NFT Intellectual Property Rights in Hong Kong: Ownership, Licensing, and Enforcement

Introduction

Non-fungible tokens (NFTs) have generated significant legal and commercial interest since their mainstream emergence in 2021, and that interest has only grown more sophisticated as the technology has matured and the market has evolved. While much of the early discourse focused on the extraordinary sale prices achieved by certain NFT artworks and collectibles, legal practitioners and regulators have increasingly turned their attention to the foundational question that underpins every NFT transaction: what, precisely, does the purchaser of an NFT actually own?

The answer, as it turns out, is considerably more complex than many buyers have assumed. In the vast majority of cases, purchasing an NFT does not confer ownership of the intellectual property rights in the underlying work — the copyright, the right to reproduce, the right to create derivative works. Instead, an NFT represents something quite different: a unique, verifiable token on a blockchain that is linked to a particular digital asset or piece of content. The intellectual property rights in that content are a separate matter entirely, governed by the ordinary rules of copyright and intellectual property law.

In Hong Kong, which operates under a sophisticated common law intellectual property framework, understanding the relationship between NFTs and intellectual property rights is essential for creators, collectors, platforms, and investors. This article examines how Hong Kong intellectual property law applies to NFTs, with particular focus on copyright ownership and transfer, licensing arrangements, enforcement challenges, and the developing regulatory landscape.

The Fundamental Distinction: NFT Ownership vs. IP Rights

To understand the intellectual property dimensions of NFTs, it is essential first to understand what an NFT actually is and what it represents. An NFT is a cryptographic token on a blockchain that records a unique identifier associated with a particular digital asset or content item. The NFT establishes provenance and scarcity — it provides a verifiable record of ownership and a mechanism for tracking transfers on the blockchain.

However, the NFT itself is not the artwork, the music, the video, or the other creative work with which it is associated. In technical terms, the underlying content is typically stored off-chain, either on a centralised server or on a decentralised storage network such as the InterPlanetary File System (IPFS). The NFT contains a reference — usually a URL or a content identifier — that points to the location of the content. This has important implications for intellectual property law.

Under the Copyright Ordinance (Cap. 528) of Hong Kong, copyright subsists automatically in original literary, dramatic, musical, and artistic works, sound recordings, films, broadcasts, and typographical arrangements. Copyright vests initially in the creator of the work, subject to specific exceptions (most notably for works created in the course of employment). Copyright is a bundle of exclusive rights: the right to copy the work, issue copies to the public, perform or broadcast the work, and make adaptations.

The minting of an NFT does not, by itself, affect the copyright in the underlying work. If an artist creates a digital artwork and mints an NFT associated with that artwork, the copyright in the artwork remains with the artist unless it is expressly assigned in writing. The purchaser of the NFT acquires ownership of the token — the unique digital certificate on the blockchain — but does not automatically acquire any copyright in the work the token represents.

Copyright Ownership and NFT Transactions

The Default Position

Under Hong Kong copyright law, assignment of copyright must be in writing and signed by or on behalf of the assignor to be effective. An assignment may be partial — for example, an assignment of the right to reproduce the work but not the right to make adaptations — and may be subject to temporal or territorial limitations. In the absence of an effective written assignment, copyright remains with the original owner.

The terms and conditions of NFT platforms and individual NFT projects vary enormously in what intellectual property rights, if any, are transferred to the NFT purchaser. Many projects explicitly state that purchasing the NFT does not transfer copyright. Others grant limited licences to display, use, or profit from the NFT. A small number of projects have sought to transfer full copyright ownership to NFT holders.

Buyers who assume that purchasing an NFT automatically gives them the right to reproduce the artwork, create merchandise, or licence the image to third parties are often mistaken. Unless the terms of the NFT transaction explicitly and effectively convey such rights, the purchaser's intellectual property rights may be extremely limited.

The Bored Ape Yacht Club Model

One of the most widely discussed NFT intellectual property frameworks is that adopted by Bored Ape Yacht Club (BAYC), which granted NFT holders a broad commercial licence to use their individual ape image for commercial purposes, including to create and sell merchandise. This model generated significant interest because it represented a meaningful grant of intellectual property rights to NFT holders, distinguishing BAYC from projects that retained all IP for the creators. However, even the BAYC licence was not a full copyright transfer — it was a licence, which means it was subject to conditions and could theoretically be revoked or modified. Under Hong Kong law, the distinction between a licence and an assignment is critical: only a written assignment transfers ownership of copyright.

Commissioned Works and Works Made for Hire

Where an NFT creator commissions an artist to create a work for an NFT project, the question of who owns the copyright in the work depends on the terms of the commission agreement. Under Hong Kong copyright law, there is no general work-for-hire doctrine comparable to that in the United States. In the absence of an assignment, copyright in a commissioned work vests in the creator (the artist), not the person who commissioned the work. NFT project founders who commission artwork for their projects should ensure that appropriate assignment clauses are included in their agreements with artists to secure the necessary intellectual property rights.

Licensing Frameworks for NFTs

Given that full copyright transfer is uncommon in the NFT space, licensing is the primary mechanism by which NFT creators and platforms define the rights of NFT holders to use the associated content. Licensing frameworks for NFTs range from highly restrictive to broadly permissive.

Personal Use Licences

Many NFT projects grant holders only a personal use licence: the right to display the NFT artwork for personal, non-commercial purposes. Under such a licence, the holder cannot use the artwork commercially — for example, to create and sell merchandise, to licence the image to a brand, or to use it in advertising. Personal use licences are common for NFTs associated with fine art, music, and film.

