In the above article, “Does Fancy Buying NFT Own the Copyright?” “It is mentioned that the NFT buyer obtains the rights specified in the smart contract in the rights attached to the NFT work during the transaction, and cannot enjoy any rights to the mapping work. However, the NFT market is still hot, and there are many issues that follow that we have to pay attention to.
Current problems with NFT transactions
At present, the largest trading platform is Open Sea, which is known as Amazon in the NFT industry. It has a complete range and of course, the handling fee is relatively high. The NFT artist sells the NFT work that has the ownership, and the buyer purchases the work, and the ownership of the NFT is transferred with the allocation of fees. Although NFTs cannot interact freely, they can be listed and traded on the trading platform, or sold at a price, or packaged for sale, or auctioned.
There is no big difference between NFT transactions and commodity transactions in e-commerce platforms in terms of process. The problems generated are also similar to those in traditional markets, including:
- The trading platform is difficult to supervise and may be used for criminal purposes such as money laundering
Most of the current NFT trading platforms are decentralized exchanges, and transactions are conducted on them. In principle, they only need to comply with the rules of the exchanges, which are anonymous, and the wallets used by the exchanges are also anonymous. As mentioned in the aforementioned Open Sea, the registered account does not require KYC authentication, and transactions can be performed only by connecting to the MetaMask wallet. Products such as NFT are not only cultural products, but also closely linked to virtual products, so their value can easily be inflated, and some people can easily launder money through this approach. At present, the creators and sellers of NFTs are not currently obligated to prevent money laundering.
- Counterfeiting and piracy appear, and the original author’s intellectual property rights are infringed
In March 2021, a painting released by artist Weird Undead was stolen and sold on NFT. This incident sent a message to the public: not all NFT mapping works are original by the caster.
As a result, I have to think about a problem: the NFT trading platform does not require the creator to be the copyright owner of the work, so it is possible that the minted NFT has not been authorized. One reason why buyers buy NFT is for the authenticity, uniqueness (NFT is fundamentally the guarantee and identification of the uniqueness of works on the chain) and scarcity of the NFT.
When the work used for casting NFT is pirated, there is no copyright or authorization, can the authenticity, uniqueness and scarcity of casting NFT really be guaranteed? In other words, does the NFT you buy remain “pure”?
One of the reasons why NFT can stir up the craze is the uniqueness and authenticity of NFT itself. I bought an NFT work, for example, an oil painting. When the oil painting is printed in every corner of everyone’s alley, you can take out the original NFT as a voucher to claim that this oil painting is yours. But when this oil painting was first used to cast NFT, it was not authorized, it was piracy and infringement. Is there any basis for your claim?
Under this circumstance, the NFT that has been purchased at a high cost will get the ownership of the NFT work or the right to use the NFT work? Or is it just a right of appreciation?
At present, relevant laws do not provide for NFT transactions. There are major disputes over whether NFTs are real rights, and there are many opinions on whether NFTs have intellectual property rights. However, NFTs have reached a consensus as a certificate of rights.
We might as well take a look at the current legal protection of intellectual property rights from the Asia-Pacific and Europe and the United States, and then analyze whether the NFT of the transaction can be protected by law.
The Status Quo of Intellectual Property Protection in the Asia-Pacific Region-Taking China as an Example
The protection of intellectual property rights in China is mainly based on the “Civil Code of the People’s Republic of China”, “The Copyright Law of the People’s Republic of China”, “The Trademark Law of the People’s Republic of China” and other series of legal provisions, which are protected based on the concept of expressive intellectual achievements.
The creation of a content is for the intellectual achievement and is presented with a carrier. That is, the right to modify, reproduction, exhibition, distribution, information network dissemination, protection of the integrity of works, compilation rights, and many other rights, collectively referred to as copyright/copyright. The protection of the aforementioned rights is for the life of the author and 50 years after his death. The term of protection for the integrity of the work is not limited.
