Navigating NFTs and Blockchain: The Intersection of Intellectual Property and Immutability

The Intersection of NFTs and Intellectual Property: Exploring the Secondary Liability Problem

In a world where non-fungible tokens (NFTs) have taken the art world by storm, a new challenge has emerged at the intersection of NFTs and intellectual property law. While the US Patent and Trademark Office (USPTO) and the US Copyright Office have determined that current IP laws are sufficient to address NFTs, a looming issue remains unresolved: the issue of secondary liability in the context of immutable NFTs.

Unlike traditional user-generated content on the Internet, NFTs are unique, non-interchangeable tokens stored on the blockchain. This immutability poses a challenge when it comes to copyright infringement. Platforms hosting NFTs that infringe on someone else’s copyright face a dilemma: when should they be held liable for the infringement?

The Digital Millennium Copyright Act (DMCA) provides a safe harbor for online platforms hosting infringing content, but this framework may not be suitable for immutable NFTs. The heart of secondary liability doctrine, notice and takedown, may not be effective when it comes to NFTs, as the content linked to the NFT may be immutable and cannot be deleted.

The issue becomes even more complex when the infringing content is stored directly on the blockchain, as is the case with on-chain NFTs. The risk of secondary liability for hosting infringing on-chain NFTs is significant, as the content cannot be deleted once uploaded to the blockchain.

This secondary liability problem could have far-reaching consequences for innovation and research involving blockchain technology. While blockchain holds promise for a wide range of applications, including financial services, healthcare, and government transparency, the risk of liability for hosting infringing content could deter platforms from utilizing blockchain for these purposes.

To address this challenge, copyright law may need to be refined to accommodate the unique features of NFTs and blockchain technology. By focusing on intent and refining the material contribution requirement for secondary liability, copyright law can adapt to the evolving landscape of NFTs and blockchain.

As the world grapples with the implications of NFTs and blockchain technology, the need for a nuanced approach to secondary liability in the context of immutable NFTs becomes increasingly apparent. By striking a balance between copyright owners and NFT platforms, policymakers can ensure that innovation in the blockchain space continues to thrive while protecting intellectual property rights.