Introduction
Few technological developments of the early 2020s generated more public confusion about intellectual property rights than the emergence of non-fungible tokens (NFTs). At the height of the NFT market in 2021 and 2022, millions of dollars were exchanged for digital tokens representing images, videos, music, and other creative works, with buyers often operating under the impression that purchasing an NFT conferred rights of ownership over the underlying creative work comparable to purchasing a physical painting. This impression was almost uniformly incorrect, and the gap between the popular understanding of NFT ownership and its legal reality has produced a series of disputes that illuminate fundamental principles of copyright law as applied to digital property.
For India, the NFT moment has raised questions that its Copyright Act 1957, the Information Technology Act 2000, and broader property law framework are not well equipped to answer. The absence of a legal definition of an NFT, the absence of any statutory provision addressing the transfer of intellectual property rights through blockchain-based token transactions, and the absence of a regulatory framework for NFT markets leave buyers, sellers, creators, and platforms in a state of legal uncertainty that has already produced commercial harm and that will produce litigation as the market matures.
This article analyses the technical architecture of NFTs in relation to intellectual property rights, examines the Indian legal framework’s application to NFT transactions, reviews key domestic and international disputes, and proposes reforms that would bring greater legal clarity to a market that, despite its speculative excesses, represents a genuinely novel mechanism for creators to connect with audiences and generate revenue from digital works.
Legal Framework
What an NFT Actually Is
A non-fungible token is a unique cryptographic token recorded on a blockchain, typically the Ethereum blockchain, that is associated with a particular asset through metadata. The token itself is a record on the blockchain: a unique identifier linked to a set of metadata that typically includes the creator’s wallet address, a description of the associated asset, and a URL or hash pointing to the location of the asset’s digital file. Crucially, in the vast majority of cases, the NFT does not contain or embed the actual digital asset itself. The image, video, or audio file to which the NFT refers is typically stored off-chain, either on a centralised server (with all the permanence risks that implies) or on a decentralised storage system such as the InterPlanetary File System (IPFS).
The immediate implication of this architecture is that an NFT represents proof of ownership of a unique token that points to a digital asset, not ownership of the digital asset itself, and certainly not ownership of the copyright in the digital work that the asset represents. Understanding this distinction is the foundation for any coherent legal analysis of NFT-related intellectual property rights.
Copyright Act 1957: Ownership and Assignment
The Copyright Act 1957 is the governing statute for creative works in India. Copyright is a bundle of exclusive rights that vests automatically in the author of an original work upon its creation (Section 13). These rights include reproduction, communication to the public, issuance of copies, making of adaptations, and, for certain works, the moral right of attribution and integrity (Section 57).
Copyright, being personal property, can be transferred through assignment (Section 19) or through licensing (Section 30). Section 19 requires that any assignment of copyright must be in writing, signed by the assignor or their duly authorised agent. An oral assignment of copyright has no legal effect. A transaction recorded on a blockchain, including the transfer of an NFT from one wallet to another, does not satisfy the writing and signature requirements of Section 19 unless the underlying NFT smart contract or a separate written document specifically purports to assign the copyright in the underlying work, is signed by the copyright owner, and satisfies the other requirements of Section 19.
The legal consequence is that in a typical NFT transaction, the buyer acquires ownership of the blockchain token and, by virtue of the token’s association with specific digital metadata, a form of digital ownership that has no direct equivalent in traditional property law, but does not acquire any copyright in the underlying creative work unless the creator explicitly executes a separate written copyright assignment. This principle is not unique to India; it reflects the universal structure of copyright law under which copyright cannot be transferred informally.
The Information Technology Act 2000 and Digital Property
The IT Act 2000, as amended in 2008 and subsequently through the IT (Amendment) Act 2008, addresses electronic records, electronic signatures, and cybersecurity but does not create any framework for digital property rights in the sense relevant to NFTs. The Act’s definition of “electronic record” (Section 2(1)(t)) includes data, record, or data generated, image or sound stored, received or sent in an electronic form, but this definition does not assist in characterising the proprietary rights attached to an NFT.
The IT Act’s provisions on intermediary liability, as developed through the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021, are relevant to NFT marketplaces as potential intermediaries. However, the Rules do not address the specific obligations of NFT marketplaces with respect to copyright verification or infringement.
