NFTs and IP in Spain: overview and ongoing litigation – Commentary

A non-fungible token (NFT) is a digital asset, a unique digital identifier that represents and guarantees ownership or proof of authenticity of a unique item or piece of content using blockchain technology. An easy way to understand NFTs is to think of them as unalterable certificates of authenticity for digital goods.

In Spain (and elsewhere), NFTs have many possible applications, especially for determining ownership and IP rights over a determined creation.

One of the main challenges surrounding NFTs is their interaction with copyrights, trademarks and patents.

Typically, physical art’s value is based on the exclusivity of the purchased work (which lies in what makes it unique) and the ownership of the work itself. However, this presents a challenge in the digital world as digital assets may be easily duplicable.

NFTs provide in those cases a certificate of ownership of the physical or digital work; in other words, it certifies its authenticity. The implementation of blockchain technology and NFTs offers a great opportunity for right holders to unequivocally identify their creations in order to fight unconsented uses. This because these technologies create an authentication system for consumers to distinguish original products from non-genuine products, associating an NFT to a particular original product.

Copyrights
Concerning copyrights, disputes are often associated with the rights transferred to users when purchasing an NFT associated to a particular work. On one hand, artists and creators want to ensure that their rights are protected when their digital works are tokenised as NFTs, while on the other hand buyers want to ensure that they are acquiring all the economic rights associated to the work associated to the NFT purchased.

When users acquire an NFT, they do not necessarily acquire all the copyrights (ie, economic rights) associated to the asset or artwork identified by the NFT. In most cases, users do not acquire the commercial or exclusive rights of the work and thus the ownership remains in the author’s property. For this reason, users should always review the smart contract associated with the NFT purchased, where details of the copyrights acquired are contained.

Although there is no specific regulation or clear case law on the protection of NFTs in Spain yet, the outcome of ongoing litigation proceedings will undoubtedly set a legal precedent addressing unresolved questions and highlight how IP laws will need to adapt to the changing landscape of NFTs.

It is worth highlighting the ongoing case before Commercial Court No. 9 of Barcelona between VISUAL ENTIDAD DE GESTIÓN DE ARTISTAS PLÁSTICOS (VEGAP), which is a Spanish collective copyright management entity representing visual authors like painters, sculptors, photographers or illustrators, and PUNTO FA, SL.

Facts
PUNTO FA, SL, as the owner of some physical artworks of Joan Miró, Antoni Tàpies and Miquel Barcelós, digitalised these artworks into an NFT collection. It promoted and published these new artworks on different platforms (as Metaverse, Decentraland or the Marketplace Opensea) and social networks. It also exhibited them in its physical store in New York.

VEGAP (on behalf of the authors) filed a complaint stating that the defendant was using the works in an unauthorised manner, infringing the economic (reproduction, transformation and public communication) and moral (integrity and disclosure) rights of the authors. In the claim, VEGAP also applied for the adoption of interim injunctions for the defendant to cease in the use of the aforesaid mentioned works.