What Visual and Street Artists Need to Know about NFTs and the Law

Posted by Juyoun Han, Jun 14, 2022 0 comments

Whether you are an artist, a creator, or an investor, you have probably come across the term Non-Fungible Token (NFT). Be it rumors of young artists raking in millions of dollars selling NFTs, or cautionary tales from those who have been scammed, NFTs have recently exploded in popularity. NFT art is rapidly changing the way artists are paid and revolutionizing how NFT artists can work, create new projects, and take ownership of their art.

As a partner at Eisenberg & Baum LLP and a fellow at NYU Law Engelberg Center for Innovation and Technology, I represent world-renowned street artists across the U.S. and internationally, including the successful $6.75 million verdict for 21artists in the 5Pointz graffiti litigation. With NFTs now reshaping the landscape of digital art, I am committed to working with innovative artists and helping protect artists’ rights. 

Here, I answer questions frequently asked by artists about NFTs and how they might be an opportunity for visual artists—in particular, for street artists.

1. What is an NFT?

A Non-Fungible Token is a digital certificate that attests to the characteristic, originality, and authorship of physical or digital art. This certificate preserved on a blockchain to prevent alterations. Because the certificate is tamper-proof, it can be used as a tool to trace the ownership of the digital file that contains the digital art. This enables artists to register their work using blockchain technology, creating unique digital assets.[1]  The ownership of digital files may also be established using smart contracts paired with NFT transactions.

Example of NFTs: A well-known example of NFT art is Beeple’s First 5000 days, which sold in February 2021 for $69.3 million. Aside from art, NFT technology can support the sale of any type of unique information, such as sports and event tickets that translate to real-life experiences. Fans of LeBron James have spent hundreds of thousands of dollars on NFT video collectibles that memorialize some of the star’s most iconic moments slamming the hoop. Even non-digital experiences like concert tickets can be sold using NFT technology, as it allows for collection and resale on the market.

2. How Can I Create and Sell NFT Art? 

a. Buy Ethereum (cryptocurrency) and get a Wallet. (See How)

b. Select a Marketplace: For creators and collectors alike, artists who want to sell their collections as NFTs must first enlist with a marketplace, then they can “mint” the digital certificate by uploading and validating their information on a blockchain like Ethereum.

i. Examples of Marketplaces: Open Sea, Rarible, LooksRare, and Zora. Some of NFT marketplaces (e.g., Nifty Gateway, Knoworigin, SuperRare) operate by invitation only, while others require user verification before engaging in transactions (e.g., Rarible, Foundation). Some platforms may charge artists a small commission to use their platform (approximately $1-$500 depending on the complexity of the project).[2]

ii. Example of street art centered NFT Marketplaces: Streeth, NFT Mural Collective.

3. Why are Visual Artists Getting into NFTs?

Authenticity: You can show that you’re the original author. When you create NFT art and mint it, this provides clear proof (a time-stamp) of authorship to the minting artist who becomes the original owner of the digital artwork. However, when you create a mural, you still want to register for copyrights and IP over the physical artwork because an NFT ownership is separate and independent of copyrights over physical or digital art. NFT-based authentication can also support the removal of illegal, fraudulent, or deceptive attempts to sell your art online. 

Sell and Get Paid: For artists, the smart contract paired with the NFT also allows you to sell the digital certificate to gain royalties and get paid automatically for the sale of NFT. You can also get paid for royalties in subsequent transactions when one NFT owner resells it to another buyer. 

Marketing, Branding, and Connection to your Audience: NFTs create opportunity for artists to build direct connections to collectors and gain membership to a virtual community that offers social clout. NFT art recognizes the authenticity and value of an artist’s work, so NFT collectors often seek to forge personal connections with the associated artists. Also, communities on Discord and other digital platforms allow for NFT buyers to connect with creators, which makes it easier for artists to develop their own brand and gain online following.

4. Can I Convert a Real-Life Work of Art into a Digital NFT?

Yes! Let’s say you created a fresh mural on a wall. You can make a 1:1 digital version of the mural (like a digital doppelgänger) or even derivative visualizations—an original video depicting its inception, a digital photograph, or a virtual reality version of the wall. All of these assets can be minted into NFTs. 

Important point to note: The ownership over a physical work of art (for example, your canvas painting or the wall of the mural’s installation) is not being handed over through an NFT transaction. From a legal and copyright perspective, the physical asset and the digital asset are separate assets and have separate ownership and copyrights.

