Intellectual Property on the Blockchain: Who Owns the NFT?

In art, buying a canvas doesn't grant copyright—the estate retains the right of reproduction. Web3 follows this same legal principle: the NFT is the container, while the IP is the content. Possession of the container does not grant ownership of the content. Launching an NFT project is an 'IP Licensing Event,' and without explicit definitions, brands risk handing a 'blank check' to the public to represent their trademark.

An NFT is a stack of three distinct components: 1. The Smart Contract (The Token - proof of ownership on ledger); 2. The Metadata (The Link - points to the asset); 3. The Intellectual Property (The Asset - the actual art/video). Legally, the copyright stays with the Brand unless severed by a specific contract linking these layers.

The most dangerous assumption is that 'The Smart Contract is the Agreement.' Under Section 204(a) of the Copyright Act, copyright transfer requires a signed writing. A cryptographic signature may not suffice. To be valid, you must link the token to a legal contract by including a URI pointing to a legally binding license agreement within the NFT's metadata.

Never grant Trademark rights via an NFT. Copyright protects the art; Trademark protects the source (your brand name/logo). A user might have the right to put their NFT on a t-shirt, but they should never have the right to market it as 'Official [Your Brand] Merchandise.' This distinction is the moat that prevents brand dilution by bad actors.

Your ToS must specifically address secondary markets, ensuring the license 'flows through' to the next buyer. It should include termination clauses for holders who use the IP for illegal activity, explicitly prohibit derivative trademarks by holders, and define whether modification rights are granted (e.g., adding assets to a character).

In 2026, royalty enforcement is social/incentivized, not technical. You cannot rely on smart contracts as marketplaces make royalties optional. The solution is to build 'Utility' that only activates for those who paid the royalty (e.g., VIP access), turning a legal requirement into a product feature.

Nike maintains 100% IP control while giving community engagement through 'Forging.' Holders have a 'Personal Use' right to redeem a digital shoe for a physical one. This maintains the premium brand Moat while leveraging the efficiency of blockchain-based rights management.

The future of branding is 'Collaborative Licensing.' You aren't losing IP; you are deputizing customers as brand ambassadors. However, this must be anchored in traditional law. The blockchain provides proof of possession, but your ToS provide the permission of use. Don't let technology outpace your legal strategy.