The idea behind the NFT revolution is relatively simple, a digital file that can include an image, GIF, video or audio file or any other digital content, is embedded as unique using blockchain technology and actually provides the purchaser with a certificate of authenticity and unquestionable ownership. Despite its innovation, however, the technology is not without its issues and raises real questions about the applicability of intellectual property laws and their ability to cope with the new technology. Or, for the Yiddish speakers among the readers: Wie tan ihr verkaufen LuftGesheft auf NFT?
One of the technological success stories of 2021, was the almost inconceivable outbreak of the NFT market. The concept of NFT stormed into the market in a way that cannot be ignored. Artists from all over the world, anonymous and well-known alike, jumped on the success wagon and began using the new technology as an innovative way to sell their work. Christie's Auction House sold the artist Beeple digital NFT work for over USD 69.35 million and Quentin Tarantino announced he would put up for sale cut scenes, screenplays and more from his "Pulp Fiction" film via NFT, in a manner that angered the studio that produced the film and holds the rights to it. Sales of works as NFT reached an estimated total value of approximately USD 17 billion in 2021.
Thus, for example, the question arises as to who actually owns the rights in the original work. A most superficial search on the Internet will produce countless directories that will also allow a beginner enthusiast to turn any digital file into an NFT, and the emphasis is on the words "any digital file". However, the mere fact that a person can imprint "ownership" does not indicate that such person is indeed the owner of the work and the owner of the rights thereto. It is an unfortunate fact that NFT online sales platforms do not, at present, have the ability to verify the author's ownership of the works he sells. A purchaser who buys such a work, may find himself not only one who has wasted his money in vain and does not hold any rights in the work at all, but also, as much as he makes use of the work, is subject to infringement claims by the real owner of the work.
Similar to the problem of ownership in the work, there is also confusion and misunderstanding of the purchasers regarding the acquired rights. Unlike selling a physical work, NFT allows the creator to sell various, or partial, rights and even allows the parties to imprint a "smart contract" within the token itself. Purchasers who are interested in entering the market must understand that the rights acquired in NFT may differ from one sales platform to another and from one NFT to another. In fact, in most cases, the purchase of NFT gives the purchaser rights only in the NFT itself, with the rights in the work remaining in the hands of the creator who may display the copy, duplicate it and make commercial uses thereof, and the purchaser may make additional crypto transactions in the NFT only by selling it, AS IS, to a third party.
In conclusion, there is no doubt that the NFT market is a new and exciting market with the potential to change the world of intellectual property, but keep in mind that there are still significant questions about the ability of existing law to protect sellers and purchasers in the market. It sems that until this issue is settles one should concentrate on purchasing NFT assets that are originally virtual art with a contract with the artist, in lieu of acquiring, at this stage, rights in real-world assets that are sold in this manner. People interested in taking part in it should consult professional legal advice to ensure that their rights are preserved as part of the purchase or as part of any future transaction in the work.