NFT Royalty Disputes: Who Owns the Revenue Stream?

The Problem Started with a Marketplace Decision, Not a Court

In late 2022 and into 2023, several major NFT marketplaces — including Blur and, eventually, OpenSea — moved to make creator royalties optional at the point of sale rather than enforced at the protocol level. That single operational choice exposed a foundational tension in the NFT market: a royalty written into a smart contract is not the same thing as a legally enforceable royalty obligation. The code can be routed around. The question courts are now being asked to answer is what, if anything, fills that gap.

As of 2026-09-07, no U.S. appellate court has issued a published opinion squarely resolving whether an NFT smart contract royalty clause creates a binding obligation on downstream secondary-market buyers or marketplaces that process those sales. That absence of authority is itself the compliance and litigation risk.

What a Royalty Clause in an NFT Contract Actually Is

Most NFT projects encode a royalty percentage — commonly between 5% and 10% — into their smart contract using a standard like the ERC-2981 royalty standard published by the Ethereum community. ERC-2981 is a technical specification, not a legal instrument. It tells a compliant marketplace how much royalty to pay and to whom. It does not compel any marketplace to query that data or honor it.

When a creator deploys an NFT collection, the terms governing the royalty may appear in:

• The smart contract itself, as code that returns royalty information on request
• A terms-of-service or license agreement linked from the project website or embedded in mint-site disclosures
• A separate intellectual property license attached to the underlying artwork or media

These three instruments frequently say different things, and the relationship among them is rarely spelled out. That ambiguity is where disputes live.

The Royalty Is Not Self-Enforcing Against Buyers

A creator's claim against a marketplace that bypasses royalties would need to establish that the marketplace had a contractual or statutory duty to collect and remit. No U.S. statute as of 2026-09-07 imposes that duty on secondary NFT marketplaces. The Visual Artists Rights Act of 1990 (17 U.S.C. § 106A) grants certain moral rights to visual artists, but it does not create a resale royalty. The California Resale Royalty Act, which did provide a 5% resale royalty for fine art sold in California, was struck down by the Ninth Circuit in Estate of Graham v. Sotheby's, Inc. (9th Cir. 2015) as unconstitutional under the Commerce Clause. That ruling removed the only U.S. state-level analog to the EU's droit de suite.

The EU's Resale Right Directive (Directive 2001/84/EC) requires member states to grant visual artists a royalty on resales of original works of art through art market professionals — but its application to NFTs remains unsettled across member state implementations as of 2026-09-07, and the Directive was written for physical art market intermediaries, not on-chain transactions.

Where the Legal Claims Are Actually Being Framed

Creators and their counsel exploring royalty recovery have looked at several theories, none of them clean.

Breach of contract is the most straightforward argument where a marketplace's terms of service, at the time of listing, explicitly promised to collect and remit royalties. If a platform later changed its policy and continued to process sales of previously listed NFTs without paying royalties, a breach claim has textual support — but only if the original terms created a clear obligation and the creator or seller had standing to enforce it.

Unjust enrichment is a fallback when a contract claim is unavailable. The argument is that a marketplace collected fees on transactions that generated value partly attributable to the creator's work, and retaining that value without remitting the royalty is inequitable. Courts applying unjust enrichment tend to ask whether an express contract governs — and if one does, unjust enrichment typically fails.

Copyright infringement is occasionally raised where an NFT's terms of sale purport to restrict secondary transfer without royalty payment, framing an unauthorized transfer as outside the license scope. This theory faces the first-sale doctrine (17 U.S.C. § 109), which generally limits a copyright holder's control over resale of a lawfully acquired copy — though the doctrine's application to NFTs, which involve cryptographic tokens rather than physical copies, has not been definitively resolved by a U.S. court as of 2026-09-07.

What Creators and Buyers Should Be Doing Differently

If you advise NFT creators or platforms, the gap between the technical royalty mechanism and a legally enforceable right needs to be closed in the documents — not assumed away.

For creators:

• Draft a standalone license agreement that conditions secondary transfer rights on royalty payment, rather than relying on smart-contract metadata alone.
• Be explicit about which version of the terms governs — the mint-time terms or any later update — and preserve those documents.
• Understand that on-chain royalty enforcement tools (operator filter registries, allowlists) are technical controls, not legal ones. They can be bypassed, deprecated, or ignored by new marketplaces.

For marketplaces and platforms:

• Review your terms of service for any language that could be read as a royalty collection commitment, particularly in older versions.
• If you changed your royalty policy, document whether and how you notified creators and sellers of active listings.
• Assess your exposure under the laws of each jurisdiction where you operate — the EU framework is meaningfully different from the U.S. position.

For buyers:

• Understand that purchasing an NFT on a marketplace that bypassed the creator's royalty does not necessarily give you a clean license to the underlying intellectual property. The license terms attached to the collection — not the marketplace's fee policy — determine your IP rights.

For a broader grounding in how token structures and smart contracts interact with legal obligations, Introduction to Utility Tokens and Initial Coin Offerings and Risky Business: Cryptocurrency, Money Laundering, and Smart Contracts both address the foundational mechanics that underlie these disputes.

The Drafting Lesson That Applies Now

The NFT royalty enforcement collapse is a case study in assuming that technical architecture substitutes for legal drafting. It does not. Every royalty expectation that a creator, an investor, or a platform builds into a business model needs a corresponding legal instrument — a contract clause with consideration, a license condition with defined consequences for breach, or a regulatory hook if one exists.

Until a legislature creates a resale royalty right for digital assets, or a court interprets an existing IP or contract theory to cover marketplace-level bypass, creators enforcing royalties are enforcing contract claims — and only as strong as the contracts they actually signed.