Do I have to pay royalties to the creator for my monetization of the IP in my NFT?
First of all, the creator must give you the right to monetize the IP. If the creator does so, the creator can ask for a payment of royalties. As we have seen lately there are creators putting their IP under a Creative Commons license which means they agree to commercial usage of their IP – under the terms of the CC license! – without the need to pay royalties.
Under French law, the principle is that a proportional remuneration to the revenues
generated from the exploitation of their work is due to the creators which
assigned/licensed their copyrights (doits d’auteur). By exception, in specific cases,
the creators may be compensated with a lump sum. It is also possible (but rare) to
provide for a free assignment of copyrights, although recent case law questioned the
validity of such agreement if not notarized.
Hence, should the license/assignment providing the rights to exploit the underlying
artwork be subject to French law, by principle, royalties will indeed be due to the
creator for monetization of the NFT, unless an exception can be invoked so that it may
be considered that the price paid for the NFT includes a lump sum to compensate the
intellectual property rights assignment/licence. This should in any case be specified
in the sale agreement or the applicable T&C.