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The Importance of Intellectual Property When Creating NFTs: Protecting Your Digital Assets

March 6, 2025

The rise of Non-Fungible Tokens (NFTs) has revolutionized digital ownership, giving creators new ways to monetize their work and collectors a method of proving authenticity. Until recently, most NFTs were art, music or games; however, NFTs have started to evolve and now NFTs are used for real estate, certifications and degrees.

The NFT space is fraught with intellectual property (IP) issues, leading to legal disputes, copyright infringement, and confusion over what it truly means to “own” an NFT. Understanding and protecting intellectual property rights is crucial for NFT creators, developers, and collectors to ensure they are legally safeguarded in this rapidly evolving industry.

In this blog, we’ll break down the role of IP in NFTs, explore legal cases, share expert insights, and provide actionable steps for creators to protect their digital assets.

1. Understanding Intellectual Property in NFTs

What is Intellectual Property (IP)?

Intellectual property refers to creations of the mind, including:

Copyrights (art, music, literature, digital assets, software, digital avatars)
Trademarks (brand names, logos, unique designs, NFT collection names)
Patents (inventions, unique processes, NFT-based innovations like smart contract
mechanisms)
Trade secrets (confidential business information, blockchain algorithms, NFT pricing
strategies)

According to the World Intellectual Property Organization (WIPO), global intellectual property filings surged by 13.5% in 2022, with a significant rise in blockchain-related patents and trademarks, showing the growing importance of IP in digital assets like NFTs. This blog will focus on copyright and trademark as intellectual properties.

How Does IP Apply to NFTs?

When I talk to NFT creators and I ask if they ask they use IP to protect their NFTs, most respond: “my NFTs are protected because they are on the blockchain.” I always respond: “Your NFTs may be protected on the blockchain, but they are not protected off the blockchain”. NFTs represent ownership of digital assets, but they do not automatically grant IP rights to the buyer. This means:

Creators retain copyright unless explicitly transferred.
Buyers own the token but not necessarily the underlying artwork or digital asset.
Trademarks protect brands from unauthorized NFT use, preventing infringement claims.
NFT metadata and terms of sale determine the extent of ownership rights.

Case Study: Quentin Tarantino vs. Miramax

In 2021, Quentin Tarantino announced NFT sales featuring unreleased scenes from his Pulp Fiction script. Miramax sued him, claiming he lacked the IP rights to tokenize and sell those assets. Tarantino argued that he had the contractual rights to sell the Pulp Fiction NFTs because he wrote the screenplay, directed, and produced Pulp Fiction. The case highlighted the complexity of IP ownership in NFTs and the legal battles that can arise when IP is not clearly defined. I was looking forward to the decision in this case, but Tarantino and Miramax settled out of court. The ruling in this case would have provided great clarity on the intellectual property ownership of NFTs.

Smart Contracts and IP Protection

Many assume that NFTs automatically grant legal rights via smart contracts, but this is often a misconception. Most NFT transactions only transfer ownership of the token, not the IP rights to the digital content.

How to Ensure IP Protection in Smart Contracts:

Explicitly state ownership rights within NFT metadata.
Incorporate licensing agreements in smart contracts to clarify commercial and personal use rights.
Utilize blockchain registries to verify authenticity and track IP ownership.

Real-World IP Violations in NFTs

Unfortunately, IP violations occur on a daily basis. In fact, the first time I researched NFTs years ago, I saw two NFTs, one from a famous rapper and one from a famous rock bad that I KNEW were copyright violations. Additional examples of IP violations in NFTs follow:

Unauthorized Disney NFTs: Third-party sellers have minted NFTs featuring Disney characters without permission, leading to take-down orders and lawsuits.
Artist NFT Theft: Platforms like OpenSea have faced backlash as thousands of artists found their artwork stolen and minted without their consent.
Counterfeit NFT Collections:Fake versions of popular NFT projects like Bored Ape Yacht Club (BAYC) and CryptoPunks have appeared on secondary markets, raising questions about copyright enforcement.

