nft – Metaverse
NFTs/digital content & the Metaverse: What are the legal issues that we should be aware of?
Last year saw the rapid expansion of Web 3.0 and the Metaverse. This growth is expected to continue in 2022.
With the widespread interest in the Metaverse and Non-fungible Tokens (NFTs), a lot of emphasis is now being placed on the rights and protections offered to the creators and those who buy NFTs.
The Metaverse is still a relatively new concept and there is often confusion as to the rights and protections offered to Metaverse users. In this article we will explore some of the legal issues relating to NFTs.
What is an NFT?
Non-Fungible Tokens or NFTs are cryptographic assets available on blockchain. However, unlike Cryptocurrencies, they cannot be traded or exchanged at the same value. This is the opposite to fungible tokens such as Cryptocurrencies, which are identical. NFTs can be used to represent real life, physical items like artwork and real-estate. NFTs can also be used to represent peoples identities, property rights, and more.
Who owns an NFT?
Generally speaking, the purchase of an NFT does not constitute a transfer of ownership or copyright. However, when you purchase an NFT, it does come with certain rights attached to it. These rights include being able to use it for non-commercial purposes. However, there are various different platforms which sell NFTs, each of these platforms will have their own conditions for the sale. Therefore, the ownership of an NFT can be obtained by the buyer if the conditions of the market place permits it.
This is an important consideration to make, as many people purchase an NFT for investment purposes. It is always wise to check what rights come with the NFT you are purchasing e.g. do you fully own the NFT or is it a license?
Piracy/IP issues relating to NFTs
Copyright issues: When dealing with NFTs on the Metaverse, it can be hard to find the real copyright owner (author) of the work. The reason for this is because not all sellers who mint their work (uploaded their NFT) on a Metaverse market place are the real or original owner of such work.
However, most NFT market places will have a verification system in place to ensure the seller does in fact hold the rights as an author to sell such work or use it in a commercial practice or not. Should there be any infringement of intellectual property rights, the victim may use the ‘notice and takedown’ procedure against the wrongdoer.
Most of the larger and more established marketplaces are likely to have their own channel to report such matters. Please note, Thailand does not currently have a channel for the victim to report and initiate a takedown procedure. However, under new amendments to the Thai Copyright Act which due to come into force in the middle 2022, a ‘notice and takedown’ procedure is set to be introduced. This will provide the creators of NFTs and other forms of intellectual property with a way to protect and enforce their interests.
Trademark issues : Trademark issues relating to NFTs in the Metaverse can be a complex subject to address. For example, if a person wants to use the logo of an existing brand for commercial aspects within the Metaverse, the logo must be registered. This registration procedure would make it difficult to mint a brand’s logo on an NFT marketplace without being the actual owner of the trademark for the logo. However, minting a brand’s logo on an NFT market place might be possible if it is to be used for non-commercial purposes.
Therefore, the main consideration for trademarks is whether the actual purpose for buying or selling the NFT is for private or commercial use.
Controlling digital content in the Metaverse
In Thailand, most of the content on the internet was traditionally regulated by the Computer-related Crime Act (which specifies what kind of content is prohibited or banned on the internet) or Intellectual Property law. It is important to also consider that these days there is a trend for creating certain laws relating to certain media or content. For example, there may be specific laws relating to content for children on the internet which will specify what content can be uploaded or viewed on sites which may be used by children.
Again, this is an important consideration for those who create or distribute NFTs in the Metaverse. When designing or selling their asset, they must consider whether it is compliant with existing laws and regulations.
Regulating the Metaverse
Simply put, the Metaverse can be considered as a change in the form of transactions. Previously, people purchased physical goods but now, NFTs are using that same principle but taking it to a digital landscape. It is only the technology which is changing, the practice and actions remain the same.
With these advanced developments, people are debating whether the Metaverse needs a legal framework designed especially for it. However, new laws for regulating the Metaverse may not be necessary as existing laws can be used. For example, when selling goods such as NFTs in the Metaverse and an infringement of rights occurs, this infringement can be addressed by existing IP law as mentioned above. Another example would be in relation to violation of someone’s personal data in the Metaverse, the PDPA or any existing laws in this regard may be used to protect the user.
While NFTs and the metaverse will continue to grow and become a large part of our lives, there is still a lot of confusion about the rights and protections relating to NFTs. While it seems as though existing laws can be relied upon to protect people against violations, it remains to be seen whether it is enough.
If you are interested in learning more about how your business could get involved with the Metaverse, why not book a Consultation with one of our Blockchain experts here
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