NFTs and IP Rights: What Are You Actually Buying When You Buy an NFT?

Someone paid millions for an NFT of a pixel image, yet cannot stop others from using that same image. Why? Because NFTs do not transfer copyright by default. The gap between "expectation" and "legal reality" is the source of most NFT disputes.

What Are You Actually Buying With an NFT?

An NFT (Non-Fungible Token) is a blockchain record proving you own a "token" linked to a specific digital work. You own the record, not the work itself.

Compare: buying the original Mona Lisa, you own the painting and the right to stop copies. Buying an NFT of a digital image, you own only the record — the image itself remains freely downloadable.

What Happens to Copyright?

Default: copyright remains with the original creator. Buying an NFT does not transfer reproduction, modification, or licensing rights.

Exception: if the sale contract explicitly transfers copyright. This is rare on most NFT platforms (OpenSea, Rarible).

NFT Projects Handle IP Differently

Bored Ape Yacht Club: grants the NFT holder a broad commercial license to use their ape image in ads and products.

CryptoPunks: the license is limited; NFT holders cannot use their pixels commercially.

Doodles: personal display license only.

Rule: read project terms before buying. Not every NFT grants the same rights.

The Saudi Position

No Saudi NFT-specific legislation yet. General copyright rules apply.

NFT trading in Saudi Arabia is limited (not legal tender, no secondary-market regulatory framework).

Using third-party images (without permission) to mint NFTs = copyright infringement, triggering court action.

Risks for Saudi Companies

A brand launching an NFT collection without defining IP ownership in the output = disputes with buyers later.

Using third-party trademarks in NFTs (like minting an NFT with the Nike logo) = trademark infringement, triggering cease and action.

Theft of Saudi artists' work by selling it as NFTs without permission = a growing phenomenon.

Recommendations for Companies Considering NFTs

Clearly define in project documents: which rights are transferred to the buyer?

Register copyright on original artistic works before issuing NFTs.

Register a trademark on the project name and logo.

Consult a specialist lawyer before launch — legislation is constantly evolving.

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