Commercial Use Licences

Some projects, particularly in the profile picture (PFP) and collectible space, grant commercial use licences that allow holders to profit from their NFTs. The scope of these licences varies: some are broadly permissive, allowing virtually any commercial use; others impose specific conditions, such as limitations on revenue, restrictions on use in certain industries, or requirements to credit the original creator.

Transferability of Licences

A critical question in the secondary NFT market is whether the licence granted to the original purchaser transfers automatically to subsequent buyers. Many NFT licence terms are silent on this point, creating legal uncertainty. Under general principles of contract law in Hong Kong, a licence is a personal right and does not automatically transfer with the underlying asset unless the licence terms expressly provide for transferability. NFT projects that intend for their licences to "run with the NFT" — meaning that each successive holder enjoys the same licence rights as the original purchaser — should make this explicit in their terms.

Smart Contract Royalties and IP

Many NFT smart contracts incorporate royalty mechanisms that automatically direct a percentage of secondary sale proceeds to the original creator. While these royalty provisions are primarily commercial rather than intellectual property in nature, they interact with IP frameworks in important ways — for example, they may incentivise creators to retain copyright rather than assigning it, since ongoing royalty income depends on continued engagement with the NFT ecosystem.

Enforcement Challenges

Unauthorised Minting of Third-Party Content

One of the most significant intellectual property problems in the NFT space is the unauthorised minting of NFTs using content that belongs to third parties. Artists have widely reported finding their works minted as NFTs without their consent by individuals seeking to profit from the sale. From an intellectual property law perspective, the unauthorised minting and sale of an NFT using a copyrighted work constitutes copyright infringement — specifically, the reproduction and/or issuing of copies of the work to the public without the consent of the copyright owner.

Enforcement against infringers is complicated by several factors: the pseudonymous or anonymous nature of many blockchain participants, the international character of NFT transactions, and the speed with which infringing content can proliferate across multiple platforms.

Marketplace Liability

NFT marketplaces face potential liability for copyright infringement where they facilitate the sale of NFTs associated with infringing content. The extent of marketplace liability depends on whether the platform can establish safe harbour protections analogous to those available to online service providers under the United States Digital Millennium Copyright Act or the European Union's Digital Services Act. Hong Kong does not have an equivalent statutory safe harbour framework for online service providers, although the Copyright Ordinance does provide a defence for innocent infringement and for intermediaries in certain circumstances.

In practice, most major NFT marketplaces have implemented notice-and-takedown procedures, and many have developed their own IP protection programmes, but the legal framework governing their liability remains unsettled.

Cross-Border Enforcement

Intellectual property enforcement in the NFT space is inherently cross-border. The creator may be in one jurisdiction, the infringer in another, the platform in a third, and the blockchain infrastructure distributed globally. Hong Kong copyright owners seeking to enforce their rights against infringers in other jurisdictions must navigate the laws and court systems of those jurisdictions, which may offer very different levels of protection and very different procedural options.

For infringers and platforms with a presence in Hong Kong or with Hong Kong assets, the Hong Kong courts offer a range of remedies including injunctions, damages (including additional damages for flagrant infringement), accounts of profits, and orders for delivery up and destruction of infringing copies.

Moral Rights and NFTs

In addition to economic rights, copyright law in many jurisdictions — including Hong Kong — recognises moral rights: the right of an author to be identified as the creator of their work (the right of attribution) and the right to object to derogatory treatment of their work (the right of integrity). Under the Copyright Ordinance, moral rights cannot be assigned, although they may be waived.

In the NFT context, moral rights are relevant in at least two scenarios. First, where an NFT is sold without crediting the original artist, the artist may have a claim for infringement of the right of attribution. Second, where an NFT project modifies the original artwork in a way that is derogatory — for example, by associating it with offensive content or altering it in a way that prejudices the artist's honour or reputation — the artist may have a claim for infringement of the right of integrity, even if economic copyright has been assigned or licensed.

Looking Ahead: Regulatory Developments

The Hong Kong government has signalled its ambition to develop Hong Kong as a leading virtual asset hub, and regulatory frameworks for virtual assets — including those applicable to NFTs — continue to evolve. To the extent that NFTs constitute securities or regulated investment products under Hong Kong securities law, additional regulatory requirements may apply to their issuance and trading. The Securities and Futures Commission has published guidance indicating that the characterisation of an NFT as a security depends on its specific features, including the rights it confers and the manner in which it is marketed.

From an intellectual property perspective, the key regulatory development to watch is the potential clarification of how existing IP frameworks apply to AI-generated content in the NFT space — a question that has become increasingly pressing as AI-generated digital art and music are minted and sold as NFTs. The Copyright Ordinance requires that works be original and created by a human author to attract copyright protection, and the copyright status of AI-generated content under Hong Kong law is currently unsettled.

Conclusion

The intersection of NFTs and intellectual property law in Hong Kong is complex, rapidly developing, and fraught with pitfalls for the unwary. Buyers, sellers, creators, and platforms all need to understand that NFT ownership does not automatically confer intellectual property rights, that licensing arrangements vary enormously across projects, and that enforcement of IP rights in the decentralised NFT ecosystem presents significant practical challenges.

For creators, the key message is to structure NFT issuances with clear, legally effective intellectual property terms — whether that means assigning copyright, granting a carefully defined licence, or retaining all IP rights for the creator. For buyers, due diligence on the intellectual property terms of any NFT acquisition is essential, particularly where the buyer intends to exploit the NFT commercially. For platforms, proactive IP compliance programmes and clear terms of service are critical to managing liability risk.

As the NFT market continues to mature and the regulatory environment evolves, robust legal advice from practitioners with expertise in both intellectual property law and virtual assets will be increasingly valuable for all participants in the Hong Kong NFT ecosystem.