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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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Emily Prieur is an IPilogue Writer and a 3L JD Candidate at Queen’s University Faculty of Law

In May 2021, a phenomenal by Keir Strickland-Murphy (Osgoode Law ‘22) touched on the recent boom of Non- fungible Tokens. In this piece, I will recapitulate Strickland- Murphy’s exploration of IP ownership of Non-fungible Tokens and expand on recent developments since May.

What are non-fungible tokens?

Non-Fungible tokens (“NFTs”) are unique digital assets that as a certificate of authenticity for an object, be it physical or virtual. Blockchain acts as a ledger to secure these assets. Blockchains are often relied upon for their security, so much so that certain universities have begun through them. As described in their name, NFTs have unique properties and are not interchangeable. As such, any digital asset can be tokenized through the “minting process”, much like a refrigerator, car, or computer is given a serial number. Unique identification is a valuable tool for the many and auction houses that have started using the blockchain to sell or . The sale of an NFT also includes a smart contract.

Strickland-Murphy noted that and were early adopters of the NFT craze. Since then, public fascination has only grown since then, with celebrities like Jimmy Fallon and Emily Ratajkowski jumping on board. In May 2021, Emily Ratajkowski sold an NFT called “. The NFT came in the form of a digital-only photograph featuring the model. Ratajkowski explained the impetus for its creation in her essay “Buying Myself Back”, where she shares that the photo she shared on Instagram had been hanging in the Gagosian as part of Richard Prince’s “New Portraits” art show. Prince had been putting other people’s photos from Instagram on canvas and re-selling them for $90,000. Given this situation, Ratajkowski’s NFT auction was, as Ratajkowski explains it, an opportunity to reclaim ownership over her photo.

Recent celebrity obsession with the Bored Ape NFTs has further fueled the NFT buzz. A bundle of 101 Bored Ape Yacht Club NFTs recently . The funky cartoon images have caught the attention of . The interest in Bored Ape is almost palpable as the release of the Yacht Club NFTs can be connected to nearly a in the sale of the NFT Ethereum.

If an image is attached to an NFT, does that mean I own the copyright for that image?

Where an NFT buyer has purchased an image, they do not necessarily receive the copyright associated with that image. If we refer to the computer serial number example, just because you own one version of a computer does not mean you own the patent for the underlying software in the computer. In this case, the software would still belong to the software engineers that invented it. Similarly, if you purchase a painting, you do not assume the copyright over that painting once you have purchased it.

In Canada, an is necessary to transfer copyright from an artist to a purchaser. Therefore, the purchaser of an NFT will only receive the underlying copyright when the smart contract accompanying the NFT expresses this. Of course, unless waived by the artist, the moral rights associated with the artistic work remain with the artist. ensure the integrity of the work, and, when reasonable, the artist’s right to association with their work by name or pseudonym.

What about copyright infringement?

The images associated with NFTs have caused some confusion. An NFT seller must hold a copyright in the image associated with the NFT they are selling. To “mint” an image as an NFT, it is crucial that a seller holds the copyright or a license. However, as long as the seller is the copyright holder, several NFTs can be associated with the same image. In short, NFT sellers can sell as many NFT’s associated with a particular image as they wish, so long as they hold the copyright to that image. If they do not own the copyright to an image, they cannot tokenize it into an NFT and lawfully sell it.

Although NFT’s are a relatively recent addition to the investment scene, numerous lawsuits involving their associated copyrights have already emerged. Rapper Jay-Z Damon Dash, co-founder and shareholder of his record label RAF Inc., for attempting to mint one of his music albums, Reasonable Doubt, as an NFT. The court held that Dash does not own a copyright to the album simply by being a minority shareholder in the record label that owns it. As such, he cannot, in the court’s words,.

Quentin Tarantino is at an impasse with his efforts to profit off the booming NFT industry. Tarantino is embroiled in a legal dispute with the film production company Miramax after announcing that he would be auctioning off excerpts of his original Pulp Fiction screenplay, which he touts include “secrets” about his creative process. that Tarantino does not own the rights to the screenplay and, therefore, selling these secrets through an NFT would constitute copyright infringement.

