As we have explained previously, a non-functional token (NFT) is not a form of intellectual property. It is not like a copyright, patent or trademark. It is almost a form of receipt for a “unique” digital file. However, NFTs, since they involve authorship as art, are adjacent to copyright. And like other forms of art, they can be bought, sold, stolen and even held for ransom. As Business Insider reported, actor Seth Green recently paid $260,000 to recover a stolen Bored Ape Ethereum NFT that he had paid $200,000 for. It was supposed to be in a TV series called White Horse Tavern. He lost that monkey and three other Bored Ape NFTs worth more than $300,000 in a recent phishing attack. Bored Ape NFTs are popular with thieves. In June, $360,000 worth of Bored Ape NFTs were stolen from Yuga Labs. It was the third attack on the account since April. According to the Bored Ape Yacht Club website, it is “A limited collection of NFTs where the token itself acts as your membership in a swamp club for apes.” As Benzinga describes it,
The Bored Ape Yacht Club (BAYC) is an exclusive community for holders of the ape and mutant themed NFT collections on the Ethereum blockchain. Commonly referred to as Bored Apes, only 10,000 generative artworks will ever exist.
The collection is reportedly worth more than $1 billion, although the value of NFTs fluctuates wildly. According to Fast Company, “Whoever owns a Bored Ape can spin it into any movie, music, TV, book or media project they want.” This contrasts with the practices of some other NFT companies, which prohibit buyers from commercial use of their NFTs. However, some companies allow NFT images to be licensed. As Fast company explains, the NFT license, free to use by any creator of an NFT project, grants certain rights to NFT holders, namely the commercialization of their NFT up to $100,000 in gross revenue each year. But the Bored Ape licenses have no such cap, according to Fast Company:
Bored Ape Yacht Club has made it clear that NFT holders have full commercialization rights to their monkey, i.e. it is not limited to just merchandise and there is no monetary limit.
As Business Insider noted,
The copyright to the Bored Ape NFT Yacht Club collection, which sparked a celebrity buying frenzy in January, is owned by creators Yuga Labs. While buyers of NFTs have rights to license and distribute them, the agreement did not cover stolen NFTs. Green was confident he still retained the rights to distribute the monkey as it was stolen, he said.
In other words, an NFT can embody two forms of intellectual property rights: in the NFT itself (which is not IP) and in the artwork depicted in the NFT (which may be protected by copyright). Ownership of the one thing does not necessarily convey ownership of the associated thing. This can be compared to the legal distinction between a painting and the image displayed in that painting. As Minnesota Lawyers for the Arts explains, when an artist creates a painting, the artist owns both the copyright to the artwork and the physical artwork. Ownership of copyright is an intangible right. Ownership of the physical artwork is a personal property right. A sale of the physical artwork does not transfer copyright to the artwork. Likewise, transfer of copyright does not necessarily transfer personal ownership of the physical artwork.
