In late March 2020, Jack Dorsey, the founder of Twitter, sold an NFT version of the first tweet on the platform for around USD 2.9 million in an auction for charity to a Malaysian businessman. The tweet by Dorsey himself read as “just setting up my twttr”. In the same month, an artist named "Beeple" aka Mike Winkelmann set up an auction at the renowned Christie’s auction house for his collage containing 5000 of his art pieces which he had been creating for almost 14 years sold for a whopping USD 69 million, which is the third-highest sale for any living artist.
Ever since then, NFTs have become a hot topic in the technology and digital sphere with a majority of people not being able to grasp the concept and trying to ride the wave of the NFT hype. So what is an NFT? NFTs and more importantly the term non-fungible in the literal sense means that the digital image or video is non-replaceable and token refers to the blockchain cryptocurrency which monitors the transaction for the sale of the digital art on a public ledger and this gives the NFT a non-hackable certificate of authenticity (a token) that the buyer has legitimately bought the work. Unlike cryptocurrencies like Bitcoin or Dogecoin, NFT’s do not have an equivalent value that can be exchanged with the NFT, therefore one cannot barter it with something else like money or goods, making the NFT a one of a kind and priceless work for an avid collector.
How does NFT relate to IPR?
Everything sold through NFTs is an intellectual property of a particular person, be it music or a painting collage. Certain cases have emerged wherein licensed artwork has been sold through NFT by unauthorised sellers on the digital marketplace, for instance, Jose Delgo, a former DC Comics employee started drawing sketches of licensed characters such as Wonder Woman and has cumulatively sold his work for around USD 1.8 million, which has irked the people at DC Comics and have demanded Delgo to cease from infringing their copyright.
While some like DC Comics have restrained themselves, others have embraced the technology. NBA by selling the highlight videos of an individual athlete’s slam dunks or three-pointers calling them NBA Top Shots have earned around USD 230 million. While the lowest price for the NFT backed highlight video is $ 9, the highest price for a highlight was USD 200,000, of LeBron James.
While most of the sellers in the NFT marketplace are the owners of the work, in some instances, it may not be the case. As an owner of an IP, one can utilise this opportunity and sell their artwork with NFTs or can license the same to third parties. NFTs are also complex when compared to Bitcoins, an original seller can add conditions for royalties on resale and duration of possession until the next resale and this can help the IP holder to exploit the unique revenue stream even after they have sold the work. NFTs also raise a novel challenge for brands regarding their approach to this new digital marketplace, one can wish to monetise their IP like the NBA or provide third parties open access to the brand trademarks and copyrights as a marketing tool which will help advertise the brand to millions of people across the world and raise goodwill. Content creators who wish to use NFTs as a medium of sale should get their IPs registered with the IPR governing authorities, this will help the creators to expedite the procedure if and when an infringement occurs pertaining to their original works.
How to approach infringement?
The pseudo anonymity within the NFT marketplace may be an inconvenience to any entity that wishes to enforce its IP rights. Every user of the cryptocurrency shall have a unique identification code that can help find them online, but the territoriality and the jurisdictional laws may not be favourable to a content creator nor would it be cost-effective to pursue legal remedies against the buyers and enforcing IP rights on the buyer would be difficult owing to the permanent nature of the blockchain ledger. The ideal time for the IP holder to actively enforce their IP rights would be when the token using the IP in question is listed for sale on the website and has not been sold yet. This would help the creator to report the unauthorised sale of the work and strike down the sale before it is transferred to the buyer.
NFTs were introduced to the world in the year 2017, the technology has been touted to be revolutionary in the blockchain environment. Experts believe that we have barely scratched 1 per cent of the possible uses of the technology and the uses for NFTs are limitless. While it is difficult to take an educated guess on the future of NFT, the underlining fact for the high sales of NFT encrypted creations is human psychology; our entire economy functions on the simple premise that things have value because we humans believe that they do this is relatable to physical money, precious metals, diamonds and cryptocurrencies. The difference between the other commodities and cryptocurrencies is that the former ones have stood the test of time and have become a staple in our economic society. A 5000 painting collage has a value of USD 69 million as of today, but if people lost their interest in NFTs in the near future and considered it
a “fad”, the same painting would be worth pennies to the dollar. We have a lot more to unveil about the technology and if NFTs survive the low attention span of the people, it may end up altering our use of the internet altogether.