UK Stance on NFT Copyright

In October 2023 the UK House of Commons Committee published a report; ‘NFTs and the Blockchain: the risks to sport and culture’.  This is not law rather a set of analyses and recommendations that could influence future legislation.  SecureWeb3 have already discussed the use of NFTs and Blockchain fan tokens in sport and particularly in football.

The new study puts particular emphasis on the issue of Intellectual Property in relation to NFTs.  The committee recognised that Blockchain data is immutable.  Although this can be used to prove provenance of a token the relative ease with which such a token can be minted means that this does not necessarily prove ownership.  The following risks to IP ownership were specifically identified:

  • Copyright infringement: The creator of an original work may not have given permission for the creation of any derived NFT.
  • Limited recourse and redress:  A takedown request should see a work being removed from a NFT marketplace but that is no guarantee that a similar copy will appear in the future.
  • Scale of infringement:  There are several independent NFT marketplaces some of whom will be hosting millions of items.
  • Consumer confusion:  The ultimate responsibility for establishing copyright for a NFT depends on the current owner not the hosting or minting platform.  Consumers may be unknowingly purchasing goods to which they do not own the IP.
  • Inflexibility transferring IP:  The immutability of the Blockchain makes it difficult to effect and publicise any transfer or rights that occurs on a sale.

The present copyright and Trademark laws do apply to NFTs but there is only limited onus on the minting engines to enforce them.  In the EU Article 17 of the Digital Copyright Directive ‘online content-sharing providers’ have been made responsible for taking necessary steps to avoid unauthorised uploads.  This law does not apply within the UK and the hosting sites themselves might not be in the EU either.  OpenSea for example is based in New York so any uploads would be subject to USA law. 

The sheer number of files that have been created as NFTs or are have been uploaded and not yet minted makes any policing by the host marketplaces difficult.  The process is further confused by AI art where the original source and owner are particularly tricky to identify.

SecureWeb3’s Brand Protection Platform offers a solution based on current technologies.  We can search across popular NFT markets and Metaverse platforms to pull back details of matching NFTs.  A search can be scheduled to repeat so new instances will be identified as they crop up.  Where transgressions are found our engine will generate takedown requests and if necessary initiate legal action against the NFT hosts.  Although particularly beneficial for the protection of TradeMarks and brand images the system is equally useful for investigating any instances of tokens created from unauthorised artworks.