Let’s cut through the noise: If you’re a creator or buyer navigating NFTs, you’ve likely heard horror stories of artists losing control of their work or collectors facing lawsuits for “owning” something they can’t legally use. Remember when Quentin Tarantino tried to mint Pulp Fiction NFTs in 2021, only for Miramax to sue him, claiming he didn’t own the exclusive rights? Or Yuga Labs’ Bored Ape Yacht Club, which had to overhaul its licensing terms in 2022 after buyers realized their $300k JPEGs didn’t include commercial rights by default?
Here’s the uncomfortable truth: Most NFT disputes stem from one fatal oversight—misunderstanding what’s actually being bought or sold. Creators assume minting an NFT won’t risk their copyright; buyers assume owning a token equals owning the art. Both are wrong. This article isn’t about hype or jargon. It’s about decoding the legal minefield of NFT licenses so you don’t become a cautionary tale.
Key Concepts: What Exactly Are You Buying or Selling?
Let’s start with a foundational truth: An NFT is not the asset itself. It’s a receipt. A receipt for what, though? That’s where things get messy.
The Two Layers of an NFT
The Token: A blockchain-based certificate proving you “own” a unique entry in a digital ledger. This is what you buy, sell, or trade.
The Underlying Asset: The artwork, music, video, or file linked to the token. This is where copyright law kicks in.
Example: If you buy a CryptoPunk NFT, you own the token (provable on Ethereum’s blockchain), but until Yuga Labs updated its license in 2022, you had zero rights to use the Punk’s image commercially. You couldn’t print it on a T-shirt or use it in an ad without risking legal action.
Ownership vs. License
Buyers: You own the token. You do not automatically own the copyright to the underlying asset. Unless the license explicitly states otherwise, you’re just a licensed user.
Creators: Minting an NFT does not transfer your copyright. The license you attach dictates how buyers can use your work.
The Fine Print
Default Terms: Many marketplaces (like OpenSea) use barebones licenses that grant buyers only “personal, non-commercial use” unless creators override them.
Explicit Transfers: Copyright ownership can be transferred, but it requires a written agreement separate from the NFT’s metadata.
Common License Types
CC0 (Public Domain): Creator waives all rights. Buyers can commercialize freely. Example: Nouns NFTs.
Personal Use: Display only. No merchandise, ads, or derivatives. Example: Most Art Blocks collections pre-2023.
Commercial Rights: Allows monetization (e.g., merchandise, games). Example: Bored Apes post-2022 license update.
Exclusive: Only the NFT holder can use the asset. Rare, as most creators retain rights to reuse their work.
Why This Matters
In 2023, the SEC sued Impact Theory, a Web3 startup, alleging its “Founder’s Keys” NFTs were unregistered securities. While this case focuses on investment contracts, it underscores a broader trend: Regulators are dissecting exactly what rights NFT buyers receive. Ambiguity isn’t just risky—it’s a target.
The Takeaway
If you’re a creator, your license is your shield. If you’re a buyer, it’s your rulebook. Skip the fine print, and you’re gambling with legal exposure.
Creator Perspective: Protecting Your IP
Let’s get real: As a creator, your art isn’t just a passion project—it’s your livelihood. When you mint an NFT, you’re not just selling pixels; you’re defining the boundaries of how your work lives in the world. But here’s the kicker: Most creators shoot themselves in the foot by relying on vague or default licenses. Let’s fix that.
Drafting Clear Licenses
Your license is your voice in a sea of chaos. It’s not legalese—it’s a manifesto of control. Here’s what you must spell out:
Scope of Commercial Rights: “Commercial use” is a black hole of ambiguity. Drill deeper:
Can buyers sell merchandise?
Can they create derivative works (e.g., animations, physical prints)?
Is there a revenue cap?
Example: Artist XCOPY grants “non-exclusive, worldwide rights to display the NFT privately or publicly” but prohibits commercial use unless negotiated separately.
Royalty Structure
Smart contracts automate royalties, but they’re not magic. Specify:
Percentage (e.g., 10% on secondary sales).
