How Do NFT Ownership Rights Differ from Traditional Copyright Ownership?

The rise of non-fungible tokens (NFTs) has rewritten how the market perceives scarcity, provenance, and value in the digital realm. But for all the headlines about seven-figure sales and celebrity endorsements, a persistent legal question remains misunderstood: what exactly does an NFT buyer own? The short answer, which is often overlooked in popular commentary, is that buying an NFT usually transfers a token and some contractual rights, not the copyright in the underlying creative work. This distinction matters for creators, purchasers, intermediaries, and counsel advising them.

The Legal Anatomy: Token, Contract, and Copyright

An NFT is a unique data record on a blockchain pointing to (or embedding) a digital asset and governed by a smart contract. The blockchain ledger provides a robust proof of token ownership and provenance, but it does not in itself create or transfer the bundle of legal rights that copyright law confers. Copyright, as defined and protected under national law and harmonized by treaties such as the Berne Convention, arises on fixation of an original work and carries with it exclusive rights (reproduction, adaptation, distribution, public performance, and moral rights in many regimes). Those rights remain with the author unless they are expressly assigned or licensed.

Scholars and practitioners emphasize that NFTs sit at the intersection of property, contract, and intellectual property law: the token is a property-like asset on the ledger; the smart contract and marketplace terms set out (sometimes inadequately) what the buyer may do with the visual or audio asset; and copyright law regulates reproduction and derivative exploitation regardless of token ownership. In short: a token does not equate to a title to copyright.

Practical Effects: What Buyers Typically Receive

Because there is no uniform practice, buyers must look to (i) the marketplace’s terms, (ii) the seller’s license language, and (iii) any smart-contract code that attempts to encode usage rights. In many high-profile collections, marketplaces, or project owners grant narrow display rights, and only a minority of issuers convey wider commercial licenses. For example, the Bored Ape Yacht Club’s published license grants owners a broad, worldwide license to use, copy, and display the purchased art and even permits commercial use subject to the collection’s stated terms—demonstrating how sellers can and do carve out significant rights without transferring copyright. But the precise scope is contractual, not automatic.

When rights are not spelled out, common law and statutory copyright principles apply: the author retains exclusive rights and the purchaser may have merely the right to possess the token and to display the purchased file in private or on social platforms to the extent the marketplace permits. Several commentators and case studies from multiple jurisdictions have warned about the gap between consumer expectations (that “buying the NFT” equals “owning the art”) and the legal reality.

Enforcement and Friction Points

NFTs create twin enforcement challenges. First, blockchain provenance demonstrates who holds the token, but it does not automatically show who holds copyright. Second, enforcement of license restraints depends on conventional legal levers (like injunctions, damages, and contract remedies), which can be complicated by pseudonymous purchasers, cross-border transactions, and the decentralized architecture of many marketplaces. Smart contracts can mitigate some risks (for example, by coding royalties or revocation conditions) but cannot replace a well-drafted license or an enforceable assignment under applicable law. Practitioners note that embedding license terms into smart contracts and ensuring clear, accessible terms to buyers reduces later disputes.

Legal disputes already illustrate these complexities. Litigation involving major NFT projects has produced important precedents on trademark and contract claims, underscoring that courts will treat NFTs through the lens of existing intellectual property and unfair competition doctrines while wrestling with novel factual matrices. Recent appellate developments involving major collections further highlight how courts balance First Amendment, trademark, and commercial claims in the NFT context.

Policy and Commercial Responses

Market participants have taken several practical steps. Some creators explicitly assign or license copyright alongside the token sale; others retain all IP and grant only limited user rights. Marketplaces are increasingly requiring clearer license language and offering standardized license frameworks. Law firms and policy organizations recommend three practical steps for participants:

1. disclose clearly what rights are transferred at point of sale,

2. consider encoding key license terms in the smart contract while ensuring alignment with governing law, and

3. Retain records of any express IP assignment or exclusive license. A failure to do so risks consumer confusion, reputational harm, and costly litigation.

Advice for Counsel and Clients

For creators: be explicit. If you intend to transfer copyright, document the assignment in writing and ensure that the assignment satisfies the applicable formalities in the governing jurisdiction. Consider whether moral rights or resale-royalty regimes affect the transaction.

For buyers: read the license/terms before purchase; do not assume token ownership equals IP ownership.

For intermediaries and marketplaces: standardize license disclosures, make smart-contract logic auditable, and provide clear consumer redress routes.

For litigators and policy makers: recognize that NFTs are a technological overlay on well-established IP law; the remedy is not to invent parallel law but to ensure clarity and enforceability within existing doctrines while being attentive to cross-border enforcement challenges.

Conclusion

NFTs present an important innovation in proving provenance and creating new market mechanisms for digital creators. But their legal value depends on layers: the immutable ledger, the smart contract, and, most critically, the conventional legal instruments of copyright and contract. An NFT can certify that you own a particular token and can carry bespoke license rights, but unless copyright has been expressly transferred, the original author usually retains the statutory bundle of rights. That legal truth ought to shape how the market markets NFTs, how lawyers draft licenses, and how purchasers evaluate value. Clear drafting, transparent disclosures, and informed advice will close the current gap between popular perception and legal reality.