Sally Yoon is an IPilogue Writer and a 3L JD Candidate at Osgoode Hall Law School. This article was written as a requirement for Prof. Pina D’Agostino’s IP Intensive Program.

More recently, we have seen digital art open doors for artists to experiment with conceptual artwork like never before. Stijn van Schaik, a second-year Advertising student, on OpenSea, making it the . In addition, hosted Aitken's exhibition in four galleries, allowing visitors to view the exhibition alongside others around the world, within the same virtual space. As a result, are increasingly seen as not just a “referential pointer to the physical but a place of primary experience, worthy of being collected”.

Doug Aitken, installation view of Open on Vortic VR. © Doug Aitken. Courtesy the artist; 303 Gallery, New 91��ɫ; Galerie Eva Presenhuber, Zurich; Victoria Miro, London; and Regen Projects, Los Angeles

Last year, released a 7-part series titled “”, to examine how NFTs affect institutions that collect digital art, and highlighted that NFTs may possibly be the “unifying mechanism” used to package [work] done in the digital space. As well as encouraging the collection of , NFTs are a way for artists to financially benefit from works traditionally non-commodifiable (ex. conceptual or ). But before we all scatter to “NFTize” our souls, we need to address some legal issues surrounding the overall sustainability of digital artworks.

Are smart contracts “smart” enough?

discusses one of the most commendable features of NFTs - the automatic resale royalties. Blockchain smart contracts track payments and distribute a percentage of the resale profits back to artists. However, there are , which include transacting on a marketplace platform on another blockchain, so that the NFT’s smart contract is not notified of the resale. Therefore, keeping collectors transacting on platforms that recognize the existing code triggering the resale royalty remains a constant challenge. For now, the best way to avoid this issue remains a specifically drafted contract with a resale royalties provision, tailored to the individual NFT.

Sustainable Models and Practices for Digital Conservation

A sustainable model will offer benefits to both the artists and the collectors. Allowing for ensures that collectors are committed to the integrity of the resale royalty process and increases the likelihood of the system functioning as it should. Sustainable practices involve the artists’ clear statement about the rights and licences being transferred with the work. Would the artist allow the owner to transfer the work to another platform in the event of blockchain issues or technological obsolescence? Can the owner lend the work to other venues? A digital work's conservation depends on these legal considerations.

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Tianchu Gao is an IPilogue Writer and a 2L JD Candidate at Osgoode Hall Law School.

On  July 18^th, 2022, the world’s second-largest art auction house, Christie’s, announced the establishment of , an investment fund that will support emerging tech companies whose products could have an impact on the art market. According to a representative, the fund is estimated to hold “.” Some may think that it is strange that an auction house would launch a venture fund, but it is not the first time that Christie’s has made a daring venture to embrace the latest technologies in its highly exclusive art businesses. The auction house was one of the first art institutions to arrange NFT sales. The March 2021 sale of digital artist Beeple’s work, , sold for a record-breaking price of 69.3 million. It even launched a two-day conference, , in July 2022, which brought in leaders from both industries to discuss the role and impact of technologies in the art world.

According to the global head of Christie’s Venture, Devang Thakkar, to solve the problems that have long bedeviled the art trade, such as authenticity disputes and safe digital asset transactions.

Christie’s Ventures will focus on : 1) Web 3.0 innovations such as non-fungible tokens, cryptocurrencies, blockchains, etc.; 2) art-related financial products; and 3) technologies that enable seamless consumption of art.

Christie’s Venture’s first investment supported a Canadian Web 3.0 company called . It provides a protocol that allows different blockchains to communicate and work together. The company had already raised CAD$ dollars in its first funding round earlier this year. It will work with Christie’s to “find new and innovative ways to create the most accessible, frictionless experience with assets indexed over multiple blockchains,” says , LayerZero Labs co-founder.

It is worth noting that Christie’s advancement into the venture capital market happened in the context of the recent crash in crypto and the broader selloff in tech stocks. Traditional venture capital firms are pulling back from the risky bets on startups, and the funding for startups altogether fell in the second quarter compared to the first quarter. Many crypto startups are undergoing since June. In fact,  from $93.2 million in 2021 to less than $5 million during the first half of this year. 

