright holder retains the right to decide how their work is used and unauthorized actions can lead to legal disputes.

A case in point involves artwork from the popular RPG Last Origin where a former employee of PiG BKK the Bangkok branch of the games overseas publisher PiG illegally created and sold NFTs using the games illustrations. The developer SmartJoy took legal action through Line Games’ legal team against the individual who misused the images and PiG promised to prevent such incidents from happening again.

The Misconception of NFT Buyers: Believing They Purchased Copyright Another issue arises when NFT buyers mistakenly believe they have also acquired the copyright to the work. While NFTs record ownership of a digital asset misinformed buyers may attempt to reproduce or use the work commercially leading to copyright infringement. This misconception is a major cause of disputes related to NFTs.

An example of this is the copyright issue surrounding Ragnarok Online. Longtu Korea announced the release of a blockchain version of the game but this move was made without the consent of Dominus Games the original creator who claims exclusive rights to the Ragnarok Online NFT game.

Conflicts with Existing Licenses: The Risk of Double Selling Conflicts also arise when a work has already been licensed or sold in another form and the original creator attempts to sell it again as an NFT. For instance if a work licensed for exclusive use by a company is resold as an NFT by the original creator it leads to a conflict with the existing license. This can result in a breach of the original contract and likely legal disputes.

A relevant case involves the Spum Snsun Pixel Unit Maker developed by Song Yong-seong which was used without permission in an NFT project leading to copyright infringement. According to Unity Asset Stores EULA purchasers do not have the right to resell or create NFTs from the assets. However the NFT project promoted the content as if it had been created by the project team clearly violating copyright.

Trademark Infringement: The Battle Over Brands and Characters Trademark infringement can occur when NFTs include images of famous brands or characters. Trademark law protects the right to use specific brands or characters and unauthorized use of such in NFTs can quickly lead to legal action. If a popular character is turned into an NFT and sold without permission the company owning the character’s rights is likely to take strong legal action.

For example French luxury brand Hermès filed a trademark infringement lawsuit against Mason Rothschild who created and sold NFTs resembling the Birkin bag calling them MetaBirkins. Hermès sent a cease-and-desist letter to Rothschild asserting that these actions constituted trademark infringement. When Rothschild did not stop selling the NFTs Hermès sued him in a New York court seeking damages and an injunction for trademark infringement and dilution.

Confusion Over Usage Rights: The Responsibility of NFT Platforms Lastly confusion often arises when the scope of use for a purchased NFT is unclear. For instance if a user purchases a character skin as an NFT that is only usable in a specific game but then attempts to use it in another game issues may arise. This often happens when NFT sellers fail to clearly explain the terms of use.

To prevent and resolve these copyright disputes several important measures are necessary. First establishing a technical system to verify the authenticity of works and enabling swift legal responses to copyright infringement is crucial. Additionally it’s important to clearly explain the difference between ownership and copyright to NFT buyers and to specify the terms of the transaction. Thorough pre-screening and legal agreements are also necessary to prevent conflicts over licensing and trademarks.

Ultimately to manage NFTs safely holders must clearly understand the difference between ownership and copyright and carefully review the terms and rights of the NFT before purchasing. By gathering information and seeking expert advice they can prepare for legal issues and ensure they do not infringe on copyright when using NFTs. While NFT and copyright issues are inevitable challenges in the new technological era understanding and addressing them correctly will allow us to harness their potential safely.

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