The regulation of virtual digital assets, including NFTs, in India is in a state of evolution. The Finance Act 2022 introduced a tax on income from “virtual digital assets,” which the Income Tax Act defines to include crypto-assets and NFTs, but the taxation framework does not address the property law characterisation of NFT ownership.
Judicial Developments
The WazirX NFT Marketplace and Its Collapse
WazirX, one of India’s largest cryptocurrency exchanges, operated an NFT marketplace that was active in 2021-2022. The marketplace’s collapse following the broader cryptocurrency market downturn of 2022 and the legal complications arising from WazirX’s relationship with Binance created a situation in which NFT buyers who had paid significant sums for NFTs listed on the platform found their tokens inaccessible or worthless when the platform’s services were disrupted. The WazirX debacle did not produce court decisions specifically addressing NFT copyright issues, but it illustrated the platform liability questions that arise when NFT marketplaces fail.
Indian auction houses and digital art platforms that listed celebrity NFTs, including the widely publicised Amitabh Bachchan NFT collection launched through Beyondlife.club in 2021, operated without any explicit contractual framework addressing the scope of intellectual property rights transferred to NFT buyers. The ambiguity surrounding what Bachchan’s fans actually acquired when they purchased the NFTs, beyond the token itself, was never legally resolved, because the Bachchan NFTs were not the subject of litigation.
International Disputes: Miramax v. Tarantino
The Miramax v. Quentin Tarantino dispute (C.D. Cal., 2021) arose when Tarantino announced plans to sell NFTs based on his handwritten screenplay for Pulp Fiction, including pages displaying unpublished content. Miramax, which holds rights to the Pulp Fiction film, argued that Tarantino’s contract had assigned to Miramax the right to create and sell NFTs in connection with the film. Tarantino argued that the contract, predating NFTs by decades, could not have assigned rights to a technology that did not exist when the contract was signed.
The case settled before a judicial ruling on the merits, but the underlying legal issue, whether broadly worded intellectual property assignment clauses in legacy agreements cover NFTs, is of direct relevance to Indian copyright law. Indian courts applying Section 19 of the Copyright Act to assignment agreements executed before NFTs existed would face the same interpretive question: do general assignments of “all rights in all media now known or hereafter devised” cover the creator’s right to mint and sell NFTs?
The Bored Ape Yacht Club Commercialisation Question
The Bored Ape Yacht Club (BAYC) NFT collection, created by Yuga Labs, was notable for explicitly granting NFT holders a commercial use licence to use their specific Ape image in commercial contexts, including merchandise and marketing. This was unusual: most NFT projects did not grant commercial rights to buyers. The BAYC commercialisation licence, however, raised its own complications, including the Miramax-style question of what “commercial use” includes when applied to AI-generated derivative works, and the question of whether the licence transferred with subsequent resales of the NFT.
The analytical framework from BAYC is relevant to Indian practice because it demonstrates the contractual mechanism through which NFT transactions can incorporate intellectual property licences: the licence terms must be explicit, incorporated into or associated with the smart contract, and designed to transfer with the NFT through subsequent resale. Without this explicit contractual structure, NFT resale creates no new licence rights for the secondary purchaser.
Contemporary Issues and Analysis
The Infringing NFT Problem
A recurring problem in NFT markets has been the minting and sale of NFTs by parties who do not own the intellectual property rights in the underlying work. An unscrupulous actor can take any image from the internet, mint an NFT purporting to represent ownership of that image, and list it for sale on an NFT marketplace. The original copyright owner has the right to take infringement action against the minter and, potentially, against the marketplace, but detection and enforcement are practically difficult given the pseudonymous architecture of blockchain transactions.
For Indian auction houses and digital art platforms that host NFT sales, the copyright infringement liability question is governed by the IT Act’s intermediary liability framework. Platforms that take down infringing NFTs promptly upon receiving notice from rights holders, and that implement reasonable measures to verify the authenticity of listed NFTs, may claim the safe harbour provided by Section 79 of the IT Act. However, platforms that are aware of specific infringing NFTs and fail to act are likely to lose the safe harbour and face secondary infringement liability.
