(Mis-) Understanding NFTs: What Seth Green Should Have Done to Avoid Losing His IP rights?

As sales of non-fungible tokens continue to rise, reaching $87 million in recent months, so does the number of fraudsters in the sphere. The idea of bringing the concept of tangible assets onto the Internet stirs artistic communities around the world.

The idea of encoding your art piece on blockchain “for safety” is also appealing to enthusiasts as it allows people to add uniqueness to their works. The logic is simple: what is the point of having a million absolutely identical “Mona Lisas”, when you can have the one?

Anyone can fall a victim to NFT-related crimes

We will never grow tired of repeating: owning NFT on a thing doesn’t mean owning copyright on it. Many people both inside and outside the artistic community still do not get this simple idea.

Recently Seth Green, an actor best known for his role of archvillain Dr. Evil’s disappointing son in the Austin Powers franchise had his NFT stolen.

The actor bought a Bored Ape NFT and planned to use it in his series called White Horse Tavern. This was possible because the Apes come with a license that allows you to make commercial use of them. It means that when you purchase one, you are granted the right to duplicate and alter it.

The actor’s plans for the show are now unlikely to come true as he has fallen victim to a clone website, imitating another NFT project’s website. Those doppelgangers are almost identical to the originals with only Os replaced for 0s or some other letters missing from their domain names. Mr. Green interacted with the website and got scammed for his precious NFT.

He is not the first to lose an NFT this way, and he is certainly not the last. Hacking and old-fashioned con artistry are shadowing every stage of the industry’s development.

The actor’s show is under threat now as the main star, the Bored Ape got stolen. But Mr. Green made the situation worse by openly going to Twitter in an attempt to reassure the public that the show will be alright. He tweeted: «Not true [that the show is doomed] since the art was stolen. A buyer who purchased stolen art with real money and refuses to return it is not legally entitled to exploitation usage of the underlying IP».

And this is incorrect. If a regular, not-tokenized item gets stolen, the original creator still has the IP rights on it no matter what. This works both for real and digital objects, as the author holds the copyright until they willfully transfer it to somebody else. Meaning that even if somebody was to steal the original recording of the Beatles’ “Imagine”, nothing would stop them from recording the song again or, say, making a movie featuring it. But with NFT things get tricky, as the aforementioned license on the Apes declares that the right to exploit an image follows the NFT.

But the NFT was stolen, how come Mr. Green is not the owner, as he didn’t want to transfer the IP, you may ask. And yes, that would be true if the theft perpetrator still had the NFT in their wallet. But the thieves managed to sell the stolen NFT to a user known as DarkWing84 for $200 000.

It is unknown, whether the user was affiliated with the thieves or probably they just came to buy but now this person possesses both the Bored Ape NFT and the copyright for it as they bought it and this is ok with the Bored Ape Yacht Club terms of service.

Could BORIS help here?

Mr. Green has decided to go to court with the idea to reclaim his IP from the user who bought it but unfortunately for him, he decided to speak out on Twitter about it before talking to his lawyer. If DarkWing84 took Mr. Green to court to prevent him from moving forward with his show thus preventing him from using the Boring Ape picture, the current owner of the NFT would likely prevail.

There is so little law on the books about NFTs and the transfer of intellectual property rights via blockchain-based smart contracts, so it would be wise to achieve something on the legal battlefield before shouting a battle cry on Twitter.

BORIS can help with this matter to some extent. In our solution, we create registration of copyright with manual verification required when IP is transferred. So we protect the digital asset itself instead of protecting the NFT associated with it. This happens largely because there is no international compliance on NFTs yet, so we prefer to deal with concrete assets rather than with tokens.

So before turning your IP into an NFT make sure to protect it with our solution. By doing so you will ensure that the asset stays with you no matter what happens to the NFT.



CADChain is a software company utilizing blockchain and legal tech to create solutions for IP protection

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CADChain is a software company utilizing blockchain and legal tech to create solutions for IP protection