Despite the economic downturn, Christie’s clearly believes in the increasingly prominent role of technology in the art market. In fact, the world’s largest auction house, Sotheby’s, is also “actively investing in and acquiring early stage ventures,” though not through a formal venture-capital arm, according to an article in  The . Christie’s move into the venture capital space challenges the traditional image of what an auction house can do.

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What is NFT?

are non-fungible tokens based on Ethereum, powered by smart contracts. means it is unique and one of a kind. It can also be understood as a proof of ownership and authenticity. is an open source and decentralized software platform, and it is also the technology behind the cryptocurrency ether (ETH).

There are various platforms for NFT marketplace, such as , , and (for sports digital collectibles).

What does NFT mean for artist, collectors and the market?

Traditionally, artists would sell the physical copy of their painting, but this business model is not as suitable for digital artworks as physical artworks. Some artists were posting their artwork , or unable to sell their digital work, because there was significant difficulties in the digital work or authenticating the owner of the original copy when there is no physical copy. With NFTs and increasing amount of marketplaces for digital works, artists might be able to finally make money with their works.

This article written by Andrew R. Chow also mentioned that NFTs seemed to encourage and applaud more creative and innovative forms of artworks - “[m]any other artists working in groundbreaking and sometimes controversial styles are also receiving unprecedented interest from NFT collectors. Art with whirling 3-D renderings, street-style oversaturated color schemes, and hyper-referential (and often crass) cartoons are thriving.”

For collectors and the digital art market, NFT is a proof that the person is the owner of the original copy. Collectors might be paying more for “” or appreciation of digital arts than just for the money in this .

Concerns about NFTs?

Ioanna Lapatoura has discussed copyright ownership with respect to NFTs in her recent article on . NFT ownership is different from copyright ownership or a proprietary right over an actual asset. NFT is the “proof of owning an unique digital version of an asset, rather than the asset itself”. There is also new type of alleged infringement – copied artwork . Since NFTs are still new and developing, there is likely to be difficulties in enforcing intellectual property rights.

What’s in the Future of NFTs?

Some people view NFTs as cards and were bidding on the virtual future. Some people were skeptical and worrying that the NFT bubble might burst. Nonetheless, NFTs are providing creators of digital works a way to monetize their work product and receive real returns for their virtual work. Since NFTs are based on the Ethereum blockchain, maybe the other question that we ought to ask is – what is Ethereum and ETH’s long term growth potential?

Written by Ya-En Cheng, JD Candidate 2022, enrolled in Professor D'Agostino's Directed Reading: IP Innovation Clinic course at Osgoode Hall Law School. As part of the course requirements, students were asked to write a blog on a topic of their choice. 

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, better known as NFTs, are unique digital assets whose veracity is secured through blockchain systems. What differentiates NFTs from contemporary assets such as Bitcoin is their lack of fungibility—unlike a currency where any single unit could be exchanged for any other unit and retain the same value, each NFT is verifiably unique and representative of some digital asset whose ownership is tracked through the blockchain.

But what does any of this have to do with intellectual property? Well, much of the recent NFT boom has surrounded digital art, with some NFTs representing various pieces of art selling for . While there is debate as to whether this demand for NFTs represents a bubble that will soon burst, for the purposes of this article we are more interested in what NFTs represent. Digital art, unlike its physical counterpart, has always suffered from the limits of its medium. While any number of reproductions of a physical painting could exist, there typically remains but a single original piece which can contain significant value. There is no digital equivalent to owning the “original” piece, as there has never been a way to “own” exclusively an original copy of a digital work. Of course, Copyright laws are designed to prevent the unauthorized copying of substantial parts of artistic works, but owning the right to prevent the creation of copies of the work is very different than owning the original work. NFTs, in a way, bridge this divide.

