On the occasion of World Intellectual Property Day, we want to address a topic as fascinating as it is complex: non-fungible tokens, or NFTs. These digital assets, which operate through blockchain technology and are frequently traded with cryptocurrencies such as bitcoin or ether, have captured global attention not only for the impressive prices that some have reached, but also for the important legal questions they raise regarding rights. of intellectual property. On a day like today, it is timely to reflect on how intellectual property faces the challenges and opportunities presented by NFTs, which continue to redefine the limits of creativity and innovation in the digital age.
NFTs have established themselves as unique digital representations of assets, which can include everything from artwork to video and music clips, GIFs, etc. Each NFT is essentially a unique code stored on a blockchain that certifies ownership of a specific digital copy of an underlying asset associated with that code. However, one of the biggest confusions and source of legal risk is the misunderstanding about what this code actually represents in terms of intellectual property.
Indeed, when acquiring an NFT, what you obtain is the code associated with the token on the blockchain and this code is linked to a digital file, but – and here comes the relevant part – the transaction does not automatically transfer the copyright of the content. linked digital. Thus, then, whoever buys an NFT in a Marketplace and pays a high price, does not acquire any rights other than ownership over the specific digital asset that they acquired, that is, over the code stored in the block network and over that particular copy. of the associated underlying intellectual work, but will not acquire the economic (or even less moral) author rights associated with the underlying image, unless the owner of the rights of the associated work has agreed to assign the economic rights to the person who minted the NFT , or that it is the same owner who has minted the NFT and has decided to transfer all economic rights to the first buyer, and so on.
It is enough to illustrate the above with the following example: if I paint a painting, and I want to mint an NFT whose associated image is my painting, whoever buys the NFT from the Marketplace will only “own” that specific copy of the painting linked to the non-fungible token; That is to say, you will be able to display and use that only version of the painting linked to the NFT, but you will not be able to prevent anyone from copying and pasting the painting on internet pages, etc., since whoever will be able to pursue these infringements (in this case, unauthorized reproduction of the painting) will be me, since the copyright remains with me. It is the same as if I sell a copy of my painting in a physical art gallery, the buyer only acquires that copy and has the right to resell it as many times as he wants (due to the exhaustion of the right I will not be able to claim anything), but he does not have the right to make new copies of the painting nor can he claim if, for example, a third party takes a photograph of his copy of the painting.
That is why the usefulness of NFTs and the high prices that in some cases are paid is in question, because on the Internet it is so easy to illicitly replicate images, the value of an asset that is supposed to be unique is diluted. quickly upon seeing that anyone can replicate the associated image, without major risks.
Likewise, in the field of NFTs, the buyer does not acquire the moral rights to the work inserted in an NFT, which significantly limits their abilities to control or modify the work associated with the NFT. This aspect is essential to understand the limitations inherent in purchasing an NFT and the risks associated with the lack of control over the work.
NFTs can be extremely expensive, with buyers often investing large sums of money in what is essentially a link to a digital file. This investment becomes risky if the rights being acquired are not fully understood. The lack of copyright transferred with the purchase of an NFT means that the buyer has no legal ability to prevent third parties from copying and distributing the linked digital content. This can significantly decrease the perceived and actual value of the NFT if the market fluctuates or if digital content is widely copied, and reveals the transparency that must be had when trading these assets.
Transparency in the transfer of rights is essential to protect both creators and buyers of NFTs. NFT sellers should be clear about what rights they are actually transferring and buyers should perform due diligence to understand what exactly they are purchasing. This transparency not only helps avoid misunderstandings and legal disputes, but also contributes to establishing a fairer and more equitable market for NFTs.
Given the novel challenge that NFTs pose to existing intellectual property laws, there are those who advocate for a regulatory framework that can adequately address these new technological developments, which has not occurred in Chile. Lawmakers and regulators should consider how laws can be adapted to protect the rights of creators while facilitating the innovation and commercialization of new forms of digital art and other content. Education plays a crucial role in the digital age, especially in the context of World Intellectual Property Day. Awareness of intellectual property rights related to NFTs and other emerging technologies is critical to ensuring that creators and consumers are well informed about their rights and responsibilities. This awareness not only promotes greater innovation and creativity, but also protects the legal and financial interests of all parties involved.
In conclusion, NFTs represent a fascinating crossover between technology and intellectual property, offering both significant opportunities and challenges. On World Intellectual Property Day, it is important to reflect on how the law can adapt and respond to these new forms of digital expression. As we move forward, legal clarity, education and adaptive regulation will be key to navigating this new landscape and ensuring that innovation and creativity continue to flourish in the digital world.
For more information on these topics, you can contact our IP, Tech and Data team:
Eugenio Gormáz | Partner | egormaz@az.cl
Antonia Nudman | Senior Associate | anudman@az.cl
Carlos Lazcano | Senior Associate | clazcano@az.cl
Fernanda Rodríguez | Associate | frodriguez@az.cl
Esteban Orhanovic | Associate | eorhanovic@az.cl