Old Laws Protect New Trends

Despite the law’s reputation as conservative and , in the case of NFTs, old copyright laws have proven to be tremendously practical. Although the world of blockchain is exciting, it is at this junction that potential NFT sellers should take a moment of pause amongst the excitement to contemplate the legal implications of selling NFTs with legally protected works. When infringing a copyrightable work through the minting process, one must balance the cost of copyright infringement versus the value of the NFT itself.

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

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In music copyright news, producer and DJ iMarkkeyz informed that his management is in talks with Cardi B’s in the wake of the success of his song, . The song features audio taken from one of Cardi B’s Instagram posts. Personally, when it comes to pandemic-inspired music, I am partial to Lawrence’s and Fred again… and The Blessed Madonna’s . While the former romanticizes the quarantine period of living in sweatpants, microwaving Pad Thai, and playing board games, the latter reminds lovers of concerts, music festivals, and dancing in general of what they have lost and will hopefully regain in the not-so-distant future. Many live music listeners are feeling the same way as Lacey Novinka, who revealed to the that she misses, “being with all these people, jumping up and down yelling, getting sweaty.”Ěý

What Have Musicians Lost? Ěý

While concert-goers have temporarily lost an experience that brings them joy, a recent detailing a brilliant jazz pianist’s departure from the music industry has brought to the forefront of my mind the losses suffered for those on stage. Ron Davis had spent over five decades in music and released 13 albums, but due to COVID-19, he lost the ability to play gigs and had to turn to his fallback career: law. Fortunately for Davis, his fallback plan doesn’t sound so bad. As he works on interesting cases and earns a steady pay cheque, he seems at peace with his shift away from the stage and towards the courtroom.

Unfortunately, not many musicians have fallbacks that offer the same level of fulfillment and financial security. Singer-songwriter Chris Luedecke took up work harvesting scallops, a job he as invigorating but not something he could see himself doing long-term as his desire to play again grows. Fiddler Ashley MacIsaac told that after gigs, which make up 95% of his gross income, were cancelled, he had to resort to selling the rights to his catalogue of recordings as well as two of his three best violins.

Many musicians need to tour and sell merchandise to earn a liveable wage. Royalties from digital streaming services, which the reports average half a cent per listen, are often not enough on their own. Kevin Erickson, the director of artist-advocacy non-profit group Future of Music, wants more than a return to the pre-virus status quo. He that the pandemic be viewed as “an opportunity to reflect on the precariousness that so many creative workers face, and to take bold action to remedy that problem.” Ěý

In conversation with Andrew Oliver, who fans may know as or as lead guitarist and bassist of , I learned that the entire music ecosystem feels the pandemic’s impact – from musicians to venue owners to promoters to sound and lighting-technicians. Oliver recounted the loss of many small and medium sized venues that “either closed down or were bought up by larger corporations. Many owners operate their venues as a labour of love, and it is terrible to see them be forced to sell their prized spaces.”

Oliver describes the last couple years as devastating for the industry and personally challenging as his band’s first European tour was cancelled. However, Oliver also left me with some hope for the future: “Many musicians, including my band mates… cycle between two modes: writing/recording and touring. When our tours got cancelled, we decided to take the opportunity to record as much music as we could… One big silver lining of the pandemic is the massive amount of music that is waiting to be released around the world.”

The Changing Copyright Landscape

After losing the ability to tour, musicians found creative ways to earn money and deliver music to and engage with their fans, including and , to name a couple. Oliver also mentioned TikTok, Discord, Twitch, Instagram live chats, and interactive YouTube premiers. Each of these platforms, and their associated copyright landscapes, present unique challenges and opportunities for both creators and users.