5. Why Would Someone Buy an NFT When Anyone Can Just Screenshot the Digital Art? 

True, anyone can just screenshot the digital NFT art or stream the NFT video if available online. However, people who buy collectible physical items like baseball cards or artwork that can be viewed and bought as prints do so because of the authentic value in an original copy. In this sense, NFT certification is much like a certification of authenticity for physical art or collectibles. The value of art, digital or physical, is derived from a combination of subjective components like aesthetic appreciation, being a status symbol, or holding personal and sentimental value. With anyone being able to print posters of Van Gogh’s art or view his artwork at public museums, the clout and appreciation for the original works grow more valuable, not less. 

6. Does NFT Art Include Copyright Protections for Artists?

It depends. Artists are the originators of their artwork, and they own a copyright for the work that is original and created by them.[3] An artist who creates digital art and mints it as an NFT would be the copyright holder of that digital art. However, if you take someone else’s artwork and mint an NFT for it, and you are not the copyright holder of that artwork, you may run into copyright infringement and fraud issues.

7. What are Some Prominent Legal Issues Related to NFT Art?

First, make sure you are not inadvertently using elements in your art that infringe on others’ copyrights, trademark, or intellectual properties. For example, in the case Hermès International v. Mason Rothschild, the artist had used the “Birkin” bag of Hermès as part of his NFT art, “The Baby Birkin,” which features an animation of Hermès’ Birkin handbag and a 40-week-old fetus. In a recent decision on a motion to dismiss, the Court held that the claims brought by Hermès for trademark infringement, trademark dilution, and cybersquatting are viable against the artist.[4]

Second, Look closely at your contract with the NFT marketplace or third-party collaborators for these issues:

1. Reserving Rights: Does your contract give you clear rights to make spin-offs or other derivative artworks based on your previous artwork or to create the NFT art? The case Miramax, LLC v. Quentin Tarantino, et al. is about Quentin Tarantino’s production of an NFT series consisting of exclusive cuts of Pulp Fiction, such as “the uncut first handwritten scripts of Pulp Fiction and exclusive custom commentary from Tarantino, revealing secrets about the film and its creator.”[5] When this news arrived at Miramax, the company sued Tarantino for infringing the copyright in the digital movie clip files that were associated with his NFTs. Tarantino responded[6] that there were certain rights reserved for Tarantino to use audio and electronic formats of the screenplay publication including comic books, novelization, and interactive media. Essentially, the litigation will focus on whether the rights reserved for Tarantino under his contract with Miramax permits him to publish the NFT series. 

2. Representations and Warranties: As the artist, you may have to make legal representations and warranties about the originality of the artwork that is minted. Make sure you have all the rights and requisite licensing for all the elements of your artwork to avoid running into liability later on. 

3. Single Time or Recurring Commitment: Is the NFT contract based on a single artwork or are you (the artist) committing to a series of artworks? If so, does it give you the artistic control over the artworks to be produced? Have you come to an understanding as to the designs and ideas over the artwork? 

8. Stay up to date

Read and Research: Information about the NFT market can be confusing and even misleading. Make sure you read many perspectives from various outlets that provide information about NFTs. 

Connect with lawyers like NFT Art and Law (email) to ask questions and stay in the loop! 

Juyoun Han is a lawyer at Eisenberg & Baum LLP based in NYC, where she leads the firm’s Digital Technology and Human Rights Department. Juyoun represented artists in the 5Pointz lawsuit and other civil rights cases involving street artist. Special thanks to Paul Ingrassia and Professor Jason Schultz for editorial input.

Disclaimer: The views expressed in this article are exclusively those of the author and do not reflect those of the author’s employers, partners, nor affiliates. This article has been prepared for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers.

[1] Glossary — Let’s get Digital! Words for Understanding Digital Art, Fondazione Palazzo Strozzi, www.palazzostrozzi.org/en/glossary-lets-get-digital

[2] See id.

[3]The Copyright Act of 1976 permits authors of original pictorial, graphic, or sculptural works with the exclusive right to reproduce and distribute copies of the work, as well as to create derivative works.

[4]Hermes Int'l v. Rothschild, 22-CV-384 (JSR), (S.D.N.Y. May. 18, 2022)

[5]Miramax, LLC v. Quentin Tarantino et al, No. 21-cv-8979 (C.D. Cal), ECF No. 1 (Complaint)

[6]Miramax, LLC v. Quentin Tarantino et al, No. 21-cv-8979 (C.D. Cal), ECF No. 17 (Answer to Complaint)

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