Pankhuri Malik is an IPilogue Writer and an LLM Student at Osgoode Hall Law School.
I attended the Global Online Thesis Topic Meetings (“GOTTMs”) hosted by Leiden University on April 5, 2022. Prof. Dirk Visser of Leiden University moderated this discussion on non-fungible tokens (“NFTs”) and intellectual property (“IP”), which featured three speakers—Richard Lehv, Alexandra Giannopoulou, and Andres Guadamuz—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 Mintable, Opensea, and Cryptokitties. 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 NBA Top Shot, which are collectibles featuring one or more NBA players with their statistics. Think basketball cards, but virtual! Other examples of NFTs include virtual sneakers (sold for a total of $3.1 million USD) and Jack Dorsey’s first-ever tweet whose NFT sold for $2.9 million USD in March 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 CJ Hendry who created a realistic painting from an iconic Andy Warhol and Jean-Michel Basquiat 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 University of Sussex and the editor-in-chief of the Journal of World Intellectual Property. He authored “The Treachery of Images: Non-fungible Tokens and Copyright”. 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 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 “The rise of NFTs: These aren’t the droids you’re looking for”.
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 2010, 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.