Abstract
The introduction of the non-fungible tokens has posed numerous complications within the conventional copyright paradigm, with respect to authorship, ownership, and protection of intellectual property in digital space. This study focuses on the legal and theoretical concerns of tokenization of creative works via block chain, in which the transfer of digital tokens does not necessarily transfer ownership of the underlying work of the copyright.
By studying the interaction of NFT transactions with copyright principles enforced on tangible media, the paper examines the interaction between the concept of NFT transactions and the principles of copyrights. This study points to an ownership paradox: when buying NFTs, buyers can expect to gain rights to the creative work to which that token is linked to, whereas they actually receive a tokenized certificate of authenticity and rights to use it.
In addition to the legal aspects, the study examines aspects related to the digital authorship, such as the tokenization of cultural heritage, environmental impacts of proof-of-work blockchains, and concerns about originality in AI-generated NFT content. This research provides evidence that the legal harmonization should be created by international intellectual property organizations. The author suggests the creation of digital authorship registries with integrated blockchain systems, the standardization of smart contract templates with the clear definition of copyright transfers, and the creation of cross-border enforcement.
The author explores the methods of rethinking authorship, ownership, and enforcement systems that are suitable in the context of decentralized digital worlds that do not compromise the fundamental principles of intellectual property protection.
Keywords: Digital Authorship, Blockchain Technology, Ownership, Minting, Smart Contracts.
Introduction
The advent of Non-Fungible Tokens (NFTs) has transformed the digital economy and brought new aspects to the discussion of the concepts of ownership, creativity, and intellectual property. NFTs are digital certificates of authenticity and provenance of a digital item that is unique cryptography tokens that are generated on blockchain networks. In contrast to the previous form of cryptocurrency like Bitcoin or Ethereum, which can be exchanged, each NFT has its own unique traits, and it cannot be replaced. Such a distinctiveness makes NFTs a form of property certificate of digital artworks, music, collectibles, and even virtual property in the gaming world and metaverse. To artists and creators NFT has become a revolutional device to establish ownership and monetize their digital creations like never before in the transparent and easy-to-copy online environment.NFTs are based on blockchain technology which is a decentralized registry that has permanent and transparent transactions. Every NFT that is minted on the blockchain provides a verifiable history of its creation and ownership and brings a bit of authenticity to an otherwise digitally duplicable and pirated world[1]. It has become a massive phenomena in 2021 after digital artist Beeple sold an NFT, Everydays: The First 5000 Days, at Christie’s for an unprecedented sum of $69 million. This happened to represent the transition of the value of digital creativity in the ways it is appreciated, acknowledged, and exchanged. NFTs have since played a role in a variety of creative industries, both within the music and entertainment world and the sports memorabilia and virtual real estate market, to create a fast-growing economy of digital ownership and creative entrepreneurship[2].
Nevertheless, these are also the same features that make NFTs innovative, and therefore, complex in terms of the law. The attribute of decentralization and being borderless of the blockchain technology questions the traditional legal systems based on the territorial jurisdiction and material fixation[3]. The traditional copyright legislation which was created to protect tangible entities and distinguishable creators is now being questioned on issues that it was never created to address. The questions of authorship, ownership, and control of digital content are becoming gray. Although an NFT has a potential to prove that one is the owner of a certain token, it does not necessarily grant the right to reproduce, distribute, or edit the work of creativity underlying the token. In the majority of situations, the ownership of the NFT and the ownership of copyright are completely different.This difference causes grave legal confusion. When a lot of people buy NFT, most of them are already thinking that they are purchasing the complete rights to the online piece when in reality, they are only buying a digital certificate that is associated with it. On the other hand, producing an NFT of an already existing work of art and not agreeing with the owner would constitute the infringement of copyright. However, it is hard to enforce, because of the anonymity and global nature of blockchain networks, it is difficult to locate and punish criminals. Copyright laws in place in different jurisdictions, like the Copyright Act of the United States or the Copyright Act of 1957 in India were written at a time when the centralized creation and material fixation were the standard concepts for copyright, both of which do not fit in a decentralized, algorithmic creative environment[4].
Increasing cases of conflicts on digital authorship, originality, and ownership indicate a critical need to define the law. Artists often complain that their works are being tokenized and resold by other parties without their authorization. OpenSea and Rarible, which form the center of the NFT ecosystem, have been criticized due to their inability to establish solid verification to avert such abuse. With the growing digitalization of creative expression, the lack of international regulations on NFTs and intellectual property poses a question to both creators and consumers and regulators as well. Unless it is reformed, NFTs become prone to perpetuate inequities and power gaps that they were initially touted to disrupt.
Essentially, the paper will suggest the argument that the existing legal framework is no more adequate to protect the ownership of the creativity in an era where digital materials cross national boundaries and where human authorship is also being redefined[5]. It demands a new, internationally concerted strategy that acknowledges the unique character of NFTs and assumes blockchain validation measures as a part of the greater framework of intellectual property law. It is exclusively through the connection between technology and legislation that creators can enjoy the benefits of NFTs, and at the same time maintain the integrity and spirit of copyright protection in the future.
[1]Andres Guadamuz, ‘The NFT Paradox: Ownership and copyright on the blockchain’ (2022) 45 Computer Law and Security Review 105.
[2] S Kraizberg, ‘NFT’s and the commodification of creativity’ (2023) 57(1) Law and Society Review 76.
[3]H Wang, J Lee and Y Liu, ‘The tragedy of ownership: NFT’s and intellectual property rights’ (2024) 14(3) Technology and Society 66.
[4]A Vashist and R Sonkar, ‘NFT’s and copyright in India: The need for reform’ (2025) 13(2) Indian Journal of Intellectual Property Law 98.
[5]S Behzadi, ‘NFT’s and the illusion of digital ownership’ (2022) 25(8) Journal of Internet Law 15.