- This episode was inspired by this comment.
"What's your take on this new world of protection
with things like NFTs instead of copyrights or trademarks?
And do I think
that these traditional methods are still stronger?"
In this episode of "All Up In Yo' Business,"
I'm going to explain why it's not a question
of NFTs or copyrights,
really more a question of NFTs and copyrights,
why I do think these traditional methods are still stronger,
and why even if you are the NFT,
blockchain, crypto authority,
you know, everything there is to know about this technology,
if you don't have at least a basic understanding
of intellectual property,
and most importantly copyright law,
you're probably doing it wrong.
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Hi, I'm Aiden Durham,
business and branding attorney with 180 Law Co. in Colorado.
If this is your first time on my channel,
welcome to "All Up In Yo' Business."
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and don't forget to hit the little bell
so you get a notification anytime I post a new video.
All right, so these things called NFTs have been a hot topic
over the last year,
year or two, or so.
NFTs have been sold
for as much as a whopping almost $92 million.
It's a relatively new technology centered around
basically creating digital collectibles.
NFT stands for non-fungible token.
Does that mean anything to you?
It really doesn't mean a whole lot to me.
It is a digitized authenticated token
that's linked to a digital asset.
And the NFT is recorded
or minted on the blockchain,
most commonly Ethereum,
the Ethereum blockchain.
Each NFT has essentially its own unique fingerprint.
These fingerprints can't be reproduced,
and NFT owners use these fingerprints to establish
that they own a copy of the linked content
from which that NFT was generated.
It's a complete record of the ownership
and history of this digital asset.
And that record is stored on a decentralized database
that we call blockchain.
The value of an NFT comes from that NF
or that non-fungible part.
That's where the value lies.
Fungibility refers to the ability of an asset
to be exchanged for something else of equal value.
Money is a common thing
that we might think of that is fungible.
Currencies across the world including digital currencies,
I'm looking at you Bitcoin,
can be easily exchanged for one another
at it agreed upon market rate.
Precious metals like gold and silver are also fungible.
They're traded at a market rate
so you know exactly what the value is on the day
that you purchase the asset,
and you can easily exchange it for currency
or other assets based on the then current market rate.
Eh, okay, yeah, all right,
I mean, that kind of makes sense.
I can grasp it enough to kind of understand
what it is, I guess.
The way that I like to think of it,
non-fungible essentially means
that its value is much more subjective,
and its value might be based on a number
of fluctuating factors.
Real estate, for example, is considered non-fungible.
Buying or selling real estate requires it to be evaluated
across a number of different factors.
The property itself is going to be appraised and evaluated,
the square footage, architectural,
interior design elements, things like that.
But we're also going to look at the market in that area.
What have other comparable properties sold for recently?
And we're gonna look at what's the demand in that area
or that neighborhood.
If something is non-fungible,
that basically means it's unique,
one of a kind, and cannot be directly traded
for something of equal value.
Because only one original version of this thing exists,
it has a very distinctive value
that can't easily be appraised or exchanged
for something like it.
Okay, whoo, enough with all of that.
NFT, blockchain, non-fungible token,
I mean, these are all words that I think help to confuse
what at the core these things really truly are.
The simplest non-techy way that I like
to approach NFTs is that it is simply a fancy way
of authenticating digital assets.
That's it, we see this most often
in the context of digital artwork
or images being sold as NFTs,
but NFTs can really be anything,
images, video, audio,
documents, even tweets.
And anytime we're dealing
with artwork, images,
music, or any other types of original works of authorship,
can you guess what else we're dealing with?
That's right, copyrights.
So when we're talking about what is an NFT,
the NFT isn't actually the image
or the artwork or the creation itself.
It's more like a digital signature
that's embedded in that image when it's created.
Again, the most non-techy way to think about this,
if I walked into an art gallery
and I decided to purchase an original Picasso,
it's a lot of money, this original Picasso.
