Lawyer: How does the NFT platform prevent copyright loopholes?

Original title: "Copyright loopholes again, can the NFT platform be saved?" "

The degree of involution in the NFT industry is no less than that of any other industry. Competitors have smeared each other, and even a series of lawsuits have emerged. "Pit-digging" NFT rights protection emerges in an endless stream. On the one hand, each platform has to pursue the halo and exclusivity of big IPs, and on the other hand, it has to face the madness and loss of consumers .

Today, I will make an abstract summary of the phenomena that Sister Sa’s team represented, assisted in processing and observed, and remind all old friends to minimize disputes and promote the healthy development of the industry.

Songs that are widely sung and anime that everyone loves are naturally worth a lot. The initial NFT platform is still playing with information asymmetry. Many traditional artists and galleries are in the testing stage of NFT. They don’t know much about technology, and they look at overseas counterparts. It was relatively easy to get authorization at that time, and they almost drank a lot of wine. That's it. But it is a pity that at that time, most NFT platforms were reckless platforms for young boys, and the authorization contracts were so rough that they could not bear to look directly at them. There is no direct agreement on the reproduction rights and credit network rights necessary for NFT casting and sales, which has buried hidden dangers and led to the outbreak of subsequent disputes.

We have seen all kinds of wonderful authorizations, so we will not show them one by one (mainly because they are too distinctive, and we are afraid of being seated). To remind everyone, when signing the IP authorization agreement, pay attention to the following points:

(1) Ask whether the obligee is an author . If the obligee is an author, he may be required to provide manuscripts, originals, legal publications, copyright registration certificates, and certificates issued by certification agencies;

(2) If the other party is not the author, ask him how to obtain the authorization, ask him to show the contract for obtaining the rights, and check the source of upstream rights to determine whether the right of trust and reproduction has been circulated intact. Pay attention to checking whether the authorization chain is complete, so as to prevent the embarrassing situation where the authorizer has no rights. Otherwise, once the NFT is minted and sold, the holder's rights cannot be guaranteed, and once it is fermented in the community, stakeholder risks will occur.

(3) Keep traces of negotiations , such as WeChat chat records;

(4) Try to strive for exclusivity and ensure scarcity;

(5) The second choice is the priority for sale, and the later sellers must be separated for a period of time and cannot be exactly the same;

(6) Pay attention to the authorization time . Nowadays, some judgments mislead NFT as property rights, and do not grant "exhaustion of rights" (non-legal fans, please ask the legal affairs of this unit directly). In the end, there will be huge conflicts between buyers and platforms, so be sure to notify them in advance described in the registration agreement.

Finally, platform A obtained the relevant copyright authorization for issuing NFT. As a result, the IP party broke its promise, slightly modified the authorization contract between the two parties, and authorized platforms B, C, and D to issue NFT. As a result, the price of the NFT under the IP dropped, the holders felt disappointed, and even complained. In this case, can platform A, which has obtained copyright authorization, sue its upstream IP party? Does A have the right to sue B, C, and D?

It needs to be discussed on a case-by-case basis.

(1) When the non-exclusive use right is repeatedly authorized, the prior licensee's difficulties

When the IP party grants a non-exclusive license to platform A, the IP party has the right to multiple licenses for the same copyright property right, that is, the right to license the use of platforms B, C, and D. Therefore, the IP has not violated the contract with A, and A It has no right to claim that the IP party breached the contract, and has no right to sue B, C, and D.

It is worth noting that platform A not only suffers from the lack of scarcity that may be caused by non-exclusive use licenses, but also cannot predict, control, and decide that more platforms B, C, D, and even E, F, and G have the same work on the same work. Without any adaptation or modification, it is possible to directly issue a large number of NFTs with this work, so that the NFT of this work may constitute the "non-homogeneous characteristics of NFTs that are not weakened by mass creation" mentioned in the initiative of the three associations , and then It caused the regulatory authorities to carry out integrated supervision on the NFT minted and issued based on this work, and took measures such as compulsory removal from the shelves, and caused risks for stakeholders.

(2) When the exclusive use right is repeatedly authorized, how does the prior licensee protect its rights?

1. Claim breach of contract or infringement against the copyright owner

When the IP party exclusively licenses the A platform, it is obvious that A has the right to sue the IP party authorized to it . For example, a printmaking work created by a certain painter is directly authorized to be cast and distributed on the NFT platform. The content of the authorized rights is the same as above, so Platform A can directly sue the artist for breach of contract. There is still some controversy as to whether an infringement lawsuit can be filed, but Sister Sa’s team believes that the infringement lawsuit also has a basis for claiming rights.

The reason for the lawsuit for breach of contract is obvious. According to the agreement, in the case of an exclusive license, the copyright owner shall not license the same expression to a third party for exclusive or non-exclusive use according to the agreement.

