Here are some key points to keep in mind if you are approached by a blockchain developer to license your content for NFT (non-fungible token) creation and sale.
Scope of NFT Licensed Rights
If you only want to license your content for purposes of NFT creation, it’s critical that the scope of the license agreement is limited to NFT purposes with all other uses excluded or restricted. In addition, your license should also include a dragnet provision that all other rights in your content are reserved to the content owner licensor.
Similar to the concept of a modern artist’s limited-edition artworks (a limited number of prints struck from one plate), in order to support NFT market value a content owner could insist on restricting the license to the creation of a limited number of NFTs.
The license agreement can also contain provisions that restrict or otherwise prohibit the right of the NFT developer to make any modifications to your original content or to use your content in combination with any other third-party content.
The NFT license agreement can be tailored to pay the content owner a negotiated percentage of revenue from the initial NFT sale as well as from any NFT resale. A companion ‘smart contract’ agreement between the content owner and the NFT developer (in the form of computer code that runs on the blockchain) would then automatically execute the revenue share arrangement in real time without any intermediary involvement.
Monitor the NFT Exchanges
While the real time advantages of smart contracts and secretive blockchain digital addresses are attractive to many, unfortunately, those same attributes make it problematic for content owners to enforce their rights against an NFT buyer. While there are methods available to support content owners with potential NFT rights infringements, content owners and brands should systematically monitor the NFT exchanges for tokens listed that contain their content and intellectual property and take appropriate action against the use of unlicensed content before the token is sold.
If you are considering licensing and selling your NFT creation and need assistance with protecting your intellectual property call or email us today to set up a consultation. We will engineer a solution for you custom tailored to the licensing agreement you have received or would like created.