And I would expect when I purchase it that I will receive
some kind of certificate of authentication,
some piece of paper that I can hold to say,
"Yes, this is indeed an original Picasso.
Yes, it is indeed mine,
and the value that I'm placing into it is valid,"
because it is what it says it is.
That certificate of authenticity is kind of like an NFT.
And without that certificate,
the value of this artwork,
I mean, drastically decreases.
The value really only lies in it
because we have this proof,
this verification that it is authentic.
Okay, okay, so we get it.
We kind of understand what NFT means,
how it applies here.
We understand that there's some copyright
related stuff in it.
What's the problem?
Why does any of this matter?
Well, let's talk about problem number one.
Let's say I want to get into this NFT game.
Naturally, I am going to mint a photo
of the spectacular amazing Britney Spears as an NFT.
I've got this,
my favorite image of Britney,
I'm going to mint it on the Ethereum blockchain
and sell my NFT.
And of course, I mean,
I'm gonna sell this to a fellow Britney enthusiasts,
someone who will truly appreciate this piece of art,
this piece of digital history.
Not only will my fellow Britney fan get to bask
in the light and joy that is this glorious Britney NFT,
they'll also get to enjoy the presumed return
on their investment if they later go to transfer
or sell that NFT.
And I, of course, get to enjoy the profit that I made
from that initial sale of the NFT.
You know what else I'll probably get to enjoy?
A nice cease and desist letter,
perhaps even a copyright infringement lawsuit.
You see, NFTs are a kind of a brand new thing.
I mean, the internet says
that they've been around since like 2014.
But even with that,
relatively speaking, they are brand new.
And we don't really have any laws that address NFTs.
There are no laws that prevent someone
from minting or creating an NFT.
Those laws just don't exist,
at least not yet.
But there are a lot of laws that prevent people
from copying, distributing, transferring,
or profiting off of other people's work.
And if you haven't figured it out by now,
I'm talking about copyright laws.
A copyright is a bundle of laws that are granted
to the creator of a work
like a photo or a musical composition,
a song or a painting,
any other original creative work.
That bundle of rights includes the right to distribute,
reproduce, display, or perform the original work,
and create derivative works based on that original work.
Simply put, a copyright is the right to copy something.
There are exceptions to this,
but generally speaking,
the person who creates the work is the one who owns
the copyright in that work.
And since as the copyright owner,
I am the only one who has the right to make copies
of this work.
I am the only one who is allowed
to create an NFT based off of this work
because the NFT is really just a copy
or potentially a derivative of that original work.
Even though we're dealing
with a basically brand new technology,
it's not a brand new concept
to produce a piece of art in a different form or media.
This is just a different form that we're producing,
let's say, a photograph or an image.
So let's go back to my Britney NFT.
Since, generally speaking,
whoever created the work is the one who owns the copyrights,
we can presume that whoever took that photo,
that original photo of Britney is the owner of the copyright
in that image.
So I need a license or other authorization from that person,
from the copyright holder to create that NFT,
otherwise it's copyright infringement.
It's really no different from any other content
that you might create.
If I was trying to create a graphic to post on social media
and I wanted to use an image of Britney Spears,
I would need to make sure I have the proper license
or I'm using it under fair use
or some other way of avoiding copyright infringement.
Just because this is an NFT doesn't mean it's now immune
from copyright laws.
No, it's just another format
that this image or this media is being produced in.
So, okay, I scrapped the Britney NFT idea
because I am not the copyright owner.
I can't make an NFT out of that photograph.
So instead, I use my great graphic design and art skills
and I draw a beautiful original portrait
of my beautiful Britney Spears.
For the sake of argument, we're gonna go ahead
and just assume it is a transformative work.
For those of you who are keeping tabs on copyright stuff,
we're gonna just assume it's transformative.
That's not an issue.
Since I created this drawing,
I created this new work myself,
I am the copyright owner.
I own the copyrights.
