CZECH REPUBLIC Law and Practice Contributed by: Daniela Kozáková, ŠIROKÝ ZRZAVECKÝ, attorneys-at-law
9.2 Counterfeit NFTs If an NFT is made illegally – ie, its creator did not pos - sess the relevant rights from the owner of the work and the artist to create it – the artists may, in princi - ple, require the marketplaces/exchanges to withdraw it from their offer, and execute other rights granted by the Czech Copyright Act provided that the NFT is subject to Czech law. 10. Gifts, Donations, Trusts and Inheritance 10.1 Planning for Generational Transfer of Artworks There are several legal forms used for private collec - tions. • Private ownership or trust – used mainly for smaller collections built by private individuals as part of their personal property. Czech trusts are purpose- separated properties without legal personality (ie, without an owner). In the scheme, the founder appoints a trustee whose responsibility is to take care of the property. The beneficiary is entitled to benefit from the allocated property and receives benefits (income or other proceeds) but cannot dispose of the assets, providing a certain protec - tion to ensure the prosperity and integrity of the collection. • Foundation or a foundation fund – used mainly for larger collections. The Act on Income Taxes introduces a family foundation or endowment fund that supports the founder or persons close to the founder or whose activity is aimed at support - ing the founder or persons close to the founder. Foundations are established with a socially or eco - nomically useful purpose. They are a legal entity of permanent operation. Foundations represent a special purpose property association. When considering the relevant form of the collection management, from personal ownership, to trust or foundation, it is always necessary to consider the aim of the collector, how the collection will operate, and the complexity of tax issues that will be covered by a specialist tax adviser.
• other original photographs (eg, photographs taken by amateurs when travelling, civil photographing, etc). Photographs from automatic devices, eg, automatic machines for ID photo, or simple copies from a pho - tocopier, are not protected. The subject of the photo - graph itself is not protected by copyright. 9. Artworks and New Technologies 9.1 NFTs An NFT is a non-fungible token. It should be a unique electronic identifier (ie, non-fungible, making it dif - ferent from cryptocurrency, which is fungible) that is registered on the blockchain and is connected to a specific artwork or digital asset (this can be a video, picture, digital art, animated GIF picture, etc). NFTs can be created based on a physical piece of work or a digital asset that does not exist in the physical world. An NFT certificate in principle contains a set of meta - data relating to the rights accompanying it towards the underlying asset (eg, the ownership of digital copies of the work). There are certain difficulties connected with NFTs, as follows. • The author of the underlying work remains the owner of the work; they may create the NFT and dispose of it, or may grant a licence for its creation to a third party. • The owner of an NFT is usually not entitled to create any other NFT or does not have any con - trol over the creation of copies of the NFT or the original work. • The relevant rights are thus included in the NFT’s purchase contract, including the terms of dis - posal of the NFT and information on the rights and obligations of all parties and limitations of use. The contract is usually prepared in electronic form and signed electronically. The jurisdictions that will apply to the contract are also relevant. • Finally, it is crucial to review the content of the con - tract to check the rights held by the NFT, and what the buyer is actually buying.
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