Sister Sa’s team believes that the basis of the claim for the infringement lawsuit is that the IP party has violated the exclusive right to use the platform A. Taking the right of information network dissemination as an example, because the IP party, knowing that it has granted platform A the exclusive right to use the information network dissemination right, then licenses and authorizes platforms B, C, and D for the same right, which undoubtedly infringes on the prior rights. Licensor A's exclusive right to use the platform.

In this case, let’s look at a case regarding the determination of the subject who owns the right of information network dissemination of works. In the retrial case (case number: (2021) Jing Min Zai No. 77) between Company A and Company B infringing on the dispute over the right to disseminate information on the network of works, the Beijing High Court held that the licensee who signed the contract first had the exclusive right to disseminate information on the network of the work. The reason for the judgment is: "According to the evidence in the case, Company A enjoyed the exclusive right to disseminate information on the network from April 23, 2014 to August 1, 2020, and Company A obtained the exclusive right to disseminate information on the network. The time was obviously earlier than the time when Company B obtained the information network dissemination rights of the works involved. Therefore, according to the aforementioned provisions, without the permission of Company A, Company B used the "XX Network" mobile phone operated by it during this period to The client’s dissemination of the work involved violated the exclusive information network dissemination rights enjoyed by Company A. ”

2. The subsequent licensee can be required to stop the infringement, and the subsequent licensee can claim damages when the subsequent licensee has the intention to infringe

Then, another question arises at any time. Can platform A, which obtained the exclusive license first, sue platforms B, C, and D, which obtained the license later, to demand that they stop the infringement and bear the corresponding liability for compensation?

As mentioned above, platform A has the exclusive right to use the information network dissemination right of the work. Therefore, under the condition that platform A, the first licensed subject, has obtained the exclusive right to use, the later licensed platforms B, C, and D exercise the exclusive right to use the information network dissemination right without the permission of platform A, which infringes the rights of A The exclusive right to use the information network dissemination rights of the platform .

So, what kind of rights should Platform A claim against B, C, and D? One is the right to ask B, C, and D to stop the infringement . It is generally believed that in copyright infringement cases, the premise of stopping the infringement is not the fault of the infringer. The aforementioned (2021) Jingmin Zai No. 77 retrial civil judgment also held this view. The second is to require platforms B, C, and D to assume liability for damages if they can prove that they are subjectively at fault . (The proof of subjective fault is a technical task, which will not be expanded in this law-enhancing article. Readers who need it can contact Sister Sa’s team to provide support .)

Affected by the overseas NFT market, the mainstream of domestic NFT is still pictures or videos. The pictures are mainly cool avatars, and the videos are blooming. In order to reduce the legal risks caused by the upload of infringing works, compliant NFT companies have special review posts, and work hard every day to detect whether there are infringing works uploaded in the image library. As everyone knows, music works have unique advantages when they are made into NFTs .

In my country, the China Music Copyright Agreement is a collective management organization for music copyright. According to Article 8 of the "Copyright Law", copyright owners and rights holders related to copyright may authorize copyright collective management organizations to exercise copyright or rights related to copyright. Paragraph 1 of Article 23 of the "Copyright Collective Management Regulations" stipulates that when a copyright collective management organization permits others to use the works, audio and video products, etc. it manages, it shall conclude a licensing contract with the user in written form. That is to say, the China Music Copyright Association signs contracts with users for the use of music works it manages, issues licenses to users and collects usage fees under the authorization of copyright owners.

The rights of musical works managed by the China Music Copyright Association, in accordance with the provisions of Article 9 of the Association's "Articles of Association", include: (1) using musical works for public performance; (2) using musical works for public broadcasting; (3) using musical works Production, reproduction, and distribution of audio and video products ; (4) Using musical works to produce radio and television programs; (5) Fixing musical works on carriers by making movies or methods similar to making movies; (6) Using information network dissemination Providing musical works to the public ; (7) Other uses of musical works suitable for collective management. In other words, in order to protect the diversity of music, it is convenient and efficient to pay the royalties to the China Music Association to obtain the "information network dissemination rights license" .

But here it is worth noting that NFT platform operators should pay attention to that, according to the provisions of Article 23, paragraphs 2 and 4, of the "Copyright Collective Management Regulations", copyright collective management organizations are not allowed to enter into exclusive licensing contracts with users. The term of the use contract shall not exceed 2 years . As mentioned above, in the case of only obtaining non-exclusive licenses for copyrights such as information network dissemination rights, NFT platforms may face the corresponding shortage of NFT scarcity, regulatory and stakeholder risks, etc.

The NFT industry is still developing. In the tide of the digital economy, combining cultural products with technology is a valuable practice. We look forward to the healthy development of the industry, and do not want the industry to become a hard-hit area for illegal fund-raising and pyramid schemes. Please keep your original intention and operate in compliance.