I own the rights to copy this image,
and therefore I can freely mint it as an NFT
on the Ethereum blockchain
or whatever other blockchain I might want to.
I own it so I can do whatever I want with it.
So now let's say you are my fellow Britney fan
and you purchase that NFT from me.
Do you know what you've actually purchased?
I mean, you own the NFT, of course,
but what do you actually own?
Does that mean you now own the whole work
that this NFT was created on?
No, of course not.
Are you now the copyright owner?
No, you're buying the digital token,
the NFT, and a license to that media file.
Now this is, of course,
unless you are actually buying the copyright,
in researching and preparing for this video,
I was seeing that there are some instances
where a creator of an NFT is actually selling
or transferring the copyright in that work along with it.
So if you are actually purchasing the copyright,
that's a different issue.
I think for the most part, though,
these things are really just,
it's a license.
You're not purchasing the copyright,
you're purchasing a license.
Just like when I download
or rent a video on demand or something,
I can't then reproduce.
I can't start making copies of this movie
and selling it on my own.
No, the production companies,
they're gonna get real pissed off at me
because they still own the copyright in that film.
I just purchased a license to use it
for whatever limited purpose they're giving it to me.
But the idea still applies to NFTs.
You're not purchasing the creation itself
unless you actually are purchasing it.
So you can't buy this NFT,
and now I'm gonna make this NFT into T-shirts.
I'm gonna create posters out of this NFT.
I'm gonna make more NFTs out of this NFT.
I don't know what exactly you do with NFTs,
but you can't do much unless it's authorized
within the license that you're purchasing,
and for the most part, it's not.
It also doesn't really mean that you're the only person
who can ever own this image.
'Cause again, let's say I created it,
I own the copyright,
I've minted it on the Ethereum blockchain,
and I've sold it.
Aren't there other blockchains?
I can mint it on this other blockchain
and sell it to someone there too.
I could also print it,
sell it in stores on Etsy,
sell it in other formats or other media however I want
because I'm the copyright owner.
So yes, you do have this unique digital key,
this NFT that is unique to you,
but that doesn't in itself mean that the digital file,
the actual work that the NFT is based on is unique to you
or that you're going to be the only person in existence
who's going to own that work.
You might own that NFT,
but unless you actually purchase
or get an assignment or a transfer of the actual copyrights,
you're just getting license.
So what's the big key takeaway from all of this?
I think the biggest one is that, again,
it's not a question of NFTs or copyrights.
It is very much NFTs and copyrights.
Copyrights and trademarks, for that matter,
aren't going away.
They're not going to be overridden
by NFTs, metaverse, blockchain.
It's really just another context
or another situation in which these existing laws,
the existing principles are going to be applied.
And so because of that,
it is very important that if you are creating NFTs
or if you're going to be investing in NFTs,
you need to understand how copyrights are going to play
into that because you could be wasting your money
on something that is essentially copyright infringement.
You could also, if you're creating the NFTs,
be putting yourself in a lot of risk for copyright issues
if you're not going through the proper steps and channels
to be able to have a license
or proper authorization to create the NFTs.
And if you're even remotely interested in getting into NFTs
or venturing into this realm,
you can't ignore intellectual property laws.
Because like I said in the last video
where I talked about trademarks and the metaverse,
it's not one or the other,
they're all working together.
If you learned a thing or two in this video,
why don't you gimme a thumbs up,
and you can drop a comment.
If you're an NFT blockchain expert
and I said all of this incorrectly,
then go ahead and comment.
I don't really care,
but I like to be able to speak
and talk about things mostly correctly.
And of course, be sure to subscribe
and click the notification bell
so you don't miss any future episodes
of "All Up In Yo' Business."
If you are interested in getting into NFTs
or the metaverse,
I strongly encourage you to consult
with an intellectual property attorney
so you're not putting yourself at any risk
of any kind of infringement or other legal issues.
Thank you all so much for watching.
I'm Aiden Durham,
and I'll see you next time.
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