Therefore, as the creator of the original work creates an oil painting, he has the right to distribute the oil painting for life and 50 years after his death, as well as the right of information network dissemination, without transferring the copyright.
The so-called right of reproduction refers to the right to make one or more copies of a work by means of printing, copying, rubbing, sound recording, video recording, dubbing, reproduction, digitization, etc.; the right of information network dissemination refers to wired or wireless means Provide to the public so that the public can obtain the rights of works at a time and place of their choosing.
Under this premise, making the oil painting into an NFT is actually to make a copy of the oil painting in a digital way. If the caster does not obtain authorization, uploading the oil painting to make NFT without authorization is an infringement of the creator’s right of reproduction; then selling the NFT is regarded as an infringement of the creator’s right of information network dissemination.
Therefore, before the relevant laws have made specific provisions on intellectual property infringements in the field of NFT technology, the current legal provisions can be referred to. However, NFT relies on the underlying technology of the blockchain. The combination of the open features on the chain and the anonymity of the NFT trading market makes the protection of NFT’s intellectual property rights a more difficult problem. With the rapid development of technology, the legal protection path needs to be perfected.
The Status Quo of Intellectual Property Protection in Europe and America——Taking the United States as an Example
The US political system is a federal system, and the legal system is a civil law system. Countries with statutory law + case law have relatively complete protection of intellectual property rights. The federal government has formulated copyright laws, trademark laws, patent laws, etc., and various states have also formulated Own copyright law, trademark law. At the same time, the United States’ compliance with court precedents has also played a greater role in the protection of intellectual property rights. According to the International Intellectual Property Index published by the U.S. Department of Commerce in 2020, the U.S. ranks first in the world in terms of intellectual property protection.
Data source: 2020 International Intellectual Property Index
The protection period of copyright in the United States is the life of the author. When the author dies, his work/intellectual achievements shall be converted to public property. The protection period in the United States is relatively shorter than that of France, China and Canada. However, the United States has cracked down on infringement of intellectual property rights more vigorously, stipulating the dual principle of compensation + compensation.
Normative Thinking of NFT Trading
It is true that the support of the ERC721 standard makes NFT a better carrier for physical and virtual mapping, and realizes the transformation of economic models. However, it is an indisputable fact that the NFT market has both advantages and disadvantages. Then, how should the disadvantages (piracy and infringement) of the current NFT market be solved? That is, how to regulate NFT transactions and how to protect artists/content creators?
In general, the development of technology precedes the law. The infringement of intellectual property rights in the field of NFT technology has not produced new infringement methods, and is still an infringement of rights such as reproduction rights and network information dissemination rights. For NFT transactions, it is urgent for the law to keep pace with the times to restrict and regulate. As parties to NFT transactions, they should also strengthen their awareness of protecting intellectual property rights.
Here, the author makes suggestions based on the current intellectual property laws and other relevant laws in various countries:
- The content creator is the original author of the work: When his work is stolen and used to make NFTs, he can ask the platform for help and provide relevant evidence. If obtaining evidence is achieved, it is recommended to claim protection of rights to the judicial organs;
- Caster: Casting NFT using its own work, if it is someone else’s work, it is recommended to obtain authorization, at least the granting of reproduction rights and information network dissemination rights;
- Buyer: The purchased NFT only enjoys the rights to the NFT. It is recommended to confirm the source of the purchased NFT;
- Platform: Increase the verification of the source of the caster’s work, such as clearly stipulated in the user agreement.
In the NFT market, which is mainly used in digital art/collectibles and other fields, legal and operational risks still exist due to the use of NFT for money laundering, intellectual property infringement, fraud, MLM hype, and theft. The relevant regulatory policies are still in a relatively blank position, and the relevant rights and responsibilities of the NFT are not clear. In order to realize that everything is mapped on the chain to become an NFT, a series of laws and regulations are needed as a guarantee. As for whether there will be a new department law based on the NFT, let us look forward to it together.
Disclaimer: The content of this article only represents the views of Footprint, for reference and information only, and does not constitute any investment advice.
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