In recent years, NFTs (non-fungible tokens) have gained significant popularity as a tool for identifying and trading digital assets, such as artworks, recordings, animations, virtual items, or in-game elements. According to Wojciech Ługowski, attorney-at-law and managing partner at Lawarton Law Firm, the development of the NFT market has given rise to numerous myths, in particular regarding the alleged transfer of “ownership” of a work to the purchaser of a token.
Importantly, many NFTs fall outside the scope of the newly established MiCA regime, provided they are genuinely unique and non-fungible. As a rule, the Regulation excludes from its scope crypto-assets that are unique and non-fungible (Article 2(3) MiCA). The EU legislator expressly notes that NFTs are often used as a “representation” of works, although they may also represent other rights or assets. However, this exclusion does not operate “automatically” merely because a token has a unique identifier – the decisive factors are the actual characteristics and functions of the crypto-asset and whether its value is inseparably linked to the individual features of a given token. In practice, issuance as part of a series or collection may point towards fungibility, while fractionalized tokens may fail to meet the criterion of uniqueness altogether, which means that, in a given business model, a project may nevertheless fall closer to the MiCA regime and require a case-by-case assessment.
In reality, the operational mechanisms of NFTs have no direct equivalent in the classical concepts of civil or copyright law in most legal systems worldwide. This results in numerous misunderstandings among both creators and users.
In NFT trading, three main models of asset-trading platforms are most commonly encountered: open marketplaces, curated marketplaces, and proprietary marketplaces. Open marketplaces operate like an “exchange” open to anyone, allowing users to mint and list NFTs independently. They typically do not conduct substantive verification of whether the seller holds rights to the content (or do so only to a limited extent), and their terms and conditions often provide for broad exclusions of liability. In practice, this entails a higher risk of copyfraud and infringements of third-party rights. Curated marketplaces apply selection criteria to creators and/or works before allowing them to be offered for sale. They may require confirmation of authorship, verify collections, or impose quality standards. As a rule, this reduces, but does not entirely eliminate, the risk of infringements; what remains crucial is what the platform actually guarantees under its terms and conditions. Proprietary marketplaces sell NFTs issued as part of their own project or ecosystem (e.g., a brand, studio, or game). In most cases, it is the platform operator (or an affiliated entity) that controls the issuance and distribution process, and the purchaser’s rights to the content arise from a licence granted by that entity. This model makes it easier to ensure consistent licensing terms, but the purchaser is more strongly bound by the rules of the specific system.
What Does an NFT Purchaser Actually Buy?
From a copyright law perspective, the fundamental issue is that an NFT is neither a work nor a carrier of the work. A token is a digital certificate of existence – a unique identifier recorded on a blockchain, which most often refers to a specific file or a URL.
In practice, most NFTs contain metadata (such as a link to a graphic or audio file), but they do not store the work itself on the blockchain (due to technical limitations) and do not provide access to the original file (which is usually stored on an external server or within an IPFS system). There are also NFT models in which the content (or a material part of it) is stored on-chain, but this is not the dominant practice. An NFT also does not contain other elements often required for an effective transfer of rights or the granting of a licence (e.g., a precise specification of the relevant fields of exploitation.
NFTs and Copyright: Scope of Protection and Limitations
Copyright law protects both the form of expression of a work and the interests of its author. In many jurisdictions, the transfer of economic copyrights requires written form and a signature, while licences (especially non-exclusive ones) may be subject to less stringent rules. In the U.S. legal system, economic rights may be transferred only on the basis of a written agreement. Importantly, “writing” / “in writing” does not necessarily mean a paper document with a handwritten signature. Electronic documents and electronic signatures are generally acceptable, and in certain situations, an exchange of emails may meet the requirements of “writing” and “signature” if it allows intent and the signer’s identity to be proven. Email correspondence alone, however, may be insufficient if it does not clearly evidence an assignment of rights (or an exclusive licence), its scope, and a “signature” within the meaning of the relevant jurisdiction. In addition, in some jurisdictions, the contract must specify additional terms, such as the scope of permitted use of the work. Copyright law protects the author, often guaranteeing them the right to all future possible modes of exploitation of the work. In particular, in Poland (and many other systems), it is not possible to validly transfer rights or grant a licence for fields of exploitation that are unknown at the time of contracting. New, future ways of using a work (e.g., arising from technological development) usually require separate arrangements.
