The Place of NFTs in the Intellectual Property Rights Universe

The concept of NFT stands for Non-Fungible Token. NFTs are crypto assets consisting of sequences of code recorded on blockchain systems via smart contracts. NFTs should not be confused with cryptocurrencies. While cryptocurrencies are fungible assets, NFTs are unique, non-fungible assets.

SO, IS EVERY NFT A WORK OF ART?

The fact that the term NFT is mostly used in practice to refer to digital art products leads to the misconception that NFTs are always works of art. To briefly define an NFT, a sequence of code suffices. This sequence of code may contain an intellectual property right, or it may constitute an independent entity. The NFT itself does not qualify as a work; it is a metadata file. However, as an exception, if the smart contract to which the NFT is linked is coded in a way that constitutes a work of art, then the NFT as a whole will be considered a work. In summary, for an NFT to be considered a work, it must meet the conditions of the Law on Intellectual and Artistic Works and bear the distinctive characteristics of its owner. One of the problems encountered at this point is the evaluation of NFTs under copyright law.

QUESTION: If an NFT (Non-Football Note) is purchased, does the copyright to that work also apply?

As a rule, purchasing an NFT does not automatically mean acquiring the copyright to the work. However, if the copyright holder prefers otherwise, the situation changes, and the copyright will transfer to the buyer upon purchase of the NFT. Otherwise, purchasing the NFT will be nothing more than acquiring a copy of the work.

Currently, discussions surrounding NFTs (Non-Footnotes) are ongoing because provisions for recourse in cases of copyright infringement have not yet been established. Furthermore, there is no settled case law in Turkey regarding disputes related to NFTs. For now, applying the provisions of the Law on Intellectual and Artistic Works by analogy to NFT disputes seems appropriate. In this case, copyright holders, provided they can prove their authorship, can file a lawsuit to determine copyright infringement, and if infringements occur, they can file lawsuits for the prevention and removal of the infringement, and claim compensation for any damages incurred.

In conclusion, while there are currently no explicit provisions in the legislation regarding how the use of NFTs as trademarks on Metaverse platforms should be evaluated, we believe that applying the Industrial Property Law by analogy would be appropriate. This would ensure that there is no legal vacuum in these matters until new provisions emerge in the world and in our country regarding disputes arising from Metaverse, Intellectual Property Rights, and NFTs.