I. What is an NFT?
An NFT —Non-Fungible Token— is a unique unit of data stored in a decentralized, electronic, and public ledger, creating an immutable record of encrypted transactions distributed through a blockchain.
NFTs are a new technology that allows digital identification of the originality and legitimacy of a digital asset on the blockchain.
II. NFTs and art
Because they identify digital assets, NFTs can cover images, music, video games, blueprints, patents, real estate, and any other digital asset capable of being tokenized.
The art world has adopted NFTs as a sales mechanism to “certify the authenticity” of an acquired work. This ecosystem has enabled artists to gain greater control and capitalization; an emblematic example is Beeple’s Everydays: the First 5000 Days, which raised USD 69.3 million at a Christie’s auction.
III. Copyright and NFTs
Given their broad nature, NFTs can be minted from any artistic or literary work recognized by the Ley Federal del Derecho de Autor (LFDA, Federal Copyright Law): literary; musical; pictorial or drawing; caricature or comic; audiovisual; software; photography; and any other work capable of being a digital token.
The LFDA aims at safeguarding and promoting Mexico’s cultural heritage and at protecting the rights of authors, performers, editors, producers, and broadcasting organizations. The Mexican State recognizes the rights of every creator, granting protection so the author may enjoy exclusive personal and economic prerogatives.
The moral right of the author is inalienable, imprescriptible, unwaivable, and not subject to attachment. Under Article 21 of the LFDA, it includes: deciding whether the work will be disclosed and in what form; demanding recognition of authorship; demanding respect for the work and opposing any deformation or mutilation; modifying the work; withdrawing it from commerce; and opposing false attribution.
Economic rights allow the author to exclusively exploit the work or license its exploitation, within the limits of the LFDA. The holder of those rights —who may differ from the author— can forbid communication or transmission of the work. To make these rights enforceable against third parties, a work registration must be filed with the Instituto Mexicano del Derecho de Autor (INDAUTOR, Mexican Copyright Institute).
The following scenarios therefore apply in Mexican copyright matters:
- NFTs are merely a mechanism to identify a digital asset; they do not, in themselves, provide legal protection of the work’s content.
- There is a risk of infringing third-party rights when tokenizing a digital asset and selling it, with the corresponding legal consequences.
- The highest level of protection consists of tokenizing the digital asset and registering the underlying work with INDAUTOR.
- Recognition of the work is regional —applicable to Mexico—, so registration is limited by territoriality.
- Because of the transnational nature of NFT transactions, Mexico’s legal framework offers limited effective enforcement mechanisms.
IV. NFTs and industrial property in Mexico
Industrial property is a branch of intellectual property recognized by the Ley Federal de Protección a la Propiedad Industrial (LFPPI), which governs patents, utility models, industrial designs, integrated circuit layout designs, trademarks and commercial notices; trade names; designations of origin and geographic indications; and industrial secrets. IMPI enforces these rights.
NFTs can serve companies as an additional digital asset in using and exploiting their trademarks, patents, industrial designs, and commercial notices, since they can be tokenized for commercial exploitation.
It is critical to consolidate the IP portfolio before engaging in NFT commerce. Improper use of intangibles is sanctioned under the LFPPI and may trigger substantial fines, as well as damages. An illustrative case is that of artist Mason Rothschild, who together with Eric Ramírez created the MetaBirkins NFT collection inspired by the iconic Hermès bag, triggering litigation for alleged trademark infringement.
Analogous scenarios apply to Mexican industrial property: NFTs by themselves do not protect the content; there is risk of infringing third-party rights; the strongest protection is registering the right before IMPI; recognition is territorial; and Mexican law provides for substantial sanctions for NFT operations that infringe the LFPPI.