By understanding and implementing proper IP protections, NFT creators and buyers can avoid legal risks and protect their digital assets in this rapidly evolving space.

2. Copyright Issues in NFTs

Who Owns the Copyright of an NFT?

A common misconception is that buying an NFT gives full ownership of the digital artwork. However, in most cases, the original artist retains the copyright, unless they explicitly transfer it to the buyer through a legal agreement. Without proper licensing, buyers may not have the legal right to reproduce, modify, or sell derivative works of the NFT.

Case Study: Hermès vs. MetaBirkins

Hermès, the luxury handbag brand, filed a lawsuit against Mason Rothschild, the creator of the MetaBirkins NFT collection, for trademark and copyright infringement. Hermès argued that Rothschild’s NFTs unlawfully profited from the brand’s famous Birkin bag design and misled consumers. The court ruled in favor of Hermès, establishing an important precedent that NFTs can violate intellectual property laws, especially when they imitate or exploit established brands.

Real-World Statistics and Examples

NFT Copyright Disputes: According to a 2022 report by Elliptic, over $100 million worth of NFTs were linked to plagiarism and fraud cases, highlighting widespread IP violations.
Unauthorized NFT Minting: A study by The Verge found that more than 80% of NFTs minted on OpenSea using its free minting tool were either plagiarized, fake, or spam.
Digital Artists Speaking Out: High-profile artists like Loish and RJ Palmer have publicly condemned NFT marketplaces for failing to prevent unauthorized tokenization of their artwork.

How to Avoid Copyright Infringement

Obtain explicit permission before using copyrighted material in NFT projects.
Clearly define copyright ownership and licensing terms in NFT smart contracts and sales descriptions.
Use original artwork to avoid potential legal disputes and ensure compliance.
Consider Creative Commons (CC0) licenses for open-use NFTs, allowing creators to dictate usage rights while maintaining some protections.
Utilize blockchain-based IP protection services such as Ascribe and Verisart to register and verify digital ownership rights.

By understanding copyright implications and taking proactive steps to secure IP rights, both NFT creators and buyers can protect their investments and avoid legal pitfalls in the evolving digital asset landscape.

Trademark Considerations for NFT Creators

Can You Trademark an NFT?

Yes, businesses and artists can trademark their NFT projects, logos, and brand names. Trademarking an NFT ensures exclusive rights to branding elements, preventing unauthorized use and misrepresentation. However, using existing trademarks without permission can lead to legal disputes, as seen in multiple high-profile cases.

Case Study: Nike’s CryptoKicks

Nike has actively protected its CryptoKicks NFT project, a blockchain-based authentication system for real-world sneakers. The company has taken legal action against unauthorized sellers who attempted to mint NFTs using Nike’s branding. In 2022, Nike sued StockX, a popular sneaker marketplace, for selling NFTs featuring Nike’s shoes without authorization, reinforcing that brands can enforce trademark laws in the digital space and that NFT marketplaces need to be cautious about listing infringing assets.

How to Protect Your NFT Brand

I tell all of my NFT clients, your NFT brand is a major factor in the success of your NFT sales. Better brands have better sales. If your brand does not have IP protections, NFT scam companies can hijack your brand to make quick and unscrupulous profits and then disappear. This brand hijack can damage your brand, perhaps permanently,

Monitor NFT marketplaces regularly to detect unauthorized copies or infringements.
Take legal action against infringers by issuing cease-and-desist notices or pursuing litigation if necessary.
Clearly define ownership rights in smart contracts and sales agreements to avoid disputes.
Partner with legal professionals specializing in blockchain and intellectual property law to ensure compliance with evolving regulations.

By securing trademarks and proactively monitoring for potential infringements, NFT creators canprotect their brands and establish legal authority in the growing digital collectibles market.

Licensing and NFT Sales

What Rights Does an NFT Buyer Actually Get?

