Non-fungible tokens (NFTs) are blockchain-based units of value or “tokens,” each connected to an underlying asset with a unique ID number. The Etherium blockchain is the most typical place to store an NFT. However, other blockchains are utilized as well. NFTs are made up of “smart contracts” written in software code. In the smart contract, the NFT is linked to the underlying digital or physical asset and the laws and rights that apply to the NFT itself. Many NFTs have used other people’s intellectual property (IP) without their consent. There have been instances when NFTs have contained third-party intellectual property (IP) in their content. In other circumstances, the material has been provided solely by third-party intellectual property (IP). IP owners, whose material is being exploited in NFTs without their permission, are taking notice and increasing their attempts to protect their intellectual property. For Instances, DC Comics, a well-known IP owner, has issued a harsh warning to DC’s creative teams and freelancers after one artist gained $1.85 million by selling NFTs, including characters he used to create for DC (e.g. Wonder Woman and others).

1. WHATYOU MUST KNOW ABOUT NFTS
AND INTELLTUAL PROPERTY (IP)?
https://hhslawyers.com/blog/nfts-intelltual-property-ip/

2. What you must know about NFTs and
INTELLTUAL PROPERTY (IP)?
• Non-fungible tokens (NFTs) are blockchain-based units of value or “tokens,” each
connected to an underlying asset with a unique ID number.The Etherium blockchain is the
most typical place to store an NFT. However, other blockchains are utilized as well. NFTs
are made up of “smart contracts” written in software code. In the smart contract, the NFT
is linked to the underlying digital or physical asset and the laws and rights that apply to the
NFT itself.
• Many NFTs have used other people’s intellectual property (IP) without their consent.There
have been instances when NFTs have contained third-party intellectual property (IP) in
their content. In other circumstances, the material has been provided solely by third-party
intellectual property (IP). IP owners, whose material is being exploited in NFTs without
their permission, are taking notice and increasing their attempts to protect their
intellectual property.
• For Instances, DC Comics, a well-known IP owner, has issued a harsh warning to DC’s
creative teams and freelancers after one artist gained $1.85 million by selling NFTs,
including characters he used to create for DC (e.g.WonderWoman and others).

3. What is Non- FungibleToken (NFTs)?
• “Non-fungible” refers to a token’s inability to be substituted with another of the
same kind. Unlike the fungible nature of crypto-currency or government-issued
fiat money, where each currency unit is equivalent in value and interchangeable
with any other currency unit, this is not the case with government-issued cash.
• An NFT may be explained using the example of a one-of-a-kind print of a piece of
art.The artist would sign physical prints and have a print number attached to them
in the real world (for example, one of five).The artist’s signature and the print
number must be included on the piece to authenticate the artwork.

4. However, in the domain of NFTs, an NFT is:
• A Signature in digital form and the print number connected with the
underlying asset is represented by this digital signature.
• The digital work, or the underlying asset
• Having a copy of the underlying asset encoded in the NFT (which isn’t very
frequent).
• The NFT contains a code that connects to or may be used to identify the
digital copy of the artwork or the underlying asset (which is the more
common).When this happens, it’s called “hashing” (to which we will return
below).

5. NFTs and Intellectual Property:
• A business’s exposure to NFTs may be both positive and negative. In the following
sections, we’ll take a closer look at each of these:
• The monetization of your intellectual property.
• The possibility that the intellectual property rights of your company may be
violated in some way.

6. Monetization ofYour Intellectual Property
• Selling an NFT to a third party is the most apparent method to monetize it. An
NFT’s purchase isn’t always as simple as a physical asset purchase for the buyer.
The owner must provide proof of the NFT’s ownership to verify ownership of an
NFT.
• A non-fungible token (NFT) is simply information about an item that is stored on a
blockchain. It implies that, although an asset is used to encode the NFT to create a
unique representation of that asset, the NFT is not typically – unless the smart
contract encoded in the NFT or any accompanying conditions of sale expressly
states otherwise.

7. NFT example of JACK DORSEYTweet
• When Jack Dorsey auctioned off his tweet, he used theValuables platform.
Valuables describe the purchase of an NFT as acquiring “a signed certificate of the
tweet”, and the rules of sale make it plain that such a transaction does not transfer
the copyright in the tweet to the buyer.
• Thus, even if the purchaser of Jack Dorsey’s tweet spent millions of dollars on the
NFT, the purchaser would be unable to utilize the tweet itself (e.g., by printing it
on a shirt) without authorization, sinceTwitter and Jack Dorsey retain ownership
of the copyright.
• Those purchasing an NFT should be cautious in determining what they are buying
since ownership of an NFT does not immediately confer ownership rights on the
underlying asset.

8. Transfer of Intellectual Property (IP) Rights
• Naturally, an NFT seller who owns intellectual property rights in the underlying
item may transfer those rights to the buyer. However, this must be accomplished
by the assignment of intellectual property in writing. It will not occur automatically
upon sale of an NFT unless clear written conditions specify otherwise, either in the
smart contract or elsewhere.

9. NFTs for sale
• An NFT seller may sell both the NFT and the underlying asset simultaneously,
albeit this is uncommon.The NFT may then be used to prove ownership digitally.
It brings up two key points:
1)The underlying asset must be owned by you:
• The NFT buyer should check the owner of the underlying asset.The underlying
asset and any intellectual property rights that vest in it are usually not sold
together with the NFT.
2) Actual possession of the NFT:
The purchaser of the NFT should also investigate who owns the underlying asset,
especially if the underlying asset is a digital file, such as a digital work of art.

10. Licensing of the underlying asset’s
Intellectual Property Rights
• A more frequent option is for an NFT seller and IP rights owner to provide the purchaser of the NFT a
license to utilize the intellectual property rights in the underlying asset for specific purposes.
• This license should be included in the smart contract or a separate agreement between the NFT vendor
and the buyer.The rights owner may select how open or limited the purchaser’s usage of the underlying
item is.The owners of intellectual property (IP) issue licenses to their IP for a variety of purposes. Some
license specified uses (for example, the right to utilize a specific distribution channel) while others license
wide usage and retain certain rights. IP owners have traditionally not included NFTs in their licensing
agreements. NFTs have not been considered by most IP owners as part of their IP protection plans, either.
• The license for CrytoKitties, for example, allows the owner of the NFT to commercialize the “kitty” till the
commercial usage does not generate more than US$100,000 per year in revenues.The NBATopShots
license, on the other hand, allows the owner of the “moments” to “use, copy, and display” such moments
but not to “reproduce, distribute, or otherwise commercialize” them.
• The purpose of this article is to provide a general overview of the subject. Regarding your situation, you
can seek expert guidance. HHS lawyers and legal consultants specialize in dealing with cases relating to
the infringement of Intellectual Property.You can contact us for further consultation.

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