It was inevitable. NFTs have merged with the esports space. So what do businesses need to know about the legalities? Let’s take a look.
What Are NFTs?
If you’ve landed on this page, you probably understand the basics of NFTs. But just in case, NFTs are:
- Non-fungible tokens that represent unique physical or digital assets
- Created with blockchain technology
- Not typically stored on a blockchain, but they include metadata referencing a network and other elements for provenance purposes
Click here for an in-depth exploration of NFTs.
NFTs can be used to represent digital or physical assets, including (but not limited to):
- Collectible digital artworks
- Video clips
- Trading cards and other collectibles
- Music clips
- Real estate
- Unwieldy objects that aren’t easily moved
NFT Uses in the Esports World
The NFT market is exploding, and naturally, people are starting to examine the potential for non-fungible tokens in the esports landscape. Several ventures are currently exploring opportunities with gaming highlights and event ticketing. Additionally, fan tokens are growing in popularity, and teams are leveraging them to create engagement, establish rewards programs, and monetize access.
Click here for an explanation of how NFTs are valuable.
Esport NFT Legalities
Intellectual property is the most common legal issue associated with NFTs. Since many entities may retain rights to materials contained in a non-fungible token, royalties and resale fees may prove to be a complicated legal web. Common IP holders include:
- Game developers
- Teams
- Game publishers
- Leagues
- Players
- Tournament organizers
- Agents
Also, keep in mind that people own NFTs but not necessarily the underlying content. It can get confusing and lead to NFT intellectual property legal disputes.
Who Needs To Check Their Esports Contracts?
Moving forward, entities with a stake in the esports economy — especially athletes — should extend their trademark registrations to cover NFTs.
Even if cryptocurrencies never experience widespread acceptance, blockchain technology and NFTs will play a role in gaming. Brands are beginning to creatively leverage the technology, allowing for more access and engagement.
Most analysts believe non-fungible tokens will remain a part of the esports landscape moving forward.
What About Fair Use?
The fair use doctrine rarely applies when it comes to NFTs. Resultantly, it’s important to be clear about intellectual property rights when structuring NFT deals. And don’t forget about royalties. Since smart contracts — the underlying administrative engine that governs NFTs — can be programmed to payout sales and resale royalties, it’s essential to include crypto-related ownership verbiage in all applicable contracts.
And don’t forget about design patents!
Connect With an Esports NFT Lawyer
The Kelly Law Firm works with businesses, individuals, and startups on various cryptocurrency, NFT, and blockchain matters. If you’re ready to speak with an attorney, get in touch.
