As we’ve explained before, a Non-Fungible Token (NFT) isn’t a form of intellectual property. It’s not like a copyright, patent, or trademark. It’s closest to a form of receipt for a “unique” digital file. However, NFTs, since they involve works of authorship like art, are copyright adjacent. And like other forms of art, they can be bought, sold, stolen, and even held for ransom. As Business Insider reported, actor Seth Green recently paid $260,000 to recover a stolen Bored Ape Ethereum NFT that he’d paid $200,000 for. It was meant to feature in a TV series called White Horse Tavern. He lost that ape and three other Bored Ape NFTs valued at more than $300,000 in a recent phishing attack. Bored Ape NFTs are popular with thieves. In June, $360,000 worth of Bored Ape NFTs were stolen from Yuga Labs. It was the third attack on the account since April. According to the Bored Ape Yacht Club website, it’s “A limited NFT collection where the token itself doubles as your membership to a swamp club for apes.” As Benzinga describes it,
The Bored Ape Yacht Club (BAYC) is an exclusive community for holders of the ape and mutant themed NFT collections on Ethereum's blockchain. Commonly referred to as the Bored Apes, only 10,000 generative art pieces will ever be in existence.
The collection is reportedly worth more than $1 billion, though the value of NFTs fluctuates wildly. According to Fast Company, “whoever owns a Bored Ape can spin it into whatever film, music, TV, book, or media project they want.” This contrasts with the practices of some other NFT companies, which prohibit buyers from commercial use of their NFTs. However, some companies do allow NFT images to be licensed. As Fast Company explains, The NFT License, free to use by any creator of an NFT project, grants certain rights to NFT holders, namely merchandise commercialization of their NFT up to $100,000 in gross revenue each year. But the Bored Ape licenses have no such cap, according to Fast Company:
Bored Ape Yacht Club has made it clear that NFT holders have full commercialization rights to their ape, i.e., it’s not constricted to just merchandise and there’s no monetary cap.
As Business Insider noted,
The copyright to Bored Ape NFT Yacht Club collection, which set off a frenzied buying craze among celebrities in January, is owned by its creators Yuga Labs. While buyers of the NFTs have rights to license and distribute them, the agreement did not extend to stolen NFTs. Green was confident he still maintained the rights to distribute the ape as it was stolen, he said.
In other words, an NFT can embody two forms of intangible property rights: in the NFT itself (which is not IP) and in the artwork depicted in the NFT (which can be protected by copyright). Ownership of the one thing doesn’t necessarily convey ownership of the affiliated thing. This is comparable to the legal distinction between a painting and the image shown in that painting. As Minnesota Lawyers for the Arts explains, When an artist creates a painting, the artist owns both the copyright in the artwork, and the physical artwork. Ownership of the copyright is an intellectual property right. Ownership of the physical artwork is a personal property right. A sale of the physical artwork does not transfer the copyrights in the artwork. Likewise, transferring the copyright does not necessarily transfer the personal property rights in the physical artwork.