Confronting Copyright: How NFTs Challenge Intellectual Property Traditions
The most pressing issue with copyright policy in the United States appears to me in the form of commercial competition within the arts. As our culture continues down the path of technological evolution, the hottest commodities emerge in ideas of ownership and control over information/knowledge as a buyable good. Intellectual property protection becomes increasingly necessary as the production and circulation of knowledge picks up speed and efficiency. On the law and economics of intellectual property, Richard Posner says, “the increase in intellectual property litigation was made inevitable by the rise of the information economy […] which is now, incidentally, America’s largest export” (5). We seem to be at a cusp in this moment — our society is coming to a point where our traditional copyright policies are not completely functional in the infinite void of the internet, especially in the digital art and social media market. This paper will discuss the issues that plague the ideology of copyright policy, and will dive into the example of NFTs as a form of ownership that deserve an alternative perspective on copyright and technology.
At the most foundational level, United States copyright policies work to incentivize creativity and original production in the arts. There are some fundamental issues with this ideology, namely the emphasis on commercial gain as incentivization. The United States legal system operates in terms of the individual, and the policy is written to favor individuals in creating for personal benefit. This centralization on the individual is reflective and perhaps a cause of our hyperfocus on celebrity culture, fame, and idolization. As we immerse culture further into the digital world, however, the divide between private/individual interests and public interests could widen. On the Digital Millennium Copyright Act, Glynn Lunney says, “With the enactment of the DMCA, there is a very real danger that our system of protecting creative works will serve primarily private interests’’ (815). These tensions, embedded in digital society, inhibit creators from capitalizing on the collaborative nature of the arts and encourage creators to operate in a centralized, individualized, dog-eat-dog world.
The Western focus on the individual ties into the Western understanding of the concept of originality. In Byung-Chul Han’s text on Shanzhai culture, he compares the Western view on originality with that of the Far East. Of Western ideology, he says, “Being as a fundamental concept of Western thought is something that resembles only itself, and that tolerates no reproduction outside itself” (11). The idea of the original is strictly linked to the labor and novelty and genius of the creator and condemns transformation of the original. This reflects the West’s obsession with the linear, with structured events unfolding one in front of the other. Western culture cherishes conservation and authenticity as core elements of liberalist thought.
Revering the past helps indicate progress that has been made since that time, and to alter the original is to deface that progress and the value of the authentic. What this ideology refuses, however, is the acknowledgement that appropriation is at the core of the arts and of creation. Jonathan Lethem phrases it well in his article “The Ecstasy of Influence.” He says, “Contemporary copyright, trademark, and patent law is presently corrupted. The case for perpetual copyright is a denial of the essential gift-aspect of the creative act” (Lethem). The fixed mindset of contemporary copyright has many drawbacks that inhibit the ability to create policy that applies not only to the past and the present, but to the future as well.
A predetermined hierarchy also exists within copyright, as the law tends to favor large corporations and wealthy individuals who are supplied with the time and resources to hire esteemed lawyers, use powers of legal intimidation, and maintain exclusive ownership of their creations. On the other hand, these powerful creators hold the potential to usurp the reputation and profits of a lesser known artist by copying or exploiting their work without repercussion. Take a look at this TikTok, where creator Cynthia Kao explains how her work was essentially stolen and redistributed by Netflix. This practice is common in almost every area of the arts, including social dance media, film, music, graffiti and street art, and the visual arts. Reputation and financial standing are key factors in determining the fairness of the infringement, though these factors are often not considered in copyright cases, as the severity of the infringement depends more on the quality of the work than of the person or corporation.
These are the issues that have plagued copyright before and during the digital era, but as we enter into an age where technology (and the internet, in particular) quickly become the predominant means of production and consumption, we need to take a long hard look at copyright and how it can be transformed to better suit this emerging digital climate of creativity. We can evaluate this conflict by looking at the recently popularized phenomenon of NFTs to evaluate what should be done with copyright in the coming years.
NFTs — non-fungible tokens — are defined by expert Moish E. Peltz as, “digital files with a unique identity that is verified on a blockchain” (Martin). NFTs are not interchangeable, cannot be replaced by a copy, and their transaction histories are permanently embedded in the blockchain. Thus, an NFT serves as a digital certificate of authenticity, of exclusive ownership over the file. NFTs raise a number of questions about ownership, creativity, authenticity, and legitimacy, many of which currently remain unanswered. Before diving into those complications, however, I would first like to discuss blockchain as a sort of open source economic model and how it is an interesting alternative to how we understand ownership.
From my understanding, blockchain is a decentralized approach to transactions. The blockchain exists not in a central location, but within a community network where each participant must approve of the transaction before it is legitimized. Once it does occur, the transaction is stored permanently as a block of its own and added to the blockchain. After its documentation, that particular transaction cannot be modified. Awani Kelkar describes blockchain as “immutable and secure” (Kelkar). This structure is very interesting to consider in contrast to traditional transaction structures, seeing as the transaction itself occurs between two parties but must be verified by the community as a whole before it is validated.
