Art meets crypto – traditional copyright issues in a tokenized world | Smart and Biggar



Non-fungible tokens (NFTs) are the latest development in disruptive blockchain technology innovations, this time in the world of digital art, collectibles and even luxury goods. Traditional auction houses have already started to take advantage of the technology, with a digital artwork selling for $ 69 million on Christie’s,1 and a visualization of the Internet source code sold for $ 5 million at Sotheby’s.2 Luxury brands, like LVMH, are collaborating to develop the world’s first global luxury blockchain that uses NFTs.3 But what exactly are NFTs and why are they getting so much attention now?

NFTs are digital tokens that can be used to represent ownership of unique digital assets on the Ethereum blockchain.

As the name suggests, NFTs are “non-fungible” in that they are not interchangeable for other items due to their unique properties, similar to owning a car with an identification number. single vehicle. Any digital asset can be ‘tokenized’ in an NFT through the ‘keystroke’ process, which involves executing a piece of code (a smart contract) on the Ethereum blockchain to assign ownership and manage the transferability of the asset. Due to the success and interest, several other blockchains are now adding NFT functionality as well. A key feature of blockchains is that the ownership record cannot be changed. As such, an NFT provides a verifiable and reliable claim of ownership over that symbolized digital asset.

What is Ethereum?

Ethereum is a blockchain platform with its own cryptocurrency, called Ether (ETH) or Ethereum, and its own programming language, called Solidity.

As a blockchain network, Ethereum is a decentralized public ledger for verifying and recording transactions. Network users can create, publish, monetize and use apps on the platform and use its Ether cryptocurrency as a means of payment. Insiders call the decentralized applications on the network “dApps”.

As a cryptocurrency, Ethereum is second in market value behind Bitcoin, as of May 2021.

Owning an NFT is not the same as owning the underlying digital asset.

NFT buyers should be aware that even though the ownership of the genuine digital asset is established by the ownership of the NFT, the digital asset itself can be viewed, downloaded, and enjoyed by anyone (for example, the artwork sold on Christie’s can be found online4 ). Indeed, Christie’s conditions of sale clearly state:5

“Your purchase of parcel does not provide any rights, express or implied, in (including, without limitation, copyrights or other intellectual property rights in and to) the digital asset underlying the TVN… “

Drawing parallels from the physical art world, owning an NFT is like owning a single print of a work of art signed by the artist, while several other people can simultaneously have identical unsigned prints. As noted below, the artist retains the copyright in the underlying work.

The purchase of a DTV does not confer the underlying copyright in the digital work.

In Canada, for copyright to pass to the purchaser, the copyright owner of the work must provide an express written assignment. Such an assignment could possibly be included in the Smart Contract executed to hit the NFT, but this has generally not been the case to date. If the buyer desires copyright, due diligence should be taken to ensure that the contract includes those rights. As indicated above, the assignment of rights can also be specified by the sales conditions of the auction house, which are distinct from the contract attached to the NFT. For example, Christie’s spells out the rights that a buyer does not get:

“… you do not have the right to distribute or otherwise market the digital asset, or to represent or involve any kind of sponsorship, endorsement, affiliation or any other relationship with the seller and / or creator of the digital asset without the prior permission of the seller or the party or parties who hold these rights. “

Watch out for NFT buyers: viewing, copying, or typing a digital artwork may be copyright infringement.

The digital and accessible nature of DTVs creates the risk of inadvertent infringement of the underlying copyright of the digital work. Like any online image, NFTs can be physically printed, displayed in digital frames,6 or easily shared on online forums, after accessing the digital work through the link specified in the NFT transaction (which is open for inspection on the Ethereum blockchain by anyone – for example, view the transaction for the artwork sold on Christie’s7 ). It is an infringement to do with a work an act that only the copyright owner has the right to do unless such acts are authorized or fall under a fair use exception. Additionally, individuals may believe that a digital work that they own (but is not the author of) can be minted and sold as DFT. However, it would also likely violate copyright, as in doing so they would distribute the work and make it available to the public without permission.


NFTs are creating an emerging market for artists and collectors to sell their unique ‘signed’ digital assets in a way that also makes unsigned copies available to the public. Both sellers and buyers of TVN should ensure that they understand the copyright implications of the transaction. Additionally, any member of the public seeking to make meaningful use of an NFT image (e.g., sell, distribute, or archive copies) should seek competent legal advice to ensure that they have addressed all legal issues. author.

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