Taking advantage of the intensification of digitalization, non-fungible tokens ( NFTs ) have also developed rapidly, and the transaction volume has jumped from $ 62.8 million in 2019 to an astonishing $ 250.8 million in 2020. However, legal issues such as ownership and intellectual property rights have not been finalized and are becoming increasingly prominent.

Blockchains are immutable decentralized ledgers that record transactions in cryptocurrencies such as Bitcoin and Ethereum. Can describe the development of cryptocurrencies and blockchain as thriving, unrelated to their open-source and experimental innovation culture.

However, success or failure is a mixed bag. It is precisely because of this cultural form that the abuse and misuse of this emerging technology are rampant and rampant, forcing legislative and regulatory authorities to step up scrutiny. NFT is a token whose overall value is greater than the sum of the importance of its parts. Its intellectual property rights protection is full of unknowns, but this Pandora's box has been opened. Can say that the value of the underlying digital assets of most NFTs is questionable, such as the CryptoPunk #7610 NFT that Visa offered to buy about $250,000 in ether.

What is NFT?

The creation of NFTs on the blockchain is nothing new. Shortly after Bitcoin was born, there was the concept of so-called "colored coins," also known as specifically tokenized bitcoins. The idea was to tie these coins to property ownership or to use them to manage natural assets. Colored coins pegged to Bitcoin didn't catch on, while NFTs running on Ethereum were hugely popular. The reason for this is that NFTs are data units stored on the blockchain that can be sold and traded, while smart contracts on Ethereum enable the automatic execution of NFTs' sale and purchase agreements.

Buyers only need to transfer the cryptocurrency into the smart contract to purchase NFT. The smart contract will automatically update the blockchain record, allowing the NFT to associate with a new digital wallet address. In addition to smart contracts, NFTs can be tied to digital and physical assets, including a license authorizing the purchase.

NFTs stored on the blockchain, with a string of cryptographically hashed records and characters that reveal data sets and forms, produce an unbroken chain of identifiable blocks of data, so it is self-contained. With provenance markers (a hash function is a mathematical function that converts a set of data into a fixed-size string of bits). NFT is unique. Can verify its ownership through the blockchain ledger, so it has become a tool for artists and content creators to realize their art. NFT is equivalent to the proof of the authenticity of their works. They sell their digital art by selling NFT, Photos, videos, audio, and other digital files.

NFT buyers usually get a license to use the underlying digital asset but not the work's copyright. Some agreements only grant buyers the right to use the underlying digital assets for personal, non-commercial purposes, while some licenses allow for commercial use.

A series of legal issues raised by NFT revolve around intellectual property rights. Therefore, it is necessary to analyze NFT from copyright law, which involves the existence and infringement of rights.

This article will discuss three questions in turn: first, whether the work, that is, NFT, has copyright; second, whether the copyright is infringed; third, whether there is any defense.

Does NFT have copyright?

After the buyer obtains the ownership of the NFT, it is not a matter of course to get the copyright of the digital asset represented by the NFT. Therefore, even if the creator has sold the NFT representing their work, it does not prevent them from creating more NFTs based on the same result. From this perspective, unless it is stipulated to transfer the underlying work's copyright, NFT is only a certificate of ownership, which is decoupled from copyright. Therefore, must arrange the transfer of the underlying digital asset copyright separately.

Jurisprudence has clearly stated that copyright does not protect facts, data, or ideas. However, there is a view that NFT and the creation process of digital assets are interrelated, and NFT itself is an integral part of the expression of the work, so the copyright is attached to it.

For example, suppose a digital artwork does not exist before being minted into an NFT. In that case, one can argue that the artist intends to let the NFT carry the work's copyright, and the sale and transfer of the NFT can be regarded as a transfer of copyright ownership.

Even if the minting of NFT is not closely related to the creation process of digital assets, one can still argue that the creator intentionally transferred the copyright of this digital asset to the NFT when minting NFT for the artwork.

Singapore's current copyright law seems to support this argument. Sections 4, 7A, and 27 of the Copyright Act of Singapore stipulate that original published works are copyrighted, and compiled works are also included.

In Feist Publications v. Rural Telephone Service Company (1991), the U.S. Supreme Court held that a compilation of facts, notably a selection and arrangement of points, is original and may qualify for copyright protection; however, the justices considered the copyright, in this case, to be "weak."

The claim that NFTs, as carriers of digital creations, can be regarded as compilation works sufficiently novel to be entitled to copyright seems reasonable.