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Pankhuri Malik is an IPilogue Writer and an LLM Student at Osgoode Hall Law School.

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I attended the Global Online Thesis Topic Meetings (“GOTTMs”) hosted by Leiden University on April 5, 2022. Prof. of Leiden University moderated this discussion on non-fungible tokens (“NFTs”) and intellectual property (“IP”), which featured three speakers—, , and —who discussed different aspects of NFTs through their individual presentations.

Richard Z. Lehv

Richard Z. Lehv is a senior litigation counsel at Fross Zelnick Lehrman & Zissu, P.C. His presentation, titled “What an IP Lawyer Needs to Know about the Colorful World of NFTs”, discussed the current NFTs’ landscape globally. He began with a general overview of NFT and blockchain technology and proceeded to discuss many interesting NFT trade examples from the past two years.

He explained that an NFT typically includes only information about the artwork’s location. The actual artwork is not stored within the NFT because storing large amounts of data on a blockchain is fairly expensive. He also discussed the novelty of owning or creating an NFT, rights acquired by purchase, and open NFT trade sources like , , and . Lehv pointed out that purchasing an NFT does not necessarily include copyright assignment, and therefore, returns from the NFT are limited to resale.

Lehv proceeded to discuss interesting examples of NFTs. He spoke about , which are collectibles featuring one or more NBA players with their statistics. Think basketball cards, but virtual! Other examples of NFTs include (sold for a total of $3.1 million USD) and 2021.

My biggest takeaway from the discussion was the range of possibilities that NFTs’ creation and trade present. My favourite example is the virtual artist photograph. She received a cease-and-desist notice from the photographer Michael Halsband, directing her to destroy the artwork. In response, she filmed herself painting over it with black spray paint and converted the video into an NFT.

Dr. Andres Guadamuz

Guadamuz is a reader in intellectual property law at the and the editor-in-chief of the . He authored “”. Guadamuz has also created and sold many NFTs and so, in addition to law, he provided answers on the business side of the trade.

Guadamuz was a critic of NFTs since 2011 and only got involved in their trade to understand what the fuss was all about. He said that most people lose money trading NFTs. According to the statistics he presented, the average price for NFT sales is less than $15 per NFT for 75 percent of the assets. He also said that the top ten percent of NFTs’ traders comprise 85 percent of total transactions. He said since the asset is only a photograph/video, which is usually transferred without the underlying copyright, or other rights in the underlying asset, there is only so much to gain from purchasing an NFT. He also briefly touched upon the high prevalence of fraud in NFT trades.

Alexandra Giannoloulou

Alexandra Giannoloulou is a postdoctoral researcher at the Blockchain and Society Policy Research Lab at the University of Amsterdam’s Institute for Information Law. She co-authored “”.

Due to paucity of time, Giannoloulou was only able to discuss NFT marketplaces and copyright management therein. She discussed three types of NFT intermediaries: open marketplaces (e.g., Opensea), collection-based marketplaces (e.g., NBA Top Shots), and curated marketplaces (e.g., SuperRare). She also discussed copyright licensing by intermediaries necessary for creating and trading NFTs. She discussed this topic in greater detail in her aforementioned paper.

What I Am Taking Home

NFTs are not a new concept; they have existed since , but only recently blew up during the pandemic. This discussion, however, did make me wonder if NFTs are as valuable an asset as they currently appear. The crossover with IP rights is unreliable at best, and breach of obligations by buyer or seller in the trade can only be mitigated through breach of contract remedies. As such, both future incentives and remedies for loss seem dubious.

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But then the international institutions changed. The WTO and WIPO used to be places where large IP-producing countries used to hold more sway, and it was easier to pass international agreements. However, as large developing countries started finding their voice, it became harder for IP owner countries to push their agendas. The culmination of this situation was the failure to approve the WIPO Broadcast Treaty in 2007, which was a big blow for the content industries. This Treaty was defeated by a combination of web activists, the tech industry and developing countries, and has to be taken as the final nail in the coffin for the quasi-unilateral control of IP owners of the international institutions.

I do not wish to be ideological in this assessment. There are few countries who are net IP exporters, and the US is still the one with the biggest stake in the creative industries (hence its interest in expanding IP protection and exporting such expansion). The USTR is not a mindless agency pushing for more IP protection to fulfill an evil agenda; it is doing so because it is in its best commercial interest. As such, for the last decade, the USTR has been engaged in a clear strategy that tries to export stronger IP protection around the world, because at the moment, anything that protects IP in a given territory will undoubtedly favour its balance sheet. TRIPS-plus agreements, and other bilateral efforts, have to be seen in that light.

Several other things have been happening at the international IP institutions. Policy-making at the WTO seems to have ground to a halt after the 2001 Doha Ministerial Conference. WIPO has also been seeing some structural and political changes. The institution has become more financially independent thanks to the success of the Patent Cooperation Treaty and the domain name dispute resolution procedure, which means that they do not have to take marching orders from content owners any more. The BRIC countries have also been gaining more expertise in the area of IP, so governance at WIPO has become an issue. WIPO is more balanced, but strangely, it is also a more dysfunctional institution as a result. It is precisely the growing balance between countries that has prompted some countries interested in international maximalist agendas to try to implement their agendas through international trade treaties.

So, if you want to expand IP protection, but cannot do it at the international IP institutions, what do you do? ĚýEnter the Anti-Counterfeiting Trade Agreement (ACTA) and the Trans-Pacific Partnership (TPP).

The ACTA negotiation was riddled with compromise from the start. In retrospect, it may have been a mistake for the USTR to include countries with their own large stake in the IP world, particularly Europe and its interest in maximizing protection for geographical indications. In the end, ACTA resulted in a much more diluted agreement than what it was originally.

So now we have had some glimpses at the IP provisions contained in the TPP, and they are what ACTA could not be. While ACTA resulted in a compromise, the TPP attempts to go for broke and contains a wishlist for the content industries. This includes its own version of the Broadcast Treaty, harsher provisions against circumvention of technological protection measures, erosion of existing exceptions, the potential destruction of the first-sale doctrine, and what I can only class as an open war against intermediaries. In short, TPP reads like the frustrated collection of a department that has had more than a decade of not getting its way.

So we have interesting days ahead of us. Will TPP fall prey of the ?

Andres Guadamuz is Vice President at Innova Technology, a software firm in Costa Rica, and Associate Director of the SCRIPT Centre for Studies in Intellectual Property and Technology Law at the University of Edinburgh, where he has also served as Lecturer in Electronic Commerce Law. For more details about some of the provisions in the TPP, .

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