Introduction

The process of tokenization of the Intellectual Property (IP) into the Non-Fungible Tokens (NFTs) provides an intriguing legal and economic paradox. In India, where the creative economy and rapidly digitizing consumer base are both thriving, the NFT market is not just a tokenistic gamification but a gateway to monetizing everything (including) digital art, music, and even legacy of a brand. Yet, this promising development exists in a legal black hole, as the absence of dedicated laws makes it necessary to apply century-old principles of IP and legislation that still has the form of an infant, the competition law. This blog critically examines legal and competition risks in the Indian NFT market, which proposes that the prevailing structure of the market namely, the absence of transparency and the high degree of control concentrated in hands of fewer intermediaries cause unstable environment which is convenient to copyright infringement and anti-competitive activities.

The Regulatory Lacuna

At present, India does not have a specific legal mechanism of NFTs. The jurisprudence of these digital assets is a mosaic of extant statutes, none of which is more than ill-fitting to encompass the aspect of a decentralized and pseudonymous technology. Whereas, the Finance Act, 2022 acknowledged such a virtual digital asset to collect tax but this was more of a fiscal decision rather than regulatory. This means that courts are compelled to use the available legislations like the Copyright Act 1957, the Trade Marks Act 1999 and the IT Act 2000 each more or less successfully and with less predictability.

This analogous application approach as a sort of stop gap measure is filled with danger. The essential misunderstanding of ownership is the major concern. Legal opinion, backed by academic commentary, is that an NFT is only evidence of ownership of a digital token, and not copyright to the work itself. Copyright which entitles the right of reproduction, adaptation and distribution is thus subject to the person who created the original copyright unless expressly assigned to the other party in writing [1]. This distinction is often lost on buyers, who are left with a worthless asset if the seller did not own the underlying IP.

This judicial ambivalence can also be seen in a recent case in the Delhi High Court, in which an interim injunction application in an infringement suit involving NFTs was refused [2]. The fact that the court has been treading carefully to provision immediate relief highlights just how challenging it will be to resolve the contrast between the classically conceived construction of IP and the existing decentralized construct of code-based NFT. This grey-area of the law puts a tempting environment in the hands of scammers and a land mine in the hands of legal artists and collectors.

A New Battleground for Copyright and Trademarks

The risks of IP infringement in the NFT space are both significant and systemic, with the digital nature of the assets making unauthorized replication easier than ever.

1. The Precedent of Digital Piracy

Although there is no precedent in the Indian Supreme Court specifically on an NFT driven IP dispute, there is a strong precedent as to how courts might deal with digital infringement as the Court held in the Star India v. Magicwin.Games case. Here, the Delhi High Court issued a “Dynamic+” injunction to counteract live cricket matches online piracy in real time [3]. The eagerness of the court to make a prospective order and compel internet service providers to close down infringing websites upon their emergence serves as strong evidence that the court is willing to adjust remedies to needs of the digital era. This would be an effective instrument to artists who have their talents being copied and sold on numerous websites.

2. Trademark Dilution and Deceptive Practices

The US case of Hermss v. Mason Rothschild is a good global precedent to the Indian situation. Rothschild has invented and auctioned so-called MetaBirkin NFTs, the digitalized version of Hermes classic luxury purses. The decision made by the court in favor of Hermes has cleared up that NFTs cannot elude the trademark law, and the reputation of the brand as well as the consumer identification of their products is not subject to uninterpreted use in the online space [4,5]. Similar analysis would probably be adopted in Indian courts as governed by the Trade Marks Act, 1999. In India, a brand-owner may claim infringement or passing off on the basis that an unauthorized NFT collection may lead to consumer confusion or dilution of the brand in its distinctiveness. This is an especially serious threat since minting is easy and platforms pseudonymous.

3. The Overlooked Role of Moral Rights

One important peculiarity of the Indian legal environment is the conservation of the moral right as it is covered by Section 57 of the Copyright Act. Such rights as the right of attribution and the right to object to any mutilation or modification of the work cannot be transferred [6]. These moral rights can be kept by a creator even when he/she sells the copyright to the work. This implies that someone buying an NFT and subsequently copyrighting the artwork to exploit it commercially may have to beat a legal challenge which I do not see in many other jurisdictions. This is a strong weapon of the Indian artists and a dangerous threat to the uneducated collectors and platforms.

Unpacking the Platform-Centric Monolith

The most dramatic and not commonly mentioned threat in the Indian NFT market is the possibility of anti-competitive behaviour of powerful marketplaces. Although the centrality potential of blockchain implies a fair distribution of space, it is a fact that most transactions and liquidity are concentrated on only several centralized platforms. The concentration of this power makes NFT ecosystem directly fall under the watchdog of the Competition Commission of India (CCI).

