It’s the first day of March in 2021, the interwebs are abuzz with defining NFTs (non-fungible tokens) and its various sectors that are taking the mainstream media (Forbes, CNBC, Bloomberg) by storm. NBA Top Shot is revolutionizing the trading card industry. Digital art is selling for $6.6 million on the secondary market. Most recently, a charm-studded virtual necklace sold for $88,888 in an online auction bid. NFTs are digitizing traditional industries and crossing them over into the metaverse. With the NFT space in its infancy, how do we protect the newfound wealth attained from these digital assets.
The bull case for NFTs is their scarcity and one-of-a-kind ownership, but I propose the base value lies in the intellectual property rights. With a focus on the $200 million crypto art market, a common misconception by many artists is that there’s no need to register a copyright on their art, because it’s automatically protected upon creation; that’s half true.
Common law copyright is the inherit right that every creator of a literary work, music composition, or art piece enjoys to protect their creation as their own. However, this common law protection is limited, and is often preempted by federal copyright. If a crypto artist wants to file a lawsuit against a major fashion label for using their artwork on a clothing line, they can’t claim copyright infringement in the lawsuit. “A copyright owner may not file an infringement suit until the Register of Copyrights has granted the application for registration.” (Fourth Estate Public Benefit Corp. v. Wall-Street.com, 2019)
In January 2021, in a federal court in California, graffiti artist, Leonard McGurr AKA Futura, filed a lawsuit against The North Face clothing label for unauthorized use of his work on their product line, FUTURELIGHT. Due to not registering a federal copyright for his graffiti art, Futura couldn’t claim copyright infringement, rather he brings the action under unfair competition, which may present challenges to his case.
For the artist, intellectual property is their best asset. Why? Because you can protect your work and license use to corporations for a substantial fee. The benefits of filing a federal copyright include: access to federal courts, statutory damages (money), attorney fees, and disgorgement of profits, to a name a few. But, most importantly, to be eligible for these benefits, artists must register before the infringement occurs or within 3 months of creating the art piece.
Should an artist copyright every piece of art? No, but it's up to them to ask: "Does my art have commercial appeal and how likely is it for someone to infringe for profit?" The NFT art space is growing and new marketplaces are popping up every month. If you have a unique style and an increasing fanbase, registering maybe a safer bet, because blockchain evidence has yet to be used in any state or federal court (as of the writing of this post). Copyright registration strengthens the value of the art and can create different streams of income. Paint onward ARTentrepreneurs, and consider registering a copyright.
The contents of this blog are for informational purposes only and may not be relied on as legal advice.
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