Do NFT buyers have 100% ownership?

According to the observation of Sister Sa’s team, in the current mainstream digital art/collection/works NFT distribution platforms in China, buyers have three main types of rights and interests in NFT:

One is that you can see the blockchain verification information on the platform , including the underlying work information (such as work name, work introduction, author), holder (ie NFT buyer), circulation information (such as issuance time, transaction time, and corresponding Transaction hash value);

The second is a symbolic display . For example, users can get a page on the platform with the name of the digital artwork, thumbnail, hash value, creator, and authentication time. The screenshot can be shared on social media;

Third, after purchasing NFTs, they must be held for a certain period of time before they can be presented to registered real-name users of the platform.

There is no doubt that the purchaser of the NFT owns the token itself, which is a record of the rights of the digital version of the corresponding underlying work (the specific rights depend on the agreement between the issuer and the user), so when the NFT is transferred to other Human time, the underlying digital version of the work has also been transferred. However, it is obvious that the user’s rights to the NFT itself (the corresponding underlying digital artwork will not be discussed this time) are relatively limited . For example, users cannot mention the purchased NFT to their virtual currency wallet (most platforms do not require users Registered wallet), it is not possible to transfer paid through the platform that purchases such NFTs at any time. In this case, does the NFT purchaser have the ownership of the NFT token itself?

Do NFT buyers have 100% ownership?

What are the legal attributes of an NFT with restricted rights?

NFT, as a cryptographic expression on the blockchain, verifies that its corresponding files have not been tampered with, and records its circulation process on the blockchain. We think it is a kind of network virtual property. In a broad sense, online virtual property refers to all virtual properties that exist in online virtual space, including virtual currency, equipment in online games, e-mail addresses, online accounts, registered domain names, etc. At present, the civil law circles mainly have three views on the nature of virtual property on the Internet: the theory of the object of property rights, the theory of the object of creditor’s rights, and the theory of the object of intellectual property rights.

1. The object theory of property rights. This view believes that the legal attributes of network virtual property are things, and real rights can be established. We believe that network virtual property, generally speaking, especially the virtual property formed by the use of blockchain technology, has the attribute of property rights, which can be controlled by individuals and can be included in the category of intangibles.

2. The object of creditor’s rights. This view believes that the exercise of network virtual property rights needs to rely on some support from technology providers, which is not equivalent to dominant property rights. We hold negative opinions on this. Generally speaking, the main feature of blockchain technology is that individuals have achieved complete ownership of encrypted assets, and the circulation of assets on the chain does not require any third-party support.

3. The object theory of intellectual property rights. This view believes that network virtual property should belong to the intellectual achievements of technology creators and belong to the category of intellectual property rights. However, while Article 123 of the Civil Code stipulates intellectual property rights, Article 127 also stipulates the content of virtual property on the Internet. From the perspective of system interpretation, it is more appropriate to move out of the scope of intellectual property rights as network virtual properties that exist objectively rather than works.

In summary, we believe that in the context of foreign mainstream NFT trading platforms where NFT can refer to wallets and conduct secondary transactions, since NFT holders have full rights to dispose of and proceeds from the NFT itself, it can be used as property rights. Object, NFT purchaser has ownership of the NFT held by it.

In the context of the aforementioned domestic mainstream NFT issuance platform, we believe that the holder does not have ownership of the NFT itself, but enjoys certain rights and interests , which is both to prove the ownership of the copy of the digital artwork corresponding to the NFT, and it is also the ownership of the NFT. A proof that a person exercises the right to appreciate, watch, listen, download, etc., to the counterparty of the contract at any time.

First, NFTs with severely restricted sanctioning authority are not belonging to objects and cannot be the object of ownership. First of all, from the perspective of system interpretation, network virtual property does not belong to “things.” The “Civil Code” stipulates that civil entities enjoy property rights in accordance with the law. Real right is the right holder’s direct control and exclusive right to a specific property in accordance with the law, including ownership, usufructuary rights and security real rights. The owner shall have the right to possess, use, benefit from, and dispose of his movable and immovable property in accordance with the law. The property includes real property and movable property. Where the law provides that rights are the object of property rights, follow its provisions. Article 127 stipulates that if the law has provisions on the protection of data and network virtual property, follow those provisions. Secondly, the “Civil Code” stipulates that the type and content of property rights shall be prescribed by law. However, the current law does not stipulate network virtual property as a thing. Finally, the content of ownership includes possession, use, disposal, and income, and disposal and income are core rights. Some domestic NFT platforms only open NFT purchase functions, and cannot transfer and generate revenue. Users do not have private keys and cannot mention their own encrypted asset wallets. We believe that the holders do not have ownership.

Second, NFT is a virtual property on the Internet, and the holder’s rights to the NFT comply with the provisions of the current law. Although the aforementioned users do not enjoy the ownership of the NFT, they can still enjoy rights based on the expressions of the intentions of both parties. This is similar to the protection of personal information by Chinese laws. Article 111 of the Civil Code and Article 2 of the Personal Information Protection Law stipulate that “personal information of natural persons is protected by law.” However, neither of the two clarified the types of rights that natural persons enjoy over their personal information. The latter clarified that no organization or individual may infringe on the “personal information rights” of natural persons, and did not use the expression “ownership”.

Write at the end

As the buyer’s rights to the NFT itself are not the ownership, Sister Sa’s team reminds NFT issuers and operating platforms to accurately define the types and scope of rights enjoyed by NFT buyers in the user agreement and product description, and pay attention to preventing fraud and false advertising risks.

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