Digital technology provides an opportunity for the transmission and innovation of traditional culture, enabling intangible cultural heritage to rejuvenate with new vitality beyond spatial and temporal limits. However, there is a conflict between the inherent “public nature” of intangible cultural heritage as a shared spiritual asset of humanity and the “private interest” emphasized by the copyright system. It is urgent to clarify the relationships between rights holders, define the legal status of the rights object, and seek a fair distribution of benefits between heritage preservation and innovation. In this regard, a hybrid model combining public and private law should be established to regulate the rights holders, confirming the copyright eligibility of digital innovation subjects in the realm of intangible cultural heritage. And a typological approach should distinguish between the replicative and creative digitalization of intangible cultural heritage, examining their “additive elements” and “substantial differences” to analyze the copyrightability of their outcomes. Furthermore, the flexibility of the fair use doctrine should be enhanced, considering more comprehensively to improve the utilization efficiency of intangible cultural heritage resources.