Jurisdiction(s):
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NFTs in the Art and Luxury Markets: IP Risks, Consumer Rights, Emerging Case Law, and Dispute Resolution: Smart Contracts, Arbitration Clauses, and Jurisdictional Challenges

Published on: 30 July 2024

Published by a LexisNexis Arbitration expert

Legal News

Article summary

Understanding NFTs and their Impact on Art

NFTs are blockchain-verified digital tokens that guarantee the authenticity and singularity of an asset, whether tied to a digital file or a physical item. Each NFT contains unique cryptographic data that sets it apart from every other token, making it well suited to signal ownership of distinctive items such as digital art. Holding an NFT grants rights in the token itself, but does not, on its own, confer rights in the underlying digital or tangible asset. The NFT market is an important arena for art and luxury goods and is expected to keep expanding, though likely not at the transaction levels seen in 2021. In essence, the token and the item it references are separate.

Legal Challenges regarding NFTs Intellectual Property Rights

A principal legal concern in Europe is the safeguarding of intellectual property rights. Artists and creators frequently discover their works—physical or digital—tokenised without permission, leading to unauthorised sales, reproduction, and distribution. This often occurs without any remuneration for creators—neither for minting the token nor for its resale as a digital asset—and without proper acknowledgement of them as authors of the artwork, amounting to an infringement of the moral right of attribution...

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