Intellectual Property in the Age of NFTs: Securing Digital Ownership Rights

As blockchain technology continues to transform the digital economy, non-fungible tokens (NFTs) have emerged as powerful tools for verifying ownership of digital assets. From artwork and virtual fashion to game items and music, NFTs have created new possibilities for creators, collectors, and brands. But this shift also brings critical legal challenges, particularly around intellectual property (IP) rights.

In this article, we’ll explore how NFTs intersect with intellectual property law, the risks of infringement, and how individuals and businesses can protect their digital content in this rapidly evolving space.

What Are NFTs and Why Do They Matter for IP?

NFTs are unique digital tokens stored on a blockchain, used to represent ownership of a digital item. Each NFT has distinct metadata and is non-interchangeable, unlike cryptocurrencies such as Bitcoin or Ethereum.

Their main value lies in authenticity, scarcity, and traceability — key concepts that also lie at the heart of intellectual property law. However, owning an NFT does not automatically grant copyright or IP rights to the underlying work, which leads to confusion and legal uncertainty.

Intellectual Property Basics

Before diving into NFTs, let’s quickly review the types of intellectual property relevant here:

• Copyright protects original works of authorship (art, music, video, writing).

• Trademark protects symbols, logos, names, and branding elements.

• Patent protects inventions and functional designs.

• Trade secrets involve confidential business information with commercial value.

NFTs can involve all of these IP categories, but copyright and trademark are the most frequently implicated.

Common IP Issues in the NFT Space

1. Copyright Confusion

Buying an NFT typically gives you the token, not the copyright to the content it represents. Unless otherwise specified, you can’t legally reproduce, modify, or monetize the content.

For example, someone who buys an NFT of a digital painting does not automatically gain the right to print and sell posters of it.

2. Unauthorized Minting

One major problem is the creation of NFTs without the original creator’s consent. This is common with stolen artwork, music, or brand elements being minted and sold on platforms like OpenSea or Blur.

This practice amounts to copyright or trademark infringement, even though the blockchain itself records the transaction. Ownership of a fraudulent NFT is not a defense against IP claims.

3. Brand Misuse

Brands are also vulnerable. Unauthorized NFTs bearing logos, product images, or even virtual replicas of branded goods can create consumer confusion and damage reputation.

Some NFT projects mimic real-world fashion, food, or tech brands to boost credibility or value — a practice that can trigger trademark lawsuits.

Real-World Legal Cases

Hermès vs. MetaBirkins

Luxury brand Hermès sued digital artist Mason Rothschild over his "MetaBirkins" NFTs, which depicted fuzzy virtual handbags resembling Hermès’ iconic Birkin bag. In 2023, a U.S. jury sided with Hermès, ruling that the NFTs infringed on its trademark and misled consumers. The case set a precedent for brand protection in the digital realm.

Yuga Labs vs. Ryder Ripps

Yuga Labs, creators of the Bored Ape Yacht Club (BAYC), sued artist Ryder Ripps for creating similar-looking NFTs under a satirical project. The court ruled in favor of Yuga Labs, affirming that trademark rights apply even to decentralized or parody projects if consumer confusion is likely.

These cases show that traditional IP law is still enforceable, even in decentralized environments.

How to Protect Your Digital Creations

If you're a creator, business owner, or collector, consider these steps to safeguard your intellectual property in the NFT space:

1. Use Clear Licensing Terms

When minting an NFT, be explicit about what rights are transferred. Use licenses (e.g., Creative Commons, bespoke agreements) to define whether the buyer has rights to display, use, or even resell the content commercially.

Projects like NFT License provide templates to help creators define rights clearly.

2. Register Your IP

Formal registration of your trademarks and copyrights gives you stronger legal standing. When filing applications, consider including digital assets and blockchain-based goods in your scope.

For example, trademark applications can now reference classes covering:

• Downloadable digital files (Class 9)

• Virtual goods and services (Class 35 or 41)

• Blockchain software and NFTs (Class 42)

3. Monitor for Infringement

Use digital tools or services to scan NFT marketplaces for unauthorized use of your content. Many platforms offer reporting tools for IP violations, but enforcement may vary depending on the platform’s policies and jurisdiction.

4. Protect Your Smart Contracts

Smart contracts are programmable code tied to NFTs. While they govern functionality (e.g., royalties), they can also embed rules around use, ownership, and transfer. However, they do not replace legal contracts, so use them in conjunction with clear IP terms.

Challenges in Enforcing IP with NFTs

Decentralization

One of the core features of blockchain is that it’s decentralized and often pseudonymous. This makes it difficult to track infringers or determine which jurisdiction applies.

Marketplace Policies

NFT platforms differ in how they handle takedown requests. Some are proactive, while others are lenient or opaque. This inconsistency complicates enforcement and discourages some creators from engaging with NFTs.

Evolving Legal Standards

Laws are playing catch-up with technology. In many jurisdictions, there's still limited case law or legislative clarity on how IP rights should be applied to blockchain-based assets.

Best Practices for NFT Buyers and Investors

Buyers should also be cautious:

• Research the creator before purchasing.

• Check licensing terms: What are you legally allowed to do with the NFT?

• Avoid NFTs that mimic known brands or copyrighted works, unless officially licensed.

Buying an NFT doesn’t automatically shield you from liability if it turns out the content infringes on someone else’s rights.

Looking Ahead

As NFTs continue to expand into industries like gaming, education, healthcare, and entertainment, the role of intellectual property will only grow in importance. Governments, IP offices, and courts are beginning to respond — but creators and brands must stay proactive.

There is also a rising push for on-chain licensing standards, where legal terms are embedded and easily viewable on the blockchain. If successful, this could bring transparency and consistency to digital rights management.

NFTs represent a paradigm shift in how we create, own, and exchange digital content. But they don’t exist in a legal vacuum. Intellectual property rights still matter—and understanding them is key to protecting your work and investments.

Whether you’re minting, collecting, or building a business around NFTs, taking IP seriously is not just smart—it’s essential for long-term success in the digital economy.