Duration (e.g., in perpetuity vs. resale windows).
Platforms (e.g., applies to all marketplaces, not just Ethereum).
Pro Tip: Use tools like Manifold Studio to embed enforceable royalties directly into your NFT’s metadata.
Termination Clauses
What happens if a buyer violates your terms? Can you revoke their license?
Example: Photographer JN Silva retains the right to terminate licenses if buyers use his NFTs in hate speech or illegal activities.
Common Mistakes
Trusting Default Marketplace Terms: OpenSea’s default license grants buyers “a worldwide, non-exclusive license to display the NFT.” That’s it. No commercial rights. No derivatives. If you don’t override this, you’re leaving your IP exposed.
Solution: Platforms like Mintplex allow custom licenses. Use them.
Skipping Copyright Registration
In the U.S., you can’t sue for infringement unless your work is registered with the Copyright Office.
Example: Digital artist Coldie registered his iconic “Digital Zones” series before minting, giving him legal leverage against copycats.
Case Study: Beeple’s $69M Masterclass
When Beeple sold Everydays: The First 5000 Days at Christie’s in 2021, the NFT included no commercial rights. The buyer, Vignesh Sundaresan, got a token and a display license—nothing more. Beeple retained full copyright, allowing him to sell prints, licenses, and derivatives. The lesson? Clarity pays.
Buyer Perspective: What You’re Actually Allowed to Do
Let’s be blunt: Buying an NFT without reading its license is like buying a car without checking if it has an engine. You’re paying for potential, not power. Here’s how to avoid becoming a cautionary tale.
Critical Questions to Ask Before Purchasing
“What’s the license?” Assume nothing. If it’s not spelled out, it doesn’t exist.
Example: In 2021, Bored Ape buyers were shocked to learn their $500k NFTs came with zero commercial rights. Yuga Labs retroactively added them in 2022—but you can’t bank on goodwill.
“Can I Profit From Derivatives?” Derivative rights are rare. Even if allowed, royalties may apply.
Example: CryptoPunks holders gained commercial rights in 2022, but Yuga Labs still takes a cut of derivative projects.
“Does This License Transfer On Resale?” Some licenses expire when the NFT changes hands. Others bind to the token forever.
Pro Tip: Check the NFT’s metadata for a “licenseURI” link (e.g., Bored Apes use Arweave to store immutable terms).
Risks of Ignoring Licenses
Legal Action: In 2023, Hermès won a $133k judgment against artist Mason Rothschild for creating MetaBirkins NFTs, ruling they infringed on Birkin’s trademark. Rothschild claimed “artistic freedom”—the court didn’t care.
Financial Loss: NFTs with restrictive licenses trade at a discount. A 2023 Galaxy Digital study found CC0 NFTs (no restrictions) have 30% higher resale volumes.
Case Study: Bored Ape’s License Evolution
In 2021, Bored Ape NFTs were cultural gold—but their license was a ticking time bomb. Buyers couldn’t legally use their apes in ads, games, or merch. After backlash, Yuga Labs issued a “commercial rights grant” in 2022, retroactively allowing holders to monetize their NFTs. But here’s the catch: The update wasn’t automatic. Buyers had to “opt in” by accepting new terms. Those who didn’t? Stuck with the old rules.
The Takeaway
Creators: Your license is a contract with the future. Write it like your career depends on it—because it does.
Buyers: Your due diligence is your armor. Assume every NFT is a “buyer beware” scenario until proven otherwise.
Overlapping Pitfalls: Where Both Sides Get It Wrong
Let’s tackle the elephant in the room: Most NFT drama isn’t about malicious intent. It’s about assumptions. Creators and buyers alike fall into the same traps, convinced they’re playing by rules that don’t actually exist. Here’s where things unravel:
Myth: “Owning the NFT = Owning the Copyright”
Reality Check: Copyright law doesn’t care about blockchain receipts. In the U.S., the Copyright Act explicitly states that only a written agreement can transfer copyright. If your NFT’s license doesn’t say “I hereby transfer copyright to the buyer,” it didn’t happen.
