Non-Fungible Tokens and Intellectual Property: Ownership, Licensing and the Misconception of Digital Property Rights

Abstract

The emergence of non-fungible tokens has generated considerable interest in the relationship between blockchain-based digital assets and intellectual property rights. NFTs may be associated with artwork, music, collectibles, virtual objects, and other forms of digital content, yet the acquisition of an NFT does not necessarily confer ownership of the underlying copyright or other intellectual property rights. This distinction has frequently been misunderstood by consumers, investors, and commercial participants, producing legal uncertainty concerning the scope of rights transferred through NFT transactions. This article examines the intellectual property implications of non-fungible tokens and analyzes the legal distinction between ownership of a blockchain-based token and ownership of the intellectual property associated with that token. The article considers copyright ownership, licensing arrangements, trademark issues, contractual terms, and the legal consequences of unauthorized tokenization. Particular attention is given to situations in which an individual creates or sells an NFT linked to a work without possessing the necessary intellectual property rights. The article further examines the role of smart contracts and blockchain records in establishing contractual obligations and documenting transactions. The article argues that blockchain technology can provide useful mechanisms for authentication, provenance, and transaction recording but cannot independently create or transfer intellectual property rights without an appropriate legal basis. Comparative analysis reveals significant uncertainty concerning the treatment of NFTs because different jurisdictions may apply conventional property, contract, copyright, and consumer-protection principles in different ways. The article proposes clearer disclosure requirements concerning the rights attached to NFTs and recommends distinguishing explicitly between token ownership and intellectual property ownership in commercial transactions. It concludes that greater legal clarity is necessary to prevent consumer misunderstanding and ensure that blockchain-based commercialization develops consistently with established principles of intellectual property law.