Just weeks before FTX, the centralized crypto exchange founded by Sam Bankman-Fried, declared bankruptcy in an epic failure and violation of trust that wiped out billions of investor dollars with risky bets of customer funds and an inability to meet withdraw demands when the bad news hit the headlines, I spoke with its then head of policy & regulatory strategy at FTX and former CFTC Commissioner, Mark Wetjen. You can listen to that interview here.
In light of the FTX collapse and the extended crypto winter, where do you think crypto regulation is going? I will talk about this and the recent Senate Agriculture Committee hearings with CFTC Chair Behnam on Coindesk TV’s First Mover Show.
Catch it here on 12/2 at 9am ET (or the replay) at Coindesk.TV.
On Tuesday, November, 22, 2022, the U.S. Copyright Office and the U.S. Patent and Trademark Office (USPTO) announced a joint study to examine various IP issues arising from the use of non-fungible tokens (NFTs). The Wednesday, November 23, 2022 Notice of Inquiry for the Federal Register can be found here.
This joint study follows a June 9, 2022 letter from Senate Judiciary Subcommittee on Intellectual Property leadership, Senators Patrick Leahy (D-Chair) and Thom Tillis (R-Tillis), requesting that the Copyright Office and the USPTO conduct a joint study and address issues related to NFTs and intellectual property rights in consultation with the private sector, drawing from the technological, creative, and academic sectors.
The notice seeks written public comments to several questions listed and also announces that the Copyright Office and USPTO intend to hold virtual public roundtables in January 2023.
A Closer Look at Copyright + NFTs
In late 2017 and early 2018, the era of token proliferation to leverage token issuance to raise funds to build blockchain-enabled projects (with a healthy dose of scams and unregistered securities), I began studying the intersection of copyright and blockchains, smart contracts, open source software and token standards in the Ethereum ecosystem (ERC-20 for fungible tokens and ERC-721 and later standards for non-fungible tokens).
My first law review article, CryptoKitties, Cryptography, and Copyright, presented at the 2019 BYU Copyright and Trademark Symposium and published in the American Intellectual Property Law Association Quarterly Journal, 47 AIPLA 219, 2019), examined the copyright implications of unique, scarce digital creative assets transferred and stored on blockchains, which I refer to herein generally as unique crypto assets (UCAs).
Specifically, I explored the emergence of NFTs created based on the ERC-721, a novel token standard at the time that enabled, for the first time, verifiable digital scarcity—an elusive characteristic in the world of Web 2.0. I analyzed whether ERC-721 tokens (and other non-fungible coding standards) could empower UCA holders to maintain control over their cryptographic creations in gaming, collectibles, and the full range of copyright-intensive industries, to name a few.
More recently, I examined the creative justice opportunities that might be enjoyed by systemically marginalized creatives when NFT and blockchain technology is leveraged.
I assessed whether such web3 technologies could provide and protect the economic power and creative control the Copyright Act promised but historically failed (and fails) to secure when at odds with discriminatory practices, contractual loopholes, and statutory impediments like the copyright transfer termination right.
I hope that stakeholders from all aspect of creativity, technology, education and policy submit comments and are invited to provide testimony during any hearings in these matters. This technology has disrupted copyright-intensive industries as much as it has the financial industry. And we’ve only just begun to explore the power and promise (as well as the pitfalls), to be sure.
In working with creatives and collectors at BlackNFTArt, Umba Daima and Black@, I know firsthand how disintermediated access to platforms that connect them on a peer-to-peer basis globally and to transfer artistry for cryptocurrencies (capital assets in the US) has begun to move the needle on the income and wealth gaps (at least before the current crypto winter).
I also know that numerous issues exist for artists, collectors and exchanges: the copyright complexities in the referenced art file connected to an individual token (because the token, itself, it not the art); direct and secondary liability issues for platforms; copyminting issues; file storage; how to respond to takedown notices and decentralized file storage issues; copyright transfer termination issues; estate planning and post-mortem copyright and license management issues. The list goes on. And that is just copyright!
So there is much to discuss. What intellectual property issues do you see at the intersection of IP and NFTs?
I’ve talked about this topic to several lawyers on my podcast, Tech Intersect, so listen, subscribe, share and let’s continue to conversation:
In a 2016 acceptance speech during the Black Entertainment Television (BET) Awards, actor and activist Jesse Williams used the phrase “gentrifying our genius ” to refer to the insidious process of misappropriating the cultural and artistic productions of Black creators, inventors, and innovators. In that speech, he poignantly and unapologetically condemned racial discrimination and cultural misappropriation. This Article chronicles the nefarious history of the creative disempowerment of creators of color and then imagines an empowering future for those who successfully exploit their creations by fully leveraging copyright ownership and transfer termination.
To that end, Professor Evans references the considerable scholarship of Professor K.J. Greene, which explores and challenges cultural misappropriation of Black musicians and composers, and build upon her own scholarship that explores the copyright transfer termination right as a potential legal tool for social and economic justice for creatives of color with cryptographically secured assets and blockchain technology.
She also references an empirical study titled U.S. Copyright Termination Notices 1977-2020: Introducing New Datasets, to explore data and extrapolations regarding likely impacts of §203 terminations since 2013.