Example: In 2023, artist Ryder Ripps lost a lawsuit against Yuga Labs after creating copycat Bored Apes. The court ruled that owning an NFT ≠ owning the IP, and his “parody” defense collapsed because he replicated the art, not just the token.
Myth: “Blockchain Immutability Enforces Licenses”
Reality Check: Smart contracts handle payments, not justice. If a buyer violates your license, you can’t “code” a lawsuit. Courts decide, not computers.
Example: CryptoKitties’ breeding mechanics are governed by smart contracts, but if someone uses a Kitty’s image in a pornographic film, the blockchain won’t auto-delete it. You’d need a lawyer, not a developer.
Ambiguity in Terms
The phrase “commercial use” is a legal grenade. Does it include memes? Fan art? Corporate branding?
Case Study: In Hermès vs. MetaBirkin (2023), artist Mason Rothschild argued his fuzzy Birkin bag NFTs were “art,” not commercial products. The jury disagreed, ruling they diluted Hermès’ trademark. The license’s vagueness buried him.
Jurisdictional Quicksand
EU: Under the Digital Single Market Directive, NFT licenses might soon require “fair compensation” clauses for creators.
U.S.: Courts lean on traditional IP law. The Andy Warhol Foundation vs. Goldsmith (2023) Supreme Court ruling tightened “transformative use” standards—directly impacting NFT derivatives.
The Takeaway
Ambiguity isn’t philosophical—it’s flammable. Write licenses like you’re explaining them to a hostile lawyer. Because one day, you might be.
Legal Frameworks & Recent Developments
The law is playing catch-up, but regulators aren’t waiting. Let’s map the minefield:
Copyright Law Basics
Berne Convention: Your work is copyrighted the moment it’s created (in 179 countries). But in the U.S., you need registration to sue.
Registration: The U.S. Copyright Office clarified in 2023 that NFTs can’t be registered as standalone works—only the underlying asset qualifies.
Practical Impact
If you’re a creator, register your art, not your NFT. If you’re a buyer, demand proof of registration before high-value purchases.
Landmark Cases
Miramax vs. Tarantino (2021): Tarantino minted Pulp Fiction NFTs, claiming rights to his screenplay. Miramax sued, arguing they owned broader film IP. They settled, but the message was clear: NFTs don’t override existing contracts.
NBA Top Shot Highlights: Dapper Labs sells NFT clips, but the NBA retains all IP. Buyers get a license to “view and display” the moments—no replays in documentaries or games.
Regulatory Trends
SEC’s Expanding Net: In 2023, the SEC sued Impact Theory, claiming its NFTs were unregistered securities because buyers expected profits from the company’s efforts.
Implication: If your NFT promises perks (e.g., revenue shares, exclusive access), you’re flirting with securities law.
EU’s MiCA (2024): The Markets in Crypto-Assets Regulation classifies NFTs as “unique digital assets,” exempting them from strict crypto rules—unless they’re fractionalized or mass-produced.
Loophole Alert: Selling 100 identical NFT concert tickets? MiCA treats them like crypto, requiring issuer transparency and audits.
The Takeaway
Regulators aren’t anti-NFT—they’re anti-chaos. Structure your licenses like they’ll be read by a skeptical bureaucrat. Because they will.
Best Practices for Creators & Buyers
Let’s get tactical. You didn’t come here for theory—you came for a survival guide. Whether you’re minting or collecting, these strategies are your armor.
For Creators: Own Your Terms
Write Licenses for Humans, Not Robots: Ditch legalese. Use plain language to define exactly what buyers can and can’t do.
Example: Photographer Justin Aversano’s Twin Flames NFT collection states: “Owner may display the NFT for personal use. Commercial use (merch, ads) requires written consent.”
Register Copyrights Early: In the U.S., registration isn’t optional if you want to sue. The process costs $45 online and takes 3–6 months.
