What legal rights do you have as an owner of a Non-Fungible Token (NFT)?
When you purchase an NFT, you purchase a code that represents a token. That token is not a drawing, illustration, or a real tangible object. It's just a piece of code that represents an illustration and points to it. The token is only a representation that you own something. It doesn't give you any other rights. You own the token and what it represents. But your ownership is only limited to that feeling that you own it. You may even be allowed by some companies to put it on your profile of in a personal space to show that you own it. You may delete the token. You may give it away. You may even donate it for a tax deduction.
But that is the extent of your right as an owner.
You have no right to prevent any other person from using your CryptoPunk or your EtherRock as a profile picture on Twitter. They can do it. All they need is to take a screenshot and place it on their profile. There is no infringement whatsoever. Even though you own it, you do not own the copyright to the image. And that means that you cannot prevent anyone from using it like it was theirs.
Copyright problems
It is a common concept in intellectual property law that ownership of intellectual property doesn't bring with it ownership of the copyright. One may own a sculpture, but he doesn't own the copyright to it. The artist can create a replica or one that closely resembles that work of art and sell it to another person. That's because even if he sold it, he still retains the copyright.
If you want the copyright, then it should be sold to you either separately, or along with the sculpture. Normally, the sale of the copyright is required to be in a written document, and preferably, registered with the government agency tasked to register copyright ownership.
The same is true with an NFT.
Except that NFTs do not usually usually come with a copyright agreement written into the token or in the NFT itself. That means that the copyright does not pass on to the owner or any subsequent owners of the NFT. And that means that it is free for anyone to take and use for themselves. The owner will know that he is the real owner. But he won't be able to tell anyone to stop using his NFT.
And the opposite is also true. The copyright owner may sell its work as an NFT. But if the new owner publicly exhibits the work, it may ask that person to take it down because the sale was purely for the private enjoyment of the person. The person cannot use it for his own gain, like as part of a box label, or an advertisement in his shop, etc. And the reason for that is because the right sold to the owner included only a license for private enjoyment - not the copyright itself.
Probably because of this problem, we now see a new legal issue that has been subject of many complaints - when artists digital works are copied and sold as NFTs. The legal issue is, "What was sold?"
The accused persons defend themselves by saying that what they sold was merely a token - not the artwork. Hence, since the artwork was not sold, then there was no crime. Furthermore, since they never copied the artwork and passed it as their own, there was no copyright infringement. And third, since they never sold the copyright, then there is no fraud.
And strictly speaking, they make good arguments.
NFT speculation has gone down with the bear market. However, the arguments and legal issues have not faded. We are all just waiting for a test case to be decided.