Applying this quasi-open-source model to copyright, we can imagine a situation in which copying, borrowing, or transforming an original creation exists outside of the jurisdiction of copyright and relies on community approval instead of legal approval. Keeping this in mind, an interesting alternative to copyright would be to approach it not as a preventative measure, where a creator must copyright their creation in order to avoid exploitation, but instead as a proactive measure, where infringements are evaluated by the arts community as a whole and legal action is taken only in exploitative situations. This approach would curtail legal intimidation, expand the possibilities of derivative creations, and make the art world more collaborative and accessible in general. It would also still hold creators accountable for wrongfully stealing in any context, and would maybe expand acceptance of a collaborative artists network with self-governing principles.
Within the past two years or so, NFT culture has completely erupted across pop culture. Musicians, TikTokers and famous meme creators, NBA teams, visual artists, digital artists, and celebrities are turning their creations into NFTs and diving into cryptoculture head-first. Copyright plays an interesting role here in a few different scenarios. Let’s look at the case of TikToker Nathan Apodaca. In the LA Magazine article written about him, Brittany Martin describes his situation:
[The] juice-drinking, Fleetwood Mac-jamming, skateboarder 420Doggface208 on Tiktok recently hoped to monetize his signature video clip with an NFT release. But Stevie Nicks, writer of the song Apodaca is so iconically vibing to while skating, supposedly nixed the notion. TMZ reports that Apodaca’s team reached out to Nicks for permission, even offering a share of the ultimate sale price, but she declined (Martin).
In this case, Apodaca took appropriate action in asking permission to use the song “Dreams,” but it is safe to say that Nicks declined because of the unknown qualities of the NFT market. By signing off on the NFT, Nicks could have risked a situation in which Apodaca resells his NFT for profit and Nicks is left without a cut. If Apodaca had successfully negotiated with Nicks and created an NFT with her song in the background, there is a chance that she would have no ownership over the song in that context. It is imperative that these issues are quickly addressed within the realm of copyright, as this type of situation exemplifies the risk of impeding creativity in this particular digital realm.
There are other complications with NFT transactions as well. In some cases, purchasing an NFT allows you to also purchase the underlying copyright which would open up space to profit off of both the sale of the NFT and the sale of the underlying copyright. In other cases, when you purchase an NFT, you are prohibited from exploiting it for commercial purposes. These varying cases complicate ideology of copyright even further. NFT culture reinforces the idea of authenticity, but leaves the question of ownership open-ended. Who owns the work once it becomes an NFT: the original creator, the blockchain, or the NFT owner?
In her piece on the legality of NFTs, Georgina Adam questions, “An NFT is just a link to a work of art stored on another platform — OpenSea, Nifty or other. But is the buyer sure that the vendor has a good title to that work? What if the host site goes out of business? The digital art would disappear with it. And is the buyer getting the right to commercialize the image?” (Adam) These questions are not to be taken lightly, as there are millions of dollars at stake in the creation and sale of NFTs. For example, Adam says, “Shockwaves [reverberate] from the $69.3m paid for Beeple’s NFT (non-fungible token) of his digital work, Everydays: The First 5000 Days. And alongside cryptocurrency-rich investors looking for a quick profit, scammers and fraudsters have entered the space amid the frenzy” (Adam). Is copyright policy necessary as the art world takes a leap into the digital?
I would argue a solution lies in something I noted earlier in this paper. Copyright policy stands now as a preventative measure, an action taken in order to avoid another artist co-opting an original creation. There are already issues embedded in this thinking which seem to obfuscate the obvious and inherent essence of creativity: that it is built on copying. In the case of NFTs, there is potential for this market to stimulate the creative economy (that is, if this phenomenon isn’t a fad that gained traction during COVID and will die down in the coming years), but not if intellectual property protections are strengthened in the process. If copyright protection were to become an option to creators who feel their works are being exploited rather than remain a method of enclosure, the creative commons would open up in the digital sphere and allow creativity to flourish as creators find new ways to manipulate already existing creations in the NFT market. Precautions should be taken, however, to protect those artists whose work was never meant to enter the commercial sphere or whose profits are compromised by infringing competitors.
Works Cited
Awani Kelkar, “Non-Fungible Tokens and Copyright Law: A ‘Nifty’ Dilemma,” Bloomberg
Quint, April 16, 2021.
https://www.bloombergquint.com/opinion/non-fungible-tokens-and-copyright-law-a-nifty-dilemma
Brittany Martin, “Thinking of Buying or Minting an NFT? Here’s What You Need to Know,”
Los Angeles Magazine, March 22, 2021. https://www.lamag.com/article/nft-law-copyright/
Byung-Chul Han, Shanzhai: Deconstruction in Chinese, MIT Press, 2017.
Cynthia Kao, Tik Tok, April 30, 2021.
Georgina Adam, “But is it Legal? The Baffling world of NFT copyright and ownership issues,”
The Art Newspaper, April 6, 2021.
Glynn S. Lunney, Jr., “The Death of Copyright: Digital Technology, Private Copying, and the
Digital Millennium Copyright Act,” Virginia Law Review 87, no. 5 (Sept. 2001).
Jonathan Lethem, “The Ecstasy of Influence: A Plagiarism,” Harper’s Magazine (February
2007).
Mitchell Clark, “NFTs, explained,” The Verge, March 11, 2021.
https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq
Richard A. Posner. “The Law & Economics of Intellectual Property.” Daedalus 131, no. 2
(Spring 2002).