Another important legal aspect is that unlike, Section 3 of the Competition Act that offers a selective IP exemption to anti-competitive agreements, Section 4 that does not permit the abuses of a dominant position does not provide such exemptions [7]. It is a strong legal difference. It implies that although an IP holder enjoys a legal monopoly with regard to their creation, CCI may step in to curtail the exercise of such monopoly to the negative-competitive effect of the market at large.

The CCI has demonstrated its readiness to investigate the practices of digital giants already. In such an historic case as Umar Javed v. Google LLC and the probe of Meta in regard to its WhatsApp privacy policy, the CCI has proven that it can establish the relevant digital market and level hefty fines of abuse of dominance, such as:

• Imposing Unfair Terms

In the same way that Google was found to have imposed unfair conditions on app developers in its Play Store, a dominant NFT marketplace may be found to have abused its position by requiring unilateral terms, e.g., high commissions or royalty fees, that creators have no choice but to accept because the platform has an excessive market share.

• Leveraging and Exclusionary Conduct

By failing to allow competition, platforms might be perceived as denying market access through its domination of the markets next to it (e.g., smart contract services, crypto wallets) within the primary NFT market. To take an example, in case a marketplace would delist NFTs on a rival platform or otherwise kill the possibility of interoperability at the expense of its monopolizing power on its user base then this would be an excellent candidate to the CCI inquiry under Section 4(2)(c) [8].

• The ‘Essential Facility’ Doctrine

 The CCI has taken into account the doctrine of essential facilities, barring a dominant player denying access to a vital facility upon which competitors have to cope [9]. It can be strongly argued that a large NFT marketplace due to its abundance of network effects and liquidity could be viewed as an essential facility needed by artists to achieve global reach. Such a platform refusing to deal or having a discriminatory policy would thus be a major competition law concern.

The meeting point of IP and competition law is where the future of the NFT market will decide. With an emphasis on the approach labelled as the analysis of the impact, the CCI is likely to ignore decentralised discourse of the NFT processes and question the actual market conduct of the platforms.

Conclusion

In order to evolve past a system of speculation, the Indian NFT market has to grapple with these root legal and competition issues. It is the responsibility of all the stakeholders to be more legally aware. This entails insisting on legally sound smart contracts to creators and collectors that accompany written statements more clearly articulating the transfer of IP rights. On the platforms, this involves taking strong due diligence practices in fighting infringement and taking care to have their terms of service not subject to criticism by the CCI.

In conclusion, although the potential of NFTs as an IP asset class remains exciting, the ultimate potential of NFTs in India will always be waiting to be unlocked until the regulatory framework is up to date. The obvious legislative frame of what an NFT is, the scope of rights to use and the liabilities involved with platforms is not an issue of legal neater. It is a precondition to the development of the secure, competitive, and innovative digital creative economy. The Indian courts and the CCI have already demonstrated capabilities of making the leap towards the digital age, though with no concrete directions, the potential of this market has remained untapped due to the lack of legal certainty and the potential of platforms dominating authorities by antitrust laws.

Author: Manannya Bhandari, in case of any queries please contact/write back to us via email to [email protected] or at IIPRD. 

Sources:

1. NLUJ Law Review: Non-Fungible Tokens: Examining its Legal Validity in India (https://nlujlawreview.in/contemporary-issues/non-fungible-tokens-examining-its-legal-validity-in-india/)
2. Rest The Case: Is NFT Legal in India? Legal Status, Taxation & Regulations Explained (https://restthecase.com/knowledge-bank/is-nft-legal-in-india)
3. Intepat IP: Intellectual Property Judgments 2024: Key Legal Developments (https://www.intepat.com/blog/intellectual-property-judgments-2024-key-legal-developments)
4. Law.asia: NFTs regulation in India (https://law.asia/nft-regulation-in-india/)
5. Chanakya National Law University: The Intersection Of NFTs And IP Rights And Protection (https://cnlu.ac.in/storage/2025/07/The-Intersection-Of-NFTs-And-IP-Rights-And-Protection-by-Rushabh-Gurav.pdf)
6. Kanakkupillai: NFTs and Intellectual Property in India – Legal Implications & Rights (https://www.kanakkupillai.com/learn/nfts-and-intellectual-property-in-india/)
7. King Stubb & Kasiva: Balancing Intellectual Property and Competition Law: An Analysis of Abuse of Dominant Position (https://ksandk.com/newsletter/ip-competition-law-balancing-dominant-position-abuse/)
8. Fox Mandal: CCI Imposes Penalty on Meta for Abuse of Dominant Position (https://foxmandal.in/News/cci-imposes-penalty-on-meta-for-abuse-of-dominant-position/)
9. Competition Commission of India: Provisions Relating to Abuse of Dominance (https://www.cci.gov.in/public/images/publications_booklet/en/provisions-relating-to-abuse-of-dominance1652177254.pdf)