Blurred Lines: How the Lack of Regulation of NFT Platforms Has Fueled Rampant Art Theft

Blurred Lines: How the Lack of Regulation of NFT Platforms Has Fueled Rampant Art Theft

Nikita Munjal is an IP Innovation Clinic Fellow and a third-year JD/MBA Candidate at Osgoode Hall Law School. This article was written as a requirement for Prof. Pina D’Agostino’s Directed Reading: IP Innovation Program course.

Artists in the digital space have always been vulnerable to the unauthorized distribution, copying, and sale of their work. Still, the straightforward process for creating non-fungible tokens (NFT) has accelerated the theft of digital art. Listing someone else’s artwork on an NFT marketplace is as simple as saving a copy of the work from an artist’s website or social media platform and uploading it onto a marketplace where it is minted into an NFT. The rampant theft has forced some artists to stop sharing their work online, limiting the ability of artists to profit from the commercialization of their IP.

What Can Artists Do When Someone Else Mints their Work into an NFT?

Copyright law provides recourse to authors who feel their work has been minted into an NFT without permission, but as copyright attorney Nelson Rosario cautions, “IP considerations get very complex very quickly.” The author of a copyright-protected work can bring a claim for copyright infringement, but this is contingent on knowing the infringer’s identity. Many NFT marketplaces do not require the person listing the piece to provide proof of ownership or personal information. Alternatively, authors can inform marketplaces of copyright infringement and request the removal of infringing content. Some marketplaces, like OpenSea, provide artists with a takedown request form when they suspect someone is infringing their IP. However, this mechanism places the burden on artists to monitor marketplaces for infringement and is not sustainable given the number of requests OpenSea receives to take down listings.

What Can Be Done?

Various stakeholders that can implement changes to reduce the likelihood of thieves profiting from the commercialization of others’ IP. First, marketplaces should partner with companies like DeviantArt, which have created machine-learning software to scan public blockchains and third-party marketplaces and inform users of any potential infringement. This recommendation would still require artists to verify the results and report an infringement to marketplaces. However, artists would be aware of the infringement and could use their platforms to inform consumers of the scam. Second, marketplaces need to overhaul their process for verifying listings. For example, after a dead artist’s work was stolen from Instagram and sold on the marketplace Twinci, it updated its requirements for listers to “provide their names, a photo of themselves, proof of them creating the work, and a digital portfolio.” Third, consumers should do their due diligence by reaching out to artists to verify the authenticity of the NFT before purchasing. Alternatively, consumers should purchase from auction houses like Christie’s or Sotheby’s to reduce the likelihood of buying a fake.

Incorporating these changes will require significant investment from stakeholders. However, since art is a cultural tool and an economic driver, those who create work should be protected by all invested stakeholders.