In recent years, cryptocurrency and blockchain technology have revolutionized various industries, including the art world. Non-fungible tokens (NFTs) have become a popular way to buy and sell art online, but with this new trend comes a unique set of issues related to licensing.
In this blog post, we’ll dive into the basics of NFTs, recent licensing deals, IP rights, licensing strategies, and critical terms within NFT licensing agreements. Whether you’re an artist or an entrepreneur looking to delve into the NFT space, this guide will provide valuable insights on licensing your NFT.
What are NFTs?
Non-fungible tokens (NFTs) are digital assets that represent ownership of a unique piece of digital art, collectible, or other form of virtual property. Unlike cryptocurrency, NFTs are non-interchangeable, meaning each token has a unique value that cannot be replicated or replaced.
Recent NFT Licensing Deals
In the past year, several high-profile NFT licensing deals have taken place. They include selling Beeple’s digital artwork, “The First 5000 Days,” which sold for a staggering $69 million. On the music front, Canadian musician Grimes sold her digital art as NFTs and generated nearly $6 million in just 20 minutes. In addition, various sports leagues, including the NBA and NFL, have been using NFTs to sell limited-edition trading cards and other collectibles.
NFT IP Rights
As with any digital asset, ownership of an NFT comes with unique intellectual property (IP) rights that must be protected. It’s important to note that owning an NFT does not necessarily provide copyright ownership of the underlying digital asset. However, it provides a unique digital certificate of ownership stored on the blockchain, ensuring its authenticity. As such, licensing NFTs requires careful consideration of IP rights and protections that go beyond traditional licensing agreements.
Licensing Strategies for NFTs
One strategy for licensing NFTs is to offer limited edition or exclusive versions for sale, each with unique value. This strategy allows artists and creators to control the supply and demand for their digital art, leading to higher values and revenue. Another strategy is to offer licensing agreements for using NFTs and their associated IP rights, providing more revenue streams while preserving ownership and value for the original creator.
Critical Terms in NFT Licensing Agreements
NFT licensing agreements typically include terms outlining the scope of the license, any restrictions on use, and payment terms. Be careful with exclusivity, which is the right of a licensee to be the only party permitted to use the NFT or its associated IP rights. Other important terms include duration, territory, royalty payments, and termination clauses.
What to Watch Out for When Licensing NFTs
When licensing NFTs, it’s essential to watch out for potential issues, including improper use of the token, misappropriation of IP rights, and other violations that could reduce the value and protection of an NFT. As such, it’s essential to work with experienced lawyers and advisors who are well-versed in NFT licensing agreements and the unique challenges they present.
Conclusion
NFTs have changed the landscape of virtual property and asset ownership. Licensing NFTs require careful consideration of IP rights, licensing strategies, and critical terms within licensing agreements. By considering these factors and working with experienced licensing professionals, artists and entrepreneurs can navigate the world of NFTs, protect their unique digital assets, and create revenue-generating licensing deals.
Contact us today to discuss your NFT and explore potential ways to leverage its IP value through licensing.
Rand Brenner
Rand Brenner is an IP professional whose passion is helping inventors, startups, and businesses use licensing to turn their IP into income-producing products, services, and technologies. His decades of experience run the gamut from medical devices to food technology to consumer products. He’s licensed some of the biggest Hollywood entertainment blockbusters, including the Batman Movies (1 and 2) and the number one kid’s action TV show, the Mighty Morphin Power Rangers. Rand speaks about licensing and is a featured speaker at investment conferences, trade shows, colleges, and startup events. His first book, Hidden Wealth: The Money-Making Power of Licensing, was released in 2019 and is available on Amazon.com. He’s also a published writer, and his articles have appeared in several prestigious trade magazines, including The Licensing Journal, Intellectual Property Magazine, and License India.
