What are nfts? Are they regulated under Turkısh Law?

A Non-Fungible Token, in its simplest form, can be defined as each unique digital unit created by registering digital products on the blockchain. Although there is a general view that the product underlying the NFT has to be a kind of digital artwork, it doesn’t actually have to be. For instance, tweets can certainly be the subject of NFTs and find buyers at very high prices. However, there is still a discussion going on whether tweets can be legally deemed artworks or not.

While evaluating the place of NFTs under Turkish law, we would like to state that the platforms where NFTs are offered for auction and/or sold generally contain an element of foreignness. In this respect, there is a possibility that Turkish law may not be applied. However, intellectual property law is a field that can have similar features in many countries. In this respect, the expectation that at least some of the comments made here may be valid in terms of foreign laws, would not be unreal.

Are nfts proof of authorshıp?

No, they are not. Proving the true ownership of the work is still a controversial issue in terms of Turkish law. There are many methods used for this: timestamp, sending an e-mail to yourself or someone else, making a declaration to the Notary’s Office, or applying for registration with the Ministry of Culture are the most common ones. However, none of these methods is a tool of definitive proof; they are only a strong indicator and are considered as the commencement of proof. Despite all this evidence, the prevailing evidence may be contrary to the circumstances of the case.

The first person to create an NFT using an artwork doesn’t necessarily have to be the author of it. It is quite possible that the person who creates the artwork is different from the person who created its NFT. Platforms apply different methods to prevent this such as demanding from the NFT creators to introduce themselves with old-fashioned methods and prove the authenticity of the work.

What rıghts do nfts offer theır creators?

The rights authorities granted to the author of the work may differ on the platform used when creating an NFT for this work. When we look at a popular site such as Opensea, we see the article as “…you grant us a worldwide, non-exclusive, sublicensable, royalty-free license to use, copy, modify, and display such Content for our lawful business purposes, including to provide, promote, and improve the Services.” The terms of the other platforms are similar (2).  Essentially, some of these rights are those that need to be transferred by a written license agreement. There will certainly be discussions about whether the confirmation given by the author with a click is a real confirmation or not. Here again, a commencement of proof rule may be applied.

What rıghts do nfts offer to theır buyers?

This also depends on the platform where the NFT was offered for the first auction. For example; Opensea, Foundation, and AtomicHub offer a limited, personal-only license package, while Dapperlabs announced that it is working on a new NFT License (3). This new license variant also allows commercial use of up to $ 100,000 per year.

For now, in general practice, NFTs are allowed to be resold in relevant online marketplaces and displayed in virtual environments for personal use. It is forbidden to use it in movies, videos, or other media without the written permission of the NFT creator.

What rıghts do nfts not offer theır buyers?

Intellectual property rights on artwork are divided into two as material and moral rights. Even if material rights are fully transferred duly (it should be clearly and individually written which rights are transferred in this transfer agreement), it is not possible to transfer moral rights. In other words, the transfer of material rights does not mean the transfer of work ownership. The title of ownership will always belong to the creator of the work. The person who owns the NFT is not the owner of the work. They can only use and benefit from some of the rights permitted by the owner of the work. For example, if commercial use permission is granted, the monetary values ​​gained from commercial use belong to the sublicensee within the limits of the agreement. However, this does not mean that the sublicensee can change the work.

What should we look for when partıcıpatıng ın nft auctıons or creatıng an nft?

At this stage, the options are very limited:

  • To investigate whether the author of the underlying work is indeed the specified person.
  • Reading the auction rules and the terms of use of the platforms. Thus, at least the provisions of non-contractual breach may be applied.
Whıch law applıes to dısputes regardıng the nfts?

For the contracts between the first buyers and the platforms, the answer to this question depends on whether the contract is a consumer contract or not. If the contract is a consumer contract, then the customer’s habitual residence law applies. However, if the contract is not a consumer contract, then the law agreed upon by the parties is applied first. If it is concluded that the contract does not indicate a genuine consensus, the workplace law of the party performing the characteristic act would be applied. We are of the opinion that the characteristic performance debtor in such contracts is online platforms. If so, the platform operator’s workplace law would be applied.

For the contracts between the creators and the platforms, Article 23 of Law No. 5718 may prevail: “The rights of intellectual property are subject to the law of state according to whose law their protection is demanded.”

WARNING: The answers to the questions in this text are of the nature of ‘preliminary examination’; they are not firm judgments or advice. The answers given may vary depending on the developments on the subject or the conditions of the case at hand.

 


1- https://evrimagaci.org/nft-nonfungible-token-nedir-insanlar-kolayca-kopyalanabilen-dijital-urunlere-neden-milyonlarca-dolar-oduyorlar-10296

2- https://wax.atomichub.io/terms

https://opensea.io/tos

https://foundation.app/terms

3- https://medium.com/dapperlabs/nft-license-2-0-why-a-nft-can-do-what-mickey-mouse-never-could-27673d5f29aa


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