Given that blockchain innovations and NFTs are still in its technological infancy stages (and fairly new to the party), authoritative financial and legal institutions are yet to inflict their iron fist of scrutiny.
Currently the bridge between intellectual property rights and NFTs have not been solidified in any South Africa legislation or case law.
This leaves a large gray area in regulation. As we know, NFTs are digital asset that show ownership in respect of a copy or reproduction of an underlying asset which it in itself represents, albeit physical or digital.
Although NFTs are undeniably a revolutionary tool to support and help artists (previously excluded from the secondary market royalties) sell and exchange their work, the ‘grey areas’ are facilitating a boom in copyright infringement and IP theft.
Heightened NFT involvement in art is dividing the industry. Some believe it’s merely a gimmicky way of gambling and imprudent investment fueled by unauthorized IP sales and copyright infringement; while others (who understand the fundamental technology) believe it’s a way of tapping into new markets.
But scapegoating NFTs are unjust.
After his death, in late 2021, the family of conceptual artist Dan Howard found his art being auctioned off as NFTs on OpenSea. After much back and forth with the platform, these NFTs were rightly removed from the NFT marketplace after the family expressed that they felt like they were “victims of a hi-tech grave robbery”.
Anyone can mint an NFT and claim to be the author or artist of the linked metadate. To sidestep the infringement caveat, as a general practice, NFT buyers should do their homework and asses whether the artwork they are buying is in-fact sold by the original artist. But this isn’t always that easy.
It will be fascinating to see how the law mutate to deal with NFTs and their ambiguous relationship with intellectual property rights.
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