Before Understanding Non Fungible Tokens we have to understand what is fungible?
Fungible means that could be replaced by something identical and when we add non it becomes non fungible that means something can not be replaced and can’t be exchangeable. A non fungible token is unique and there can’t exist another like it. This article talks about the non fungible token, its importance, and relation with the copyright laws in India.
IMPORTANCE OF TOKEN
We will understand the word token with an example that when a person is going to purchase a home. There are some legal formalities (agreement)which that person has to fulfill the ownership of the home and that agreement is the proof of the ownership. When any person digitally owns a song, art, small video clip of any match, movie etc. And the person need to prove that he is the owner of a song, art etc. the proof digitally is known as a token. The token is totally in digital form and we can not touch it.
MEANING OF THE BLOCK CHAIN
The token is tracked by the public in block chain form and the Block chain is a technology which is based on the bitcoin type of crypto currency. The block chain came in 1990 but in actuality it was implemented in 2001. In simple words block chain means all records are in public any person who are in the block chain can see the records.
The block chain is totally transparent. It is similar to the ledger book and there are so many blocks like the first block of data and second is of hash and third is of previous hash. It continues like this and becomes a chain.
The first block is known as the genesis block which does not store any previous data. The word hash we can understand is like a unique code which is generated through the block chain. In the block chain once the data is stored it can’t be altered or modified.
NON FUNGIBLE TOKENS
NFTs are digital certificate or digital authenticity seals that grant ownership of an asset represented as an NFT verifiable through block chain entry. NFTs are unique cryptographic tokens that exist on a block chain and can’t be replicated. NFTs can represent the real world like real art work or real estate. NFTs have been in existence since 2014 but they have become popular nowadays.
Since 2021, it became popular amongst the masses bringing art and technology together. Most NFTs are a metadata file that has been encoded using a work that may or may not be subject to copyright protection. When purchasing NFTs, the work is not owned, rather the metadata is an intellectual property law expert says.
In digital world no one can claim ownership of copies of a file issued in public domain but nowadays it is not like that with the help of NFTs any one can own ownership of any popularity.
NFTs are one of a kind digital assets which can’t be exchanged with any object. There is no one replaceable fungible form because of it there is the issue of digital token that there can be claim ownership of that property. People can have the copy but for it’s ownership there are so many claim which is provided by NFT.
NFT is like a real world object that represents art, music, video games, etc. Which can sell and purchase through online in which maximum transaction is done with the help of crypto currency.
NFTs provide an option to own any digital file, and the ownership can be transferred after payment. It is like real life, like a person buying land and selling the land in an auction. The same process has taken a successful part in digital. In India many celebrities are attracted to NFTs and are willing to sell their art digitally.
WHAT IS THE MEANING OF COPYRIGHT?
Copyright is a legal term which is used to save the rights of the creator, innovator that they have over there literary or artistic work. Copyright protects in case of a literary, dramatic, musical and artistic work, cinematograph films, sound recordings. The main and primary function of a copyright law is to protect the fruit of a man’s work, labour, skills or test from annexation by other people.
In copyright according to the section 17 of Intellectual Property rights the author of the work shall be the owner of the copyright therein.
Copyright laws gives creator of original material the exclusive right to further use and duplicate that material for a given amount of time, at which point the copyrighted item becomes public domain. Copyright law protects creators of original material from unauthorised duplication or use.
The NFTs only give access to underlying/digital assets, but they do not give complete ownership of those assets simply because one owns such NFTs. But due to the very nature of digital content, it is easy for the infringing party to copy or replicate it. This makes it easier for the infringing party to take somebody else’s work and tokenize it. The NFTs owner can’t sue for infringement of copyright.
The basic premise is that NFT ownership does not necessarily equal copyright ownership. In other words you can own the object but you may not own the copyright associated with said object. Copyright is not a simple one right but it is a whole bundle of rights and many of them remain firmly within the grasp of the original creator of the work.
WHEN YOU OWN A COPYRIGHT YOU TYPICALLY OWN SIX EXCLUSIVE RIGHTS?
● Right to reproduce the copy of the work.
● Right to prepare derivatives of the work.
● Right to distribute copies by sale or rental.
● Right to perform the work.
● Right to display the work.
● Right to perform the proceeding of the work.
When you buy an NFT you can get much less rights. You might think owning NFT means you are owning that particular content and you can sell it and trade it on the market palace to earn profit but you can not own the full copyright unless it is specifically stated by the artist or creator.
Lets understand with an example-
You buy a CD of your favourite artist you can play it, you can put it on your personal display, you can sell it to your friend but if you are going to try it in commercial work tthen the things will get change and you don’t have the right to use it in commercial work to do so you have to take consent of creator and if the creator gives consent then you have to sign a contract and the contract should be bound by law.
If you think because all of these that the NFT is less valuable then it is wrong you can own a piece of the art and resell it to another person and you don’t need to have all the copyright to do that.
The NFTs are still new and the technology is at the initial stage. NFTs are being seen as a new revolution in the market. Businesses should grab the opportunity and make an advantage of this market but they should keep in mind to continue it, consider the IP laws also.
Hence as a creator create your own art, and specify in discription about the rights of use to the NFT buyers it will bring transparency. NFT is one of the major step taken to regulate the financial in the growing digital age.
- Guadamuz, Andres. “The treachery of images: non-fungible tokens and copyright.” Journal Of Intellectual Property Law and Practice 16.12 (2021): 1367-1385. Retrieved from: <https://academic.oup.com/jiplp/article/16/12/1367/6449489?login=true>
- Bamakan, Seyed Mojtaba Hosseini, et al. “Patents and intellectual property assets as non-fungible tokens; key technologies and challenges.” Scientific Reports 12.1 (2022): 1-13. Retrieved from: <https://www.nature.com/articles/s41598-022-05920-6>