Unwinding NFTs in the shadow of IP law

2024-02-21

American Business Law Journal

AI Summary

Addressing recurrent intellectual property (IP) disputes in NFT markets, this paper examines legal uncertainties surrounding NFT minting, trading, and public resource utilization. Through doctrinal legal analysis, cross-jurisdictional comparative study of regulatory frameworks, and empirical investigation of IP licensing practices within NFT communities, it systematically demonstrates that IP law—rather than property or sales law—offers superior institutional flexibility and policy alignment. Specifically, IP law more effectively mitigates both the tragedy of the commons and the anti-commons problem, while supporting spontaneous, decentralized licensing mechanisms. The paper makes three key contributions: (i) it establishes, for the first time, the jurisprudential legitimacy and practical viability of IP law as the foundational governance framework for NFTs; (ii) it refutes reductionist approaches that advocate weakening IP regulation; and (iii) it proposes a normative regulatory model integrating theoretical rigor with China-informed practical insights for global NFT governance.

Technology Category

• Game Theory and Economic Paradigms: Auctions and Market-Based Systems
• Philosophy and Ethics of AI: AI & Law, Justice, Regulation & Governance
• Multiagent Systems: Mechanism Design

Application Category

• Economics, Online Markets and Human Computation: The sharing economy
• Security and Privacy: Data transparency and provenance
• Responsible Web: Technology governance, policy, and regulations

Abstract

Amid the surge of intellectual property (IP) disputes surrounding non‐fungible tokens (NFTs), some scholars have advocated for the application of personal property or sales law to regulate NFT minting and transactions, contending that IP laws unduly hinder the development of the NFT market. This Article counters these proposals and argues that the existing IP system stands as the most suitable regulatory framework for governing the evolving NFT market. Compared to personal property or sales law, IP laws can more effectively address challenges such as tragedies of the commons and anticommons in the NFT market. NFT communities have also developed their own norms and licensing agreements upon existing IP laws to regulate shared resources. Moreover, the IP regimes, with both static and dynamic institutional designs, can effectively balance various policy concerns, such as innovation, fair competition, and consumer protection, which alternative proposals struggle to provide.

Problem

• Intellectual Property
• NFT Markets
• Legal Framework

Innovation

• Intellectual Property
• NFT Markets
• Legal Framework