It seems like overnight NFTs exploded and every brand and artist across the world started to sell them.
Eye-popping prices have caught the attention of brands, game developers, and users from all corners of the earth and everyone has a close eye on NFTs. We are now seeing how they can revolutionise ownership of digital assets, and creators, investors and more are looking at how they can get in on the action.
However, NFTs are unique and are new. Some aspects of how ownership is controlled are still not widely understood. Intellectual property (IP) is a big concern for many who are buying and selling NFTs. In this post, we cover everything you need to know about IP and NFTs, and how you can address any concerns you may have.
NFTs are unique in many ways. What many investors and creators don't understand is that when you buy or sell an NFT the rights that come with that NFT can vary from platform to platform.
For example, you may buy an NFT but it may not give you the right to display that NFT or use it for commercial purposes.
Creators or sellers can retain some of their rights to their NFTs after a sale. It is possible that an NFT creator could embed a contract into the NFT itself that automatically starts executing royalty payments that a buyer may not be aware of if they don’t read the fine print.
When you decide what platform to sell on, you need to clearly read the fine print. You need to be aware of what rights you are giving away and which rights will be retained. If you don’t want a buyer to have a specific right, such as minting new NFTs from your original, you need to clearly express that in the contract.
Need to make clear the terms for the NFTs their platform offers. Litigation risks are possible from unhappy buyers or sellers, so all terms need to be clearly stated so that no party can claim they have been duped.
Should pay close attention to the specific rights they are signing away with their NFTs. You can review your registrations to see whether the classifications listed give you enough coverage for NFTs.
As a game developer, there are some specific IP issues that you need to be aware of when selling NFTs.
If you create an NFT that has any of your own intellectual property – for example, your company branding or a character from your game – you need to clearly define to what extent you are licensing out or retaining the rights to those assets.
There are also some issues relating to how the buyer may use an NFT. For example, if the NFT in question is an in-game item, the buyer may then have to be granted the specific right to use that item within the game.
NFT copycats are another common issue game developers will face. For example, forged in-game items. Developers will need to consider how they will address such issues.
NFTs have exploded onto the scene and while they definitely present great solutions to verifying ownership of digital assets there are still some key areas that need to be fully understood by buyers and sellers before they start creating and investing.
IP will continue to be an issue until every party involved in the process of buying and selling NFTs is completely transparent about the rights that are transferred with it. Until then, both buyers and sellers need to be reading the fine print and ensuring they are purchasing and selling the rights that they want to.
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