Blockchain technology is slowly seeping into the mainstream, but how will it stand up when it collides with the law?
Mary Shelley’s Frankenstein is arguably a metaphor for the dangers of the industrial revolution; a hideous monster brought to life by human tampering with, and mastery of, nature.
But in our digital age - which some have dubbed the fourth industrial revolution - what is there left to be tampered with? And what dreadful powers could be unleashed by shaking up the world order?
Enter Quentin Tarantino, who this month announced his intention to make seven non-fungible tokens (NