As society increasingly becomes digitised, so do the assets we own and desire. For example, the on-line gaming industry in June 2022 was estimated to be worth $220 billion and expected to grow by 2026 with a value at over £313 billion. We have recently seen many on-line games being launched (sometimes referred to as GameFi) which enable players to earn as they play. According to Cryopto.com, this digital asset classification is worth over $28 billion and includes games such as Axie Infinity, valued at $9+billion, and Decentraland, worth almost $5billion. More interactive charts and diagrams can be found on their website.

However, the use of an immutable technology such as Blockchain can potentially lead to complications in the case of copyright violations - how can you remove, amend or give the correct accreditations retrospectively if the information/data itself cannot be amended? This challenge is potentially of real concern when using a public blockchain as opposed to a permissioned/private blockchain. By allowing ex post modifications, surely it undermines one of the fundamental drivers of using Blockchain technology i.e. immutability? However, if, for some reason, one has used someone’s intellectual property (IP) without realising it to maybe create a Non-Fungible Token (NFT) and a digital representation of the IP has been put on a blockchain, what damages could a court apply to the legal owner of the IP it the digital representation could not be removed?

Currently, copyright registries around the world are not harmonised, nor is one copyright effective on a world-wide basis. Indeed, Art. 5 (2) of the Berne Convention on copyrights from 1886 and then amended in 1979, does not require a national registration for copyrights for the right to have legal effect. Copyrights and protecting of IP certainly present a challenge since different approaches exist, depending on the jurisdiction. In Europe, EU copyright law reform traces its history back to over 20 years ago, when the Information Society Directive (2001/29/EC) was adopted. It was proposed that copyright laws would be updated to protect digital assets and IP in particular, given the increasing digital nature of our day to day lives. June 2021 was, in fact, the deadline when EU member states were required to implement provisions of Directive 2019/790 on copyright. According to Legal Zoom in North America, digital IP is meant to meet the same criteria as physical creative work: “The work must be fixed in some tangible medium that can be perceived, reproduced or otherwise communicated, either by itself or with the aid of a machine. Copyright protection begins as soon as a work has been created and fixed in a tangible medium. You do not have to register your copyright or place a copyright notice on your work. In general, copyright lasts for the lifetime of the author, plus 70 years after the author’s death.”

A key for buyers, especially as regards digital IP, is how can they be certain that the alleged creator/seller of the IP is indeed the owner. This is one area in which Blockchain technology is potentially able to facilitate. The originator of the IP could record the IP on a blockchain and then have timestamped proof of when the IP had been registered. One business that offers such a service is California-based FileProtected. For a very small sum, IP can be recorded on a blockchain and even a QR code can be attached to the digital IP so those that wishing to have a license to use the IP (or simply obtain more details about the IP) can do so simply by scanning the QR code and be taken to the IP owner’s website/contact details. Another interesting feature of using Blockchain technology is the ability to establish smart contracts so that every time a digital asset is sold, the originator of the IP can receive a % of the sale and so create an on-going income from his/her creative work.

The management of digital rights or as some call it, Digital Rights Management (DRM), is not merely a company’s logo, the photos you take or the words you write but encompasses many of the files and day to day activities for all of us working in our homes and offices. Adobe described DRM to include: “All the processes, policies, and technologies organizations use to control how content creators use and share digital assets. DRM considers intellectual property and copyright laws to protect both content owners and corporations as they distribute and create content”. Our spending habits and preferences generate, in effect, personalised digital assets which many of the Silicon Valley giants such as Amazon, Google, Facebook etc. have capitalised on so effectively by the selling digital data to advertisers. The protection of digital assets is a complex field but one that business intrinsically needs to address and understand as we march inexorably towards an ever more digital economy.

This article first appeared in Digital Bytes (10th of November), a weekly newsletter by Jonny Fry of Team Blockchain.