Many NFT buyers assume they have unlimited rights to the artwork, but most NFT transactions grant only limited usage rights. Licensing agreements define:

Whether the buyer can reproduce, modify, or resell the artwork.
Whether commercial use is permitted or restricted to personal use.
If the NFT comes with exclusive ownership rights or just digital access.
The duration of rights (some licenses are perpetual, others expire over time).
Whether royalty payments are required for future sales.

Example: Bored Ape Yacht Club (BAYC) Licensing Model

BAYC grants broad commercial rights to NFT holders, allowing them to use their Ape’s image for merchandising, branding, and creative projects. This has led to:

BAYC-themed restaurants and beverage brands, such as Bored & Hungry.
Musicians and creators using Apes as virtual characters in music videos and commercials.
Collaborations with major brands, integrating Bored Apes into mainstream media.

Additional Examples of NFT Licensing Models

CryptoPunks: Originally did not allow commercial use, but Yuga Labs later granted full rights to Punk owners in 2022.
World of Women (WoW): Provides extended licensing options, allowing holders to monetize their NFTs under specific guidelines.
Moonbirds: Switched to CC0 (Creative Commons Zero), meaning anyone—not just NFT holders—can use the artwork for commercial purposes.

Types of NFT Licensing Models

Full Copyright Transfer: Buyer owns all rights, including reproduction and commercial use.
Limited Commercial Rights: Buyer can monetize but with restrictions (e.g., no modifications or sublicensing).
Personal Use Only: Buyer can use the NFT privately but cannot profit from it.
CC0 (Creative Commons Zero): Anyone can use and monetize the artwork without restrictions.
Revenue-Sharing Licenses: Creator retains some rights and earns royalties from buyer’s commercial use.

Real-World NFT Licensing Statistics

70% of NFT projects provide only personal-use licenses, according to a 2023 DappRadar report.
NFT sales with clear licensing terms see 25% higher resale values, per data from NonFungible.com.
More than 40% of NFT buyers do not fully understand the legal rights they are purchasing, based on a 2022 survey by CoinGecko.

Understanding licensing terms before purchasing an NFT is crucial to avoiding legal disputes and ensuring proper use of digital assets.

Risks NFT Scams and Counterfeit NFTs

NFT scams are a growing problem in the digital art world. Scammers often create fake NFTs or copy existing ones and sell them to unsuspecting buyers. They may also use phishing scams to steal people’s cryptocurrency or personal information. To avoid NFT scams, it’s important to do your research before buying any NFTs. I always advise NFT purchasers to make sure you’re buying from a reputable seller and that the NFT is authentic. You should also be wary of any offers that seem too good to be true. If you’re not sure about something, it’s always best to err on the side of caution and not buy it.

The Rise of Counterfeit NFTs

Artists frequently find their work minted as NFTs without permission. Fraudsters steal digital art, mint unauthorized NFTs, and sell them to unsuspecting buyers, leading to financial and reputational damage for legitimate creators. The anonymity of blockchain transactions makes it difficult to trace and prosecute counterfeiters.

Case Study: Artists Fighting Back Against NFT Theft

Digital artists like Loish and RJ Palmer have publicly spoken about unauthorized NFTs of their work being sold on major marketplaces.
OpenSea reported that over 80% of NFTs minted using its free minting tool were fraudulent, counterfeit, or spam, forcing the platform to revise its policies.
DeviantArt Protect, an AI-powered tool, has scanned over 4 million artworks and detected over 300,000 instances of NFT art theft, helping artists combat unauthorized usage.
The Banksy NFT Scam (2021): A hacker minted and sold a fake Banksy NFT for $336,000, misleading collectors into believing it was authentic.

How to Prevent NFT Theft

Watermark artworks before minting to discourage unauthorized use.
Use blockchain-based verification tools such as Verisart and Arweave to authenticate ownership.
Monitor NFT marketplaces regularly and report stolen works for takedown.
Engage legal professionals to issue Digital Millennium Copyright Act (DMCA) takedown requests.
Use AI-based detection tools like DeviantArt Protect to scan marketplaces for unauthorized copies.
Consider using NFT whitelisting platforms to limit unauthorized minting of artworks.