By creating and selling NFTs that are representative of their work, artists and creators now have an entirely new way to commercialize their intellectual property. Creators have already begun to test the waters by selling NFTs of , and this is certainly only the beginning of creative ways to profit from NFTs. Selling an NFT of a work does not prevent the owner of that work from licensing or otherwise exploiting the intellectual property inherent in that work, not unlike how a piece of art can exist in a gallery but its image can be used commercially. It is clear that the advent of NFTs represent a brand new way for creators to gain value from their intellectual property, and it will be interesting to see whether the demand for these NFTs continues to rise, or if they will go back to simply being a .

Written by Keir Strickland-Murphy, JD Candidate 2022, enrolled in Professor D'Agostino's Directed Reading: IP Innovation Clinic course at Osgoode Hall Law School. As part of the course requirements, students were asked to write a blog on a topic of their choice. 

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A Brief History: Copyright Laws and Copycats

In Canada, the  protects all original creative works, regardless of their commercial value. The  of this act is, among other concerns, to safeguard an artist’s exclusive right to ownership over their work, which is essential for promoting creativity and ensuring that artists can safely and openly share their work without losing social or economic recognition. 

Historically, imitation has been common in the art community, even when accessing and replicating specific pieces of artwork was much more difficult. However, technology has drastically changed the circumstances. Now, it is easier than ever to find an image of an original art piece online and use digital programs to replicate it. Although some people use these methods for economic gain, fraud, or deception, it is important to understand that not all replication is done with malicious intent. A perfect example of this is fanart.

What is Fanart?

“Fanart” is artwork created by members of a fandom, typically featuring a replicated or altered version of the original artist’s creations. It can include various means of re-imaging the original creation including drawing a character in your own art style or taking creative liberty with the story line. Nearly all fandom communities have and support fanart. Some of the most notable communities include Harry Potter fans, anime fans, and Disney fans. Nowadays, if you search for any recognizable content creator or title in an app like Instagram, you will immediately see results from both the original artist and fan adaptations. While some artists may feel proud about inspiring fanart, others may not enjoy the replication, especially if they are not acknowledged as the original artist.

Is Fanart an Infringement of Copyright?

The short answer is yes.

Copyright laws ensure that original content creators have the to their works, including derivative pieces based on their original creations. According to  of the Copyright Act, copyright infringement includes selling, distributing, or publicly exhibiting a copy of a work without permission. Therefore, all fan art is an infringement of the original content creator’s copyrights.

The scope of social media makes it challenging for smaller artists to track down imitators, and therefore, legal remedies can be difficult to pursue. Additionally, fanart creators may be able to argue a defence of fair dealing.

The law states that “ for the purposes of… private study, education, parody or satire does not infringe copyright.” Many fan artists are amateurs, and therefore, can argue for study, education, or parody; however, there are limits to this argument. The  of fair dealing is to allow copyright protected works to be used in specific contexts for the benefit of society. Therefore, the court engages in a case-by-case assessment of whether particular pieces of fanart qualify under “fair dealing.”  such as “the amount you are copying, whether you are distributing the copy to others, and whether your copying might have a detrimental effect on potential sales of the original work” are evaluated. It is important to note that the Supreme Court of Canada has recently approached copyright law with the goal of finding a “ between the rights of users and of copyright owners.”

Artists in the Digitized World

Because of the difficulty of regulating online content and platforms, artists are now encouraged to . This includes using watermarks, a copyright notice on their website and social media platforms, and tools like “”, which search for unsolicited use of their content online. , such as checking their fandom’s community guidelines, making it clear that their work is unofficial, not using fanart for commercial purposes, and asking the original artist for permission.

Despite both creators’ and fans’ efforts, many online artists have moved their content to paid-subscription platforms like to better safeguard their IP rights and the commercial value of their artwork. These legal and economic consequences are detrimental to the original artist, and perhaps reaffirm that imitation is not always the sincerest form of flattery.

Written by Adele Zhang, a first-year JD student at Osgoode Hall Law School. Adele is interested in the intersections of IP, sports law, business law, and employment law.

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