Licensing of characters to create new NFT digital product

NFTs are being used by innovative brands in China to boost their brand value and engagement with consumers. Our client wanted to license its characters to a third party to create an NFT to be sold in exchange for royalty payments. They approached us to draft the NFT Cooperation Agreement and understand how to mitigate the new regulatory and IP risks created by this new digital asset. ​

From a regulatory perspective, we advised on the contractual arrangements to receive royalties and to restrict the sale and usage of NFTs inline with regulation. When managing IP, we advised on mechanisms to control IP ownership and avoid mis-use and abuse by third parties, including end consumers. In order to protect our client’s brand reputation, we supported due diligence IP clearance for the new NFT artwork. We also advised on content censorship and ensured cultural sensitivities were not breached. As a result, our client was able to enter into the agreement with the licensee, knowing that their royalties revenue was secured whilst their reputation and IP was protected.