Pro Tip: Use the U.S. Copyright Office’s “Single Application” for standalone works (e.g., 1/1 NFTs).
Audit Marketplace Defaults: Platforms like Rarible let you attach custom licenses. Others (looking at you, OpenSea) default to barebones terms.
Workaround: Host your license on Arweave or IPFS, and link it in the NFT’s metadata.
For Buyers: Treat Licenses Like Blueprints
Reverse-Engineer the Value: If an NFT has no commercial rights, its utility caps at bragging rights. Ask: Would I pay this much for a museum ticket?
Red Flag: Projects promising “IP rights coming soon.” Delayed licenses = legal vaporware.
Lawyer Up for Big Plays: Spending six figures? Hire an IP attorney to audit the license.
Case Study: VC firm Andreessen Horowitz (a16z) requires portfolio projects to use their “Can’t Be Evil” licenses—pre-vetted by their legal team.
For Both: Cover Your Bases Off-Chain
Document Everything: Licenses embedded in NFTs aren’t enforceable unless mirrored in a signed contract.
Example: When DC Comics threatened to sue artists selling NFT versions of their superhero fan art in 2021, creators with written agreements survived. Those without folded.
The Bottom Line
Your license is only as strong as your willingness to enforce it. Prepare for the worst, even if you expect the best.
Future of NFT Licensing
The NFT space isn’t evolving—it’s mutating. Here’s what’s coming, and how to stay ahead of the chaos.
Standardization Wars
Creative Commons Meets Web3: Projects like Can’t Be Evil (a16z) and DAO Licenses aim to create universal NFT terms. Think of them as “open source” licenses for ownership.
Problem: One-size-fits-all rarely works. A meme NFT and a $1M sculpture need wildly different rules.
The “Ethical License” Movement: Licenses that prohibit use in hate speech, AI training, or climate-harming industries.
Example: Artist Refik Anadol’s NFT licenses ban buyers from using his AI-generated art to train competing models.
Dynamic Licenses
DAOs as Arbiters: Imagine a license that evolves via community vote. The PleasrDAO collective already does this, letting members decide how acquired NFTs (like Edward Snowden’s Stay Free) are exhibited.
Risk: What if the DAO votes to revoke your rights?
Hybrid On-Chain/Off-Chain Terms: Nike’s .Swoosh NFTs use blockchain-based authentication but tie usage rights to off-chain agreements. This lets them update terms without redeploying contracts.
AI’s Legal Black Hole
Who Owns AI-Generated Art? In 2023, the U.S. Copyright Office ruled that AI art (e.g., Théâtre D’opéra Spatial) can’t be copyrighted—only human-modified elements can.
Implication: If you mint an AI-generated NFT, buyers get no copyright. Full stop.
Licensing as a Shield: Artists like Claire Silver now license their AI-assisted works under CC0, sidestepping ownership debates by embracing the public domain.
Regulatory Thunderstorms
SEC’s “Investment Contract” Test: The Howey Test doesn’t care about your “utility” claims. If buyers expect profits from your efforts (e.g., staking rewards, exclusive access), you’re selling securities.
Landmine: Starry Night Capital’s NFT fund paused operations in 2023 after SEC scrutiny.
Global Fracturing: Japan treats NFTs as “digital content,” exempt from crypto laws. India taxes them as “virtual assets.” Cross-border licensing? Good luck.
The Takeaway
The future belongs to those who license with flexibility and foresight. Assume every rule will change, and build for it.
Let’s be honest: The NFT space is a Wild West of creativity, speculation, and legal gray zones. But here’s the good news—you don’t have to be a casualty of the chaos. Whether you’re a creator or a buyer, the difference between thriving and nosediving boils down to one skill: reading the fine print.
Key Takeaway
Commercial rights in NFTs are not a given. They’re a negotiation.
Creators: Your art is your legacy. A poorly drafted license can dilute it overnight.
Buyers: Your NFT is only as valuable as the rights attached to it. Assume nothing.