Under Polish law, these formal requirements are particularly strict. An agreement transferring economic copyrights must be concluded in writing under pain of nullity (Article 53 of the Polish Copyright Act), and an agreement transferring rights or granting a licence covers only those fields of exploitation expressly listed therein and may relate solely to fields known at the time of its conclusion (Article 41(2) and (4) of the Polish Copyright Act). Moreover, an exclusive licence also requires written form under pain of nullity (Article 67(5) of the Polish Copyright Act). It is worth remembering that, under Polish law, the written-form requirement may also be satisfied by an electronic document bearing a qualified electronic signature (equivalent to written form).
For this reason, NFT transactions are not based on standard contractual arrangements. At best, they are accompanied by a smart contract – a piece of code recorded on the blockchain that automates the performance of certain terms (such as payments or royalties for the creator). However, a smart contract does not meet the requirement of written form. However, a smart contract, as a rule, does not (on its own) meet the requirement of written form under Polish law.
Accordingly, even if the creator’s intention was to transfer specific rights, without a formal document containing the relevant provisions, no effective transfer of copyright will occur. As a consequence, the acquisition of an NFT does not grant rights to reproduce, modify, or publicly communicate the work (unless a separate agreement and/or the transaction terms expressly grant the purchaser an appropriate licence). The purchaser of the token acquires solely the right to hold a unique entry in the blockchain register and (potentially) any rights arising from the licensing terms of the relevant project/marketplace.
The Difference Between Owning an NFT and Owning the Underlying Work
Typically, when someone says they “own” a particular work, they do not mean a specific copy, but rather the copyright in that work – above all, the right to use it, publish it, and modify it. This is not “ownership” in the same sense as for ordinary tangible things, but for simplicity, these concepts are often juxtaposed and treated interchangeably.
By contrast, being the owner of an NFT is also not as straightforward as owning a thing. From this perspective, an NFT resembles a digital certificate of authenticity or a collectible record rather than a legal title, especially where the underlying asset is a copyright-protected work.
For this reason, an NFT owner cannot freely dispose of the work and has no control over the file’s availability (for example, if the link stops working, the token loses practical utility). Moreover, the NFT owner cannot prevent others from using the work, because they have not acquired the rights to do so.
Where Does the Risk Arise?
We increasingly observe cases where NFT-related marketing messages are misleading. Typical statements such as “buy the artwork”, “become the owner of digital art”, or “we transfer ownership of the painting” are not supported by the legal reality.
The creation and sale of NFTs are particularly vulnerable to so-called “copyfraud” and to infringements of both the economic and moral rights of the author of the original work. Copying-related fraud may occur where a person mints an NFT linked to a work in the public domain while falsely claiming to hold copyright in the original work. Similarly, copyright infringement and infringement of moral rights may occur where a person who is neither the author nor the copyright holder of a given work creates an NFT and falsely represents that they are the author or the owner of the copyright in that work. Such conduct is especially problematic in non-financial transactions due to the anonymity features of blockchain, which make it difficult to verify who is the rightful creator or copyright owner of the work underlying a non-financial transaction.
The creation and sale of NFTs are therefore exposed to intellectual property infringements and to the phenomenon of copyfraud. Copyfraud consists of falsely attributing copyright to oneself (for example, in relation to a work in the public domain) and leveraging that claim in commerce. Classic copyright infringement, in turn, may occur when an unauthorized person mints and sells NFTs linked to a still-protected work, thereby suggesting authorship or ownership of rights. The problem is exacerbated by the pseudonymity of blockchain-based trading and by technical and practical barriers to enforcing claims in NFT markets. Even where an NFT transaction is intended to involve the grant of a licence, the key issue remains the definition of its scope. A lack of precision usually does not benefit the purchaser. In practice, it increases the risk of disputes, and in the United States, courts emphasize that copyright licences are interpreted narrowly and cover only expressly permitted uses. For this reason, the terms of an NFT transaction should be described unambiguously, and the scope of rights to use the work should be defined with precision.
How to Secure NFT Transactions?
To avoid misunderstandings and potential legal disputes, attorney-at-law Wojciech Ługowski recommends using separate agreements governing the rights to works associated with NFTs. Such an agreement should:
- specify whether the transaction involves a transfer of rights, the granting of a licence, or the sale of a copy of the work,
- describe the scope of permitted use of the work,
- include representations regarding authorship and the absence of infringement of third-party rights,
- be executed in a form compliant with the relevant copyright law requirements.
This approach minimizes risk and enhances the project’s overall credibility.
Summary: Between Technology and Law
NFTs are a technology with enormous potential. They can support digital creators, help build communities, and offer new monetization models. However, their legal effects are limited; at present, they are not accompanied by a properly constructed contractual mechanism.
NFTs do not replace copyright law, and a token is not a work. Ownership of a token is not equivalent to rights in the underlying work. Without changes in the law, NFTs remain merely a digital pointer, not a carrier of rights.