As the NFT space continues to evolve, robust legal frameworks and marketplace policies will be crucial in protecting artists and ensuring a fair and transparent digital art ecosystem.

How to Protect Your Intellectual Property When Creating NFTs

Steps for NFT Creators to Secure Their IP

Register copyrights or trademarks for your digital creations to establish legal ownership and prevent unauthorized use.
Use blockchain verification for proof of ownership by registering your work with platforms like Verisart, Codex Protocol, or Arweave.
Clearly define IP terms in smart contracts to specify what rights are transferred and any restrictions on commercial use.
Regularly monitor NFT marketplaces for unauthorized listings using AI-based detection tools like DeviantArt Protect or Google Reverse Image Search.
Take legal action against infringers by issuing Digital Millennium Copyright Act (DMCA) takedown notices or pursuing legal claims through blockchain-friendly IP attorneys.
Implement watermarking and metadata protection to deter unauthorized duplication and provide proof of authenticity.
Leverage licensing agreements to specify commercial, non-commercial, and resale rights, ensuring creators retain appropriate control over their work.

Emerging Legal Frameworks for NFT Protection

Governments and legal bodies worldwide are exploring new regulations to enforce NFT copyright protection more effectively. Some notable developments include:

The European Union’s Digital Services Act (DSA), which aims to hold online platforms accountable for removing counterfeit or infringing NFTs.
The U.S. Copyright Office’s increasing scrutiny of blockchain assets, with courts debating how traditional copyright laws apply to NFTs.
China’s enhanced digital copyright laws, which now cover blockchain-based assets, ensuring stronger protections for digital creators.
NFT marketplaces enhancing security measures by implementing verified creator programs, AI-driven authenticity checks, and reporting mechanisms to prevent fraudulent listings.

As the NFT ecosystem evolves, stronger legal frameworks, technological safeguards, and proactive creator strategies will play a crucial role in protecting digital assets and intellectual property rights.

The Future of Intellectual Property in NFTs

Key Trends to Watch

Decentralized Autonomous Organizations (DAOs) forming to protect NFT IP rights and manage community-led enforcement of copyright violations.
New blockchain-based licensing solutions making IP tracking easier, such as smart contracts that include automated royalty payments and verification of asset authenticity.
Regulatory shifts increasing enforcement of NFT-related IP laws, with governments worldwide considering clearer legal frameworks.
Growth of NFT copyright registries, where creators can officially register their work on blockchain networks for added legal protection.
Collaboration between NFT marketplaces and law enforcement agencies to combat counterfeit NFTs and unauthorized sales.
The rise of AI-powered monitoring tools that track and flag IP infringements across multiple NFT platforms, reducing unauthorized usage.
More litigation and legal precedents as courts handle cases that define digital ownership and enforceable rights in the NFT space.

Real-World Statistics and Examples

According to a 2023 WIPO report, global NFT-related trademark filings increased by 50%, reflecting the growing importance of IP in digital assets.
Elliptic’s 2023 NFT Crime Report found that over $100 million worth of NFTs were linked to copyright disputes and fraudulent activities.
The EU’s Digital Services Act (DSA) aims to hold platforms accountable for counterfeit NFTs, ensuring better enforcement of IP laws.

Final Thoughts

As NFTs continue to expand in popularity, intellectual property protection will be a top priority for creators, businesses, and investors. The increasing number of legal disputes and counterfeit cases highlights the urgent need for robust IP enforcement mechanisms and standardized licensing frameworks across different jurisdictions.

The integration of AI-driven copyright detection tools and blockchain-based registries will further help mitigate IP theft and unauthorized NFT duplication. Additionally, as more governments introduce clearer NFT regulations, marketplaces will need to adapt by implementing stricter compliance policies and automated verification systems to protect both buyers and sellers.

By staying informed and proactive, NFT creators and investors can safeguard their assets, ensure fair compensation, and contribute to a more transparent and secure digital economy.

Are you an NFT creator or investor? Have you encountered IP-related challenges? Share your experiences and insights in the comments!