Non-fungible Token (NFT) Purchase and License Agreement

Summary

This NFT purchase and license agreement governs the relationship between a creator and buyer of a non-fungible token (NFT) sold through a recognized, public, third-party marketplace. This template includes practical guidance, drafting notes, and optional clauses. Standard sale agreements transfer title of an item from a creator to a buyer, which generally ends the relationship between the parties barring some express or implied warranties regarding use. NFT sale agreements usually contain additional intellectual property (IP) licenses and related terms. In typical NFT-related transactions, ownership of IP rights is not transferred along with ownership of the NFT. Rather, the creator of an NFT will generally retain ownership of the copyrights, trademarks, rights of publicity, and other IP rights in the artwork, designs, and other material that is the subject of the NFT. The buyer obtains ownership only of a unique digital token recorded on the relevant blockchain's distributed public ledger. Additionally, many NFT transactions provide continuing benefits both to the creator and the buyer beyond the initial sale of the NFT. One common example of an ongoing benefit to the creator is the right to receive downstream royalties from resales of the NFT. There are many examples of ongoing benefits to the buyer of an NFT, which may include discounts on purchases of the creator's products, access to special subscriptions or content, or opportunities for the buyer to participate in physical or virtual utilities that may be redeemed from the seller. These continuing benefits are among the many reasons that NFTs have become popular in recent years. Of note, the creator's ability to enforce downstream obligations against subsequent purchasers has not been fully tested in courts and could prove difficult to enforce in some cases. Basic Assumptions: This NFT Agreement makes certain major assumptions: 1. That the NFT will be sold through a recognized, public, third-party marketplace, and not on a proprietary marketplace. 2. This agreement will be executed online in a "scrollwrap" or "clickwrap" form at the initial point of sale (via a process called minting), usually on a public third-party marketplace, but occasionally on an NFT collection's own website (e.g., Intuition Machines, Inc.'s NBA TopShot). Before a purchaser can mint an NFT, they must expressly agree to this Agreement by specifically assenting to these terms. In order to ensure that Secondary Owners are aware of this Agreement, users of this Agreement are encouraged to include a link to these terms at the point of sale to the initial purchaser or Secondary Owner, as well as on their website directly to the public. 3. The NFT creator legitimately owns the rights in and to the underlying IP in the NFT, such as the copyright in, or trademarks displayed on, the art that is tied to the NFT. 4. No commercial uses of the NFTs are permitted. If any of the above assumptions are inaccurate for a creator's specific transaction, additional terms and conditions beyond the scope of this Agreement may apply. For related resources, see Smart Contracts, The Non-fungible Token Marketplace, and Virtual Currency, Bitcoin, and Cryptocurrency Resource Kit.