As the pandemic has pushed life online, live-event producers have moved into the digital sphere and must adapt to its more complicated and potentially more expensive IP licensing process. Writing for the , law professor Edward Klaris warns that as more businesses enter the rights clearance game, people may look for shortcuts. Like Erickson, however, Klaris also views the pandemic as an opportunity. For him, it is an opportunity “to avoid the chaos of the past, [and to urge] organizations across the board – whether individual performers, arts platforms, small businesses or major corporations – to start thinking and behaving like the multimedia companies they have abruptly become.”

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

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Held on May 27, 2021 as part of Gowling WLG’s 2021 Blockchain Webinar Series, explored all things non-fungible tokens (NFTs). Speakers included well-known entertainment lawyer Susan Abramovitch, entrepreneurship and technology commercialization expert Thomas Hunter, leader of the Toronto Gowling WLG advertising and regulatory group Daniel Cole, and founder and CEO of Vinay Gupta. Gowling WLG partner Michael Garellek moderated the panel.Ěý ĚýĚý

Physical Assets as NFTs

Gupta gave participants a glimpse of , the world’s first and largest NFT marketplace. The front page was populated with ‘traditional’ NFTs: digital art objects, from paintings to sculptures to cartoons. But Mattereum specializes in another kind of NFT: physical assets. Gupta showed participants listings like a and a .

Listings of this nature are an exciting advancement in the NFT space, and not only for die-hard Star Trek fans and gold collectors. With companies like Mattereum using NFTs to eliminate risks associated with purchasing physical assets online, such as false condition reporting, the possibilities are endless. While NFTs were not designed for the sale of physical assets, vault reports, warranties, and the work of lawyers can build up additional layers of protection and open up the NFT market to a variety of assets by providing a guarantee that the information listed is accurate and building contracts that protect buyers’ and sellers’ rights. For example, since the buyer, seller, website host, and physical asset may be in different locations, an arbitration clause in the contract of sale prevents uncertainty about which laws apply to the sale/use of the NFT and in which venue any dispute would be resolved. In the future, NFTs may even be used to buy and sell real estate.

Digital Assets as NFTs

Abramovitch explained the importance for artists, and agents or marketplaces that sell work on artists’ behalf, to be aware of the IP rights involved in the sale of a digital asset. These rights vary more than those attached to the sale of physical assets. For example, musicians typically wish to retain copyright in their master recordings and musical compositions. But by entering into an agreement with an agency or marketplace to sell their music as an NFT, they grant the right to sell a copy of their master recording or musical composition minted (NFT lingo for created) as an NFT. While the agency or marketplace selling the NFT may allow an artist to retain their copyright, they will likely try to limit the rights an artist retains in order to guarantee the scarcity, and therefore the value, of the NFT.

NFTs and the Law

Hunter provided advice for individuals inspired to start an entrepreneurial venture using NFTs. First, it is essential from a legal and regulatory perspective to define the commercial purpose of the NFTs for sale. Second, individuals must determine who holds the rights over the product in order to mint and sell it as an NFT. Abramovitch touched on this as well, explaining the importance for artists, agents, and marketplaces to understand who is legally authorized to mint and sell something as an NFT, or to transfer this right.

Abramovitch went on to explain that although an artist may own the copyright in a work, they may have granted exclusive licenses. If a recording artist performs a cover song, they cannot give an agent or marketplace the right to mint and sell that recording without the consent of the musical composition’s owner. Similarly, a photographer may own the copyright in their work, but they may infringe the subject’s personality rights by selling the photograph as an NFT without the subject’s permission.

If an existing brand wants to use NFTs in contests or promotions, Cole explained that in addition to copyright, patent, and trademark laws, brands must be aware of advertising, marketing, and contest laws that still apply. He notes that this is an area where the law needs further development to keep pace with technology. For example, section 206(1)(f) of the prohibits contests with purchase requirements where the prize is any goods, wares, or merchandise. Is an NFT a good, ware, or merchandise? This is one of the many legal questions about NFTs that remain unresolved.ĚýĚý

For more information on any of the above topics, and many more ranging from the environmental footprint of NFTs/cryptocurrencies to whether an NFT could be used as collateral for a loan, I highly recommend checking out the .

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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.Ěý

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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.Ěý

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