Why a License Agreement is Essential to an NFT Project
Amyli McDaniel, Esq.
Lawyer and Web3 founder with a mission to unlock the opportunity of intellectual property for creators, brands and entrepreneurs in the digital realm.
The NFT market has become painfully aware of the essential need for an NFT (represented by a creative work) to have a proper license agreement that grants the NFT owner certain property and use rights to that creative work.
Legally, creating an NFT on the blockchain only gives you a right to a token ID number. Just because it links to a creative work file does not give you any rights to use that creative work.
A license agreement is how rights to use a creative work are granted from a rights owner (like an artist or musician or writer) to others and this agreement is backed by Intellectual Property Law.
Every creative work is considered intellectual property (IP). Creative Works would not be considered property and have no value if it were not for IP Laws. These laws were passed to encourage the creation of intangible goods by granting exclusive property rights to the creator of a creative work.
Because of the way IP laws work, without license grants, merely delivering a copy or file of a creative work does not give the recipient any rights to use the creative work.
Under IP Laws, the owner of a creative work has 4 types of exclusive rights (“IP Rights”):
1.Right to Display the Work
2.Right to Perform (Use) the Work
3.Right to Copy/Distribute the Work
4.Right to Commercialize the Work ; and
5.Right to Make Changes to or Creative works based on the Work (derivative works)
When you create your NFT, you as the owner of the creative work, you get to choose what rights to grant to the NFT owner. Those rights are based on your vision and purpose of making NFTs of your works. And, if the NFT owner uses the work beyond what rights you granted, he is violating IP laws and you can sue them for damages and other liability.
