By: Fabiola Sáenz
The digital era is inevitably and rapidly transforming the world with respect to the ways and means originally known for marketing goods or services and even for the approach to law as such. This last point, particularly focused on Intellectual Property rights, and more specifically on copyrights, is precisely the focus of the present analysis.
Copyright, as traditionally understood, are those rights that arise intrinsically with the creation of a literary or artistic work by its author. The Copyright Registries of the different States have been to date, the main ones in charge of providing protection over the deposited works, so that their creators can exploit them in a safer way against possible infringements by third parties, being that they provide them with a recognized paternity over their works. However, the digital era has come to transform with new disruptive technologies, some relevant aspects for authors, such as proving the paternity of a work. Through technologies such as Blockchain, different alternatives emerge to declare the paternity of a work and in turn, new marketing possibilities arise for creators and artists, which are substantially different from the traditional and centralized ways so far used, among which are the NFTs.
The emergence of NFTs
An NFT or Non-fungible token, as it is known by its acronym in English, is a digital certificate that certifies the ownership of a digital asset, unique and exclusive. These are created using blockchain technology whose particularity and attractiveness is its immutability. That is, digital files are created on this platform, which cannot be altered or modified, as it works with other types of cryptoassets such as bitcoins. They are unique assets, which cannot be substituted, no two NFTs are the same, and they are not consumed when used. They are the digital version of an original asset, which in the material and tangible world would be the equivalent of owning, for example, a painting, a stamp or collectible card.
NFT and Crypto-art
The attention of the Intellectual Property world has been attracted by NFT’s since one of the main focuses has been their application through “crypto-art”. This particularity of creation of works of art is the subject of intellectual property rights, since, as it happens with material works, namely paintings, books, music, among others, its author acquires rights with the creation of his work. The difference will be that while an original painting carries the signature and physical certificate of authenticity, an NFT carries a digital seal or certificate. Whoever obtains this non-fungible token, never acquires the work physically, since it only exists digitally. This digital file, given its nature, allows its commercialization without intermediaries and particularly, by digital means.
In simple words, artists create their works, digitize them through an NFT and make them available to the consumer in the market, without intermediaries, being able to directly charge the value of the same, and documenting the transactions through smart contracts. This digital ecosystem has come to provide options to a community of artists hit by the ravages of the Covid-19 pandemic, particularly the inability of many artists to bring their art directly to the public. NFT’s have represented a very attractive alternative to market their work. However, the novelty of such tokens and their implementation in the virtual world also brings with it a dose of challenges worth mentioning. Certainly, NFT’s can be very effective in proving the paternity of a work, since the immutable block in which it was created and uploaded generates a certain date for its author. However, problems arise when that work is not entirely original, or is based on the intellectual property rights of third parties. For example, a photo of a Disney character is taken and uploaded as an NFT, the person has rights over the photo, but does not have authorization from Disney to use such character. What happens then? It would be violating an Intellectual Property right of a third party, and being that the blockchain is also immutable, it would also be leaving an immutable proof of such illegality. Consequently, it is necessary to create awareness of the Intellectual Property aspects of NFT’s in order to understand, for example, what can be created and claimed as one’s own, or what can be purchased without infringing third party rights.
How do these non-fungible tokens work in practice?
NFTs have grown like crazy and currently there are some very famous platforms where they are traded, such as Mintable, Rarible, or Ethernity, which is focused on sports, or also the case of the marketplace known as Open Sea, which is promoted as the “amazon of the guild”. In all these platforms, consumers can buy and sell all kinds of NFT’s, ranging from collectible cards, “moments” starring celebrities, crypto-art, music, twitts among others. The market prices have been largely what have triggered the popularity of NFT’s, being that the most expensive NFT so far has been a work of the artist Pak, created using the platform called Nifty Gateway and which was sold in 91.8 million dollars. Likewise, images of what are known as Cryptopunks have reached outlandish sums of around 7 million dollars,
Certainly, the digital transformation will continue to make inroads into new vehicles to boost trade, and it is there where the operators of the law will find themselves with the inexhaustible task of generating both awareness and responses to the challenges inherent in the development of new technologies, which will undoubtedly impact multiple sectors, but especially Intellectual Property.