Moral Rights and NFT Resale
Indian copyright law’s moral rights provision (Section 57) protects the right of attribution and the right of integrity, including the right to object to modifications of the work that are prejudicial to the author’s honour or reputation. These moral rights are inalienable in India and persist even after copyright assignment. The NFT context raises interesting moral rights questions: if an NFT is modified, altered, or presented in a misleading context after it has been sold by the creator, does the creator have a moral rights remedy against the buyer or subsequent holders? The answer under existing law is likely yes, at least where the modification or misleading presentation is prejudicial to the creator’s honour or reputation.
Comparative and International Perspective
The EU’s Markets in Crypto-Assets (MiCA) Regulation, which entered into force in 2023, largely exempts unique NFTs from its scope, treating them as outside the definition of crypto-assets that are fungible and tradeable. However, the European Commission has committed to a review of MiCA’s application to NFTs by 2025, and the EU Intellectual Property Office has published guidance on copyright implications of NFTs that recommends explicit contractual provisions for intellectual property rights in every NFT transaction.
The UK Intellectual Property Office published a “Call for Views on Non-Fungible Tokens and Intellectual Property” in 2022, acknowledging that existing UK copyright law applies to NFTs without modification but recognising that consumer confusion about the scope of NFT ownership warrants educational intervention. The UK’s approach of relying on existing law while providing guidance is instructive for India, where the initial priority should similarly be to clarify how existing law applies to NFTs before determining whether new legislation is required.
Practical and Policy Implications
For Indian NFT creators, the practical implications are straightforward: if a creator wishes to transfer copyright along with the NFT, a separate written assignment agreement satisfying Section 19 is required, and that agreement should be referenced in the NFT’s smart contract metadata and associated documentation. If the creator wishes to retain copyright and grant a licence, the licence terms should be explicitly defined in documentation associated with the NFT, specifying the scope, duration, territory, and transferability of the licence.
For NFT buyers, the practical implication is that purchasing an NFT without reviewing the associated intellectual property terms confers no copyright rights and may not even confer a licence to display the associated image publicly. Due diligence on NFT acquisitions should include review of the copyright status of the underlying work and the intellectual property terms associated with the specific NFT.
For Indian NFT platforms, a mandatory intellectual property disclosure regime, analogous to the disclosure requirements for securities offerings, would serve both consumer protection and platform liability interests. Platforms should require sellers to certify copyright ownership or licensing authority before listing an NFT, and should maintain accessible records of these certifications to support safe harbour claims.
Suggestions and Reforms
The Copyright Act 1957 should be amended to add a provision explicitly addressing NFT transactions, confirming that the transfer of an NFT does not constitute an assignment of copyright in the underlying work absent an explicit written assignment satisfying Section 19, and that any licence of copyright in connection with an NFT must be in writing and expressly identified in the transaction documentation. This provision would eliminate consumer confusion and reduce litigation.
The government should introduce an NFT disclosure code, perhaps through an amendment to the Consumer Protection Act 2019 or through rules under the IT Act, requiring NFT platforms to prominently disclose to potential buyers before purchase: what intellectual property rights, if any, are transferred with the NFT; whether a copyright licence is included and if so on what terms; and whether the NFT seller has verified ownership of the intellectual property rights in the underlying work.
The Reserve Bank of India and the Securities and Exchange Board of India should coordinate a regulatory framework for NFT marketplaces that addresses, among other things, the obligations of marketplace operators with respect to intellectual property verification, the application of anti-money laundering rules to NFT transactions, and the consumer protection obligations of platforms that facilitate NFT sales. This regulatory framework should be developed in consultation with the Ministry of Law and Justice to ensure consistency with the Copyright Act and the IT Act.
Conclusion
NFTs represent a genuinely novel technological mechanism for digital ownership and creator monetisation, but the intellectual property rights they carry, or more precisely fail to carry by default, are governed by existing copyright law principles that are well-established and readily applicable. The confusion that has pervaded the NFT market is not primarily a function of legal inadequacy; it is a function of consumer education failure and platform disclosure failure.
India’s legal response to NFTs should therefore focus first on clarity and disclosure rather than wholesale legislative innovation. The Copyright Act amendments and the disclosure code proposed in this article would address the most acute consumer protection problems without creating new IP categories that could distort the existing copyright framework. As the NFT market evolves, and as new use cases emerge in digital art, gaming, music, and ticketing, the regulatory framework can be refined in response to specific problems that arise, rather than anticipating every possible development with comprehensive legislation that may quickly become technologically obsolete.
