Blockchain and the future of IP in 2022

The?main?disruption NFTs and blockchain technology cause for media, is a change in our understanding?of IP value creation and ownership. Three main features of tokens and blockchain technology reflect those implications:

• Utility of NFTs
• Digital scarcity through token gates
• Copyright implications for virtual assets

NFT projects are usually based on original images, granting the owner of the token (NFT) certain rights around those works. Whilst the utility and digital scarcity feature is being tested out in different models and still in its early days, we currently identify two opposing sides on the copyright protection question:

1. Projects limiting the rights to use IP attached to the token. They give the owner certain licenses limited in time and usage, therefore choosing a middle ground between traditional copyright exploitation and a new, more open approach to copyrights. These licenses may vary from merchandise to use in social media and might even grant the holder a certain percentage of profits generated by the IP.
2. The other side using the CC0 license from the creative commons toolkit, assigning its IP to the public domain, therefore letting holders and fans create and monetize content without any restriction ("no rights reserved"). While user generated content (UGC) on YouTube or other social platforms works in similar ways, the main difference is that owners of the original IP might let the fan monetize UGC but does not grant them any rights or licenses. CC0 on the other hand assigns the IP to the public, letting everyone exploit and build on top of it.

CC0, creative commons and new licensing approaches have influenced IP and its value creation for several years. The innovation is the degree of automation over the blockchain and the shift in the general consensus, especially for the next generation, of how (pop culture) IP should be monetized and distributed.

We see this shift clearly on several ends:

??Crypto Punks vs. Bored Apes Yacht Club (BAYC)

The "Crypto Punks" and the "Bored Apes" are both extremely successful NFT projects and considered “blue chips NFTs”: these NFT are not subject to strong fluctuation in pricing as the secondary market (where users sell to users) has consistently raised the price of both projects. Both represent the most successful NFTs drops in terms of transactional volume and market capitalization. There is a critical difference between both projects though:

while owners of a "Crypto Punk" are not entitled to exploit the IP under what is commonly known as "NFT license", Bored Apes holders have the ability to create merchandise, animated videos or other content. Brands like Adidas or Universal Music have partnered with BAYC, celebrities like Eminem or Jimmy Fallon purchased Apes to tap into the community. And the BAYC community has capitalized massively on it: they are currently trading at a floor of 74 ETH and have surpassed the punks for the first time (60ETH), claiming the #1 spot as the most successful NFT project so far.

Follow @Journey-li on linkedin for excellent news on around NFTs and crypto. https://www.dhirubhai.net/in/journey-li/

??U.S. group to buy soccer club

Lead by a sports betting analyst and a successful NFT trader, a group of U.S. investors under the umbrella of WAGMI FC intends to buy the British soccer club Bradford City AFC, currently playing in the second tier of English football. The transaction will be financed through NFT sales and the (potential) new owner plans to make NFTs the cornerstone of the sports organization.

NFT sales, where the project owner lets users “mint” an NFT onto the blockchain for a certain price, are a popular tool to raise initial capital for new projects. But instead of attaching shares of the club to the NFT, which would give every NFT holder legally a fractional ownership of the club, the investors will not give up ownership or governance over the team. Instead holders will be able to produce and sell merchandise with the team logo as the NFT will be seen as "collectible with certain IP exploitation rights." Therefore WAGMI FC plays with a decentralized approach publicly, but does not hand out ownership and limits the usage of the club logo.

https://www.washingtonpost.com/sports/2021/12/16/daryl-morey-crypto-nfts-english-soccer/

??Miramax suing Tarantino

The famous director plans to auction a series of seven exclusive "Pulp Fiction" NFTs, containing handwritten screenplay pages. According to Tarantino and his lawyer, he reserved the rights for "screenplay publications” in 1993, which grants him the rights to publish his handwritten pages and notes. Miramax, the studio behind the movie, sued Tarantino on the grounds that the sale of an NFT is a "one time transaction" and not as a publication. They also sued the director for copyright and trademark infringement, as some notes contain non-released information about the characters and story. Miramax also warned Tarantino and the public of acquiring assets containing protected material that could further lead to liabilities and claims for statutory damages. Tarantino sued Miramax in return - both parties are scheduled to meet in February, while the sale seems to take place at the end of January.

https://deadline.com/2021/12/quentin-tarantino-nft-lawsuit-dismissal-motion-pulp-fiction-miramax-1234888031/

Implications

Blockchain technology has set a new infrastructure, thousands of users have started to redefine ownership in their understanding. Similar to how UGC has shaped how creators can monetize their content and amplify video games, music or movies, the implications for IP and ownership through tokens are slowly becoming visible:

we are on the brink of a massive user owned IP flywheel, where a community drives attention and value towards the IP while co-owning fractions of it. the ownership changes rapidly within the community, therefore staying decentralized and not being monetized by a single entity.

The downside is a lot of legal blurr, as the tokens itself only contain metadata and usually only link to an image on a server. Also copyright subject to the laws of the jurisdiction it originates or is traded in, and the legal implications differ strongly between countries.

The most interesting question will be how protected copyright will be fought over once it moves to public domain, and 2022 is poised to set the parameters for the future:

2022 - the Blockbuster year for IP

What is named to be a "Blockbuster year for IP" sees original works and designs published on or before 1926 moving from copyright protection to public domain in 2022. This includes major works such as "Winnie the Pooh" or "Bambi" by the Walt Disney company.

The "Winnie the Pooh" franchise has brought in over $80Bn (yes, that's right) for Disney, only trailing the "Mickey Mouse" franchise. While Disney can't sue anyone using the original book in a project from 2022 on, they have trademarked the name and still hold the rights to derivatives and all of its versions of the Winnie the Pooh characters, since those specific copyrights have not expired.

This year will be indicative on how major corporations owning IP will manage the public domain and how the public will make use of those works in a virtual environment that is completely redefining ownership and copyright.

BTW: Mickey Mouse, as originally seen the first time in the 1928 short cartoon "Steamboat Willie", enters the public domain on Jan. 1, 2024.

Source: Getty Images

SOURCES

https://deadline.com/2022/01/quentin-tarantino-lawsuit-pulp-fiction-nft-auction-miramax-letter-1234907552/

https://finance.yahoo.com/news/hollywood-taps-into-nft-craze-as-anthony-hopkins-movie-uses-blockchain-for-distro-183733236.html

https://www.hollywoodreporter.com/movies/movie-news/nfts-film-funding-martin-scorsese-niels-juul-1235055385/

https://www.thestreet.com/investing/disney-faces-copyright-expirations-for-mickey-mouse-winnie-the-pooh

https://arstechnica.com/tech-policy/2019/01/a-whole-years-worth-of-works-just-fell-into-the-public-domain/

https://www.larvalabs.com/cryptopunks

https://www.thestreet.com/investing/disney-faces-copyright-expirations-for-mickey-mouse-winnie-the-pooh

https://qz.com/2107498/winnie-the-pooh-is-among-the-works-entering-the-public-domain/

https://www.morningbrew.com/daily/stories/how-disney-held-onto-winnie-the-pooh-until-2022

https://www.hollywoodreporter.com/movies/movie-news/nfts-film-funding-martin-scorsese-niels-juul-1235055385/

https://thedefiant.io/bored-apes-yacht-club-cryptopunks-copyright-fight/

https://www.fool.com/investing/2021/12/30/disney-risks-losing-copyright-protection/

https://creativecommons.org/share-your-work/public-domain/cc0/