SIMPLIFIED: NFTs & Their Protection Under The Copyright Law

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The concept of NFTs has taken the world on a unique journey in an arena of digital assets. An NFT is a non-fungible token, but that will not help clarify what it means since the full form in itself can be perplexing.

Understanding What NFTs Are

What exactly is an NFT? Now, diving into its meaning and significance, a non-fungible token is a form of digital asset that represents real-life tangible assets. The examples of these assets covered under the scope of NFTs are extensive. It includes everything from art, music and games to even tweets! NFTs can also be a copy of assets that exist in digital forms, like copies of video clips of a famous football game, digital copies of movie posters etc. 

The selling and buying of these assets are done online, primarily by cryptocurrencies. Also, the transactions are encoded, much like crypto-based currencies and assets. Based on Ethereum like technology, non-fungible tokens have a framework like a cryptocurrency. This allows for storing the information more concretely.

The Ethereum network creates and stores a large number of NFTs.

In the simplest terms, NFTs uniquely exist on a blockchain, making infringement a nearly impossible task. So the term non-fungible. They hold monetary value, which can efficiently determine the ownership of digitised assets. Overall, NFTs have become a beautiful tool that revolutionises digital media. 

Even though NFTs have been around for a long time, they recently gained much attention. Besides, it has already spent a whopping amount of $174 million on NFT based transactions since 2017. Even though NFTs can include almost anything, many investors are particularly interested in digital art.

The image is called ‘Everdays: The First 5000 Days,’ created by the digital artist Beeple a.k.a Mike
Winkelmann. This was the most expensive NFT sale in 2021. Picture courtesy- OpenSea

From Jack Dorsey’s (Founder of Twitter) tweet being sold as an NFT for $2.9 million to Grimes auctioning her posters and video clips as digital art worth $6 Million, one thing that is visible here is that the trend of NFTs is attracting much money. That is why it is essential to look at whether there is a legal framework that can protect and regulate NFT related transactions. 

Intellectual Property Rights and NFTs

The extension of intellectual property rights to digitised assets like cryptocurrencies, NFTs etc., has been a perplexing debate. This is mainly because of the nature of these assets. The central subject matters to be covered under the ambit of NFTs include cinematographic works, art, music, etc. These assets majorly belong to the niche of ‘work of authorship’ essentially covered under the scope of copyright law. Hence, whether non-fungible tokens come under copyright protection remains the question.

Understanding Copyrights 

Copyright is a type of IP protection extended to literary and artistic works to protect the rights of the artists, creators, and copyright owners. It covers a wide range of subject matters, including poems, books, music, cinematography, paintings, sculpture, computer database etc. 

Analysing the Extension of Copyright to Protect NFTs

The issue was analysed various times, but this matter remains in a grey area.

An Instance

Spice DAO (Decentralized Autonomous Organisation) recently bought an NFT of a copy of Alejandro Jodorowsky’s Dune. Originally written for a film adaptation of Frank Herbert’s sci-fi book Dune, this unpublished manuscript was very rare. However, it held much value considering its fan base. The maximum monetary value was estimated to be $40,000.

The concept art book of Jorodowsky’s unproduced Dune
Picture courtesy- Literary Hub

Here is the surprising part, the Spice DAO community, which includes various enthusiastic crypto investors, came together to buy a copy of this manuscript in the form of an NFT for $2.66 million! They believed that they would also acquire the IP rights of the said manuscript. However, they fumbled pretty badly, as the NFT was a mere copy of the original manuscript. 

Now, they had made numerous plans, including introducing the book in the public domain and making animated series based on the storyline of the book’s manuscript. Funnily enough, they spent a hundred times the estimated monetary value on a collectable, available online for free since 2011. This purchase did not give them any legal or IP rights over the collectable, making it a costly mistake.  

Significance of Knowing the Legal Rights

Considering the money involved, the above incident cannot be considered a trivial mistake. Such major blunders are a practical example of the need to understand the legal rights available when purchasing an NFT. Like when an individual buys a copy of an original product and gets no rights to monetise the content specifically, a similar concept is followed in the NFT regime. The copyright continues to belong to the original creator of the NFT. So unless an individual wants to resell the NFT and make money out of that, the monetary options are pretty scarce. 

Stance in India

The NFT craze has also reached India, with famous personalities minting and auctioning their collectables. Amitabh Bachchan sold his father’s poem ‘Madhushala’, his autographed vintage movie posters, and other digital art pieces for an approximated value of 7.18 crore rupees.

Amitabh Bachchan is the first Indian celebrity who rolled out his NFT
collection. Picture courtesy- The Free Press Journal

However, the legal framework in India does not directly acknowledge the rights and obligations related to NFTs.

“Just like cryptocurrency, NFTs possess no legal sanctity.”

Nevertheless, considering the copyright regime in India, the Copyright Act mandates that for the transfer of the ownership of a particular copyrighted work, it should record the application of transfer in the same register where the copyright was initially registered and recorded. Hence, the NFTs cannot come under this concept. Furthermore, buying and selling of NFTs follow an entirely different concept, so they are not considered recognised under Copyright law. 

Also, read The Cryptocurrency Boom And Its Implications For India here!

The Major Challenges 

  • Lack of a Proper Structure and Awareness

The major problem that persists is the hype around the entire concept of NFTs. This has encouraged many people to invest in NFTs without understanding their rights concerning NFT and the remedies in case of any infringement. 

  • Absence of a Legal Framework

Moreover, since the law related to the same remains uncrystallised, it can be a complex task to know the available remedies and seek them. 

  • High Monetary Value of NFTs

The amount of money involved in selling and buying non-fungible tokens is enormous. Going with the trend is not the best option until one has conceptualised the reason for buying the said NFT and its future uses. While many people simply collect NFTs as a passion, it is not exactly the most feasible and logical approach for all. Simply because buying an NFT can drain one’s economic resources in a single transaction. 

  • Jurisdictional Aspects

The jurisdictional aspect is not clearly explored, just like the absence of formulated laws to protect and regulate NFTs. NFT transactions can occur between parties from any corner of the world. Hence, understanding and determining the jurisdiction is a must in case of a fraudulent transaction or dispute over ownership.  

A digital rendition of the 2011 meme ‘Nyan Cat’ was sold for $531,000 in February 2021.


Since presently copyright or any IP protection cannot be extended to NFTs, it is crucial for every NFT investor to firstly analyse the rights and repercussions of investing huge amounts of money on these digitised assets, as right now, the only solution that does exist is being aware, and making smart investments.   

About the author


Nikita has a penchant for reading and writing, and naturally, she is a research enthusiast. Being a law student with a specialisation in International Trade and Investment Law, her interest areas include Intellectual Property Law, Cyber Law, and International Law. She has written various articles and research papers about global issues related to IPRs and Cyber laws with the aim of acknowledging these issues, addressing potential solutions, and spreading awareness about the same.

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