- The vast majority of NFT art projects convey no actual ownership of the underlying content
- The issuer controls how token holders can use the content within the license
NFT holders don’t necessarily have intellectual property (IP) rights of the assets they’ve bought according to Galaxy Digital head of research Alex Thorn, who specializes in crypto development research, CoinDesk wrote. He said:
The vast majority of NFT art projects convey no actual ownership for the underlying content. When you buy one of these tokens, you’re not buying the media that the metadata points to, you’re actually buying a license from an issuer.
Only World of Women ‘attempts to give ownership’
Galaxy carried out research into the matter on the estimated top 25 NFT projects and found just one of them, World of Women, tries to “give true ownership for the underlying artwork.”
However, it’s not clear if the original issuer of an NFT would have to transfer the IP address to a purchaser if they were to sell on OpenSea or another NFT marketplace.
The issuer controls how token holders can use the content within the license and how the license itself is governed because most NFTs come with an issuer license.
Evidence in BAYC licensing agreement
According to Thorn, there is proof of this in the Bored Ape Yacht Club (BAYC) licensing agreement. According to it, a person who buys an NFT owns the underlying art completely, but that’s not true. If they did, they wouldn’t need a license.
The expert finds that NFT issuers like Yuga Labs, who’s behind BAYC, have misled NFT buyers about the rights to intellectual property for the content being sold by them. In an attempt to be more transparent, he advised updating users’ rights when they buy an NFT.
Licenses can be changed on a whim
Thorn finds that users who want to build long-term assets will have a problem in this situation because the licenses can be amended, revoked, or otherwise changed on a whim at any time. Issuers can make changes without even informing NFT holders because they have the IP rights.
2021 was a very strong year for NFTs. There was some decline in the ecosystem this year, but it’s still valued at over $118 billion.
