Today’s guest post is by intellectual property lawyer and novelist Brad Frazer (@bfrazjd).
We have an original oil painting hanging over our fireplace in the basement. We commissioned it many years ago from a young local artist whose work we enjoyed. The painting is probably worth less today than when we bought it in the late 90s.
On the back of the painting is an envelope, taped there by the artist. Inside is a handwritten “certificate of authenticity” signed by the artist indicating that he in fact did paint the picture, a whimsical scene of a stylized living room that was meant to be hung, well, in a living room. That certificate is the only proof of provenance we have should that artist suddenly become famous.
If instead of actually committing oil to canvas, however, the artist had created the work purely and only in a digital form, he could not have attached his physical certificate of authenticity to the work. Thus, when he emailed me the JPEG or PNG of the image for me to presumably print, frame, and hang over my fireplace, all I would have to prove provenance is his email indicating that the attached was his original work of authorship. And I might not even have such an email!
So, what to do to establish provenance of wholly digital works of art? NFTs! These digital certificates of authenticity, minted and recorded in the blockchain, certainly have their utility in terms of establishing provenance, but as a copyright lawyer, I frankly stand all amazed at the hoopla surrounding non-fungible tokens.
Why? Well, whence does a work of art derive value? Provenance, yes, but more accurately, scarcity. It’s Econ 101 all over again. If there’s only one The Starry Night, never to be re-created again by Van Gogh, and the provenance is not in question, that work of art is worth tens of millions of dollars. If there were fifty or a hundred The Starry Nights, however, all identical to the original and all painted by Van Gogh, the value of that masterpiece would certainly decrease.
So now consider a wholly digital work of art, a work that may be infinitely and easily copied and re-created by everyone who sees it on the internet simply by right-clicking on the image and selecting “Save As.” Or “Print.” Or “Email.” Or “Publish to Facebook.” Again, and again and again. There is thus no inherent scarcity to wholly digital works of art.
And this is true even if the artist has minted an NFT to go along with it because all an NFT is is a digital form of provenance. Admittedly the unique, immutable non-fungible token itself may have value as a novelty and because there is only one, but I worry about the general public’s perception that the NFT somehow establishes the value and creates scarcity of the underlying work of art.
And so now enters our old friend copyright law. With or without an NFT, the only way an artist can stop the unlawful reproduction of a digital work of art is by using copyright law, as is true for any work authored in, say, the last 100 years. For today, U.S. copyright law does not recognize an NFT as that “thing” that will get you admission to federal court to sue for copyright infringement. Unless a digital artist has registered her copyrights in her portfolio with the United States Copyright Office, she has no legal remedies against illegal copying of her digital works, NFTs notwithstanding, and this means she has no real effective mechanism to create scarcity of her work by controlling the supply.
So until Congress rewrites 17 USC Section 411(a) or the U.S. Supreme Court revisits its recent Fourth Estate decision (holding that the plaintiff must have a copyright registration certificate in hand to maintain an infringement action in federal court), an NFT is not equivalent to a copyright registration certificate issued by the Copyright Office. Thus, cutting-edge digital artists are left with a legal remedy hundreds of years old to create the requisite scarcity to drive value in their digital works, even if the artist has minted an NFT for the work.
I guess I understand the novelty of NFTs, but at the intersection of economics and copyright law, I am flabbergasted at the extreme values currently associated with these blockchain curiosities when the underlying digital works of art gain no protection against copying through their existence.
Think of it this way: an investor paid $69 million for the NFT minted in connection with Beeple’s digital work of art Everyday: The First 5,000 Days, but unless and until Beeple obtains a copyright registration certificate on that work, someone could, for example, print 1,000 T-shirts with exact copies of 5,000 Days on them and sell them on Etsy with relative impunity. So, Beeple, if you’re reading this, have your lawyer register your copyrights in all of your digital works whether they have NFTs minted or not. This is the only way you can go to court, get an injunction against an infringer, and create scarcity in your digital works of art.
Brad Frazer is a partner at Boise, Idaho law firm Hawley Troxell where he practices internet and intellectual property law. He is a published novelist (http://www.diversionbooks.com/books/the-cure/) and a frequent speaker and writer on legal matters of interest to content creators. He may be reached at bfrazer@hawleytroxell.com.