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Despite a reported turndown in the NFT market during 2022, we continue to see companies offering large sums of money to mint artwork and content created by our clients. So, what is the benefit, if any, in minting your creative output into NFTs and what should you look out for?
Back to basics: What is an NFT and what is minting?
At a high-level, a non-fungible token or NFT is a unit of data, recorded on a blockchain, which is linked to a digital or physical asset such as music, artwork or even in-game purchases on videogames. It is “non-fungible” because it is unique and immutable, the token can be exchanged but not replicated (unlike a cryptocurrency which is fungible because it can be exchanged like-for-like) and proves ownership of the asset. “Minting” refers to the process of converting digital files into the NFT, which is then published on a blockchain where it becomes purchasable.
Who owns the IP?
Let’s dispel any illusions. Ownership of an NFT does not equate to ownership of the underlying intellectual property.
Damian Hirst’s project, The Currency, provides a good example of this. Hirst created 10,000 artworks, which he sold. The catch is that Hirst asked each buyer to choose whether they wanted the NFT or the physical piece – the other would be destroyed. It is reported that as of October 2022, 4851 opted for an NFT. Nevertheless, much like if they had opted for the physical piece of art, purchasers were buying the saleable piece only and Hirst alone remains entitled to enforce his artistic copyright against any unauthorised copying.
This is good news for IP owners looking for another avenue to exploit their IP, without having to lose title to it altogether. Of course, there is nothing stopping an IP owner from also assigning ownership of the IP but that isn’t the default position upon the sale and purchase of an NFT. More typically, a licence is granted by the owner of the IP to the NFT purchaser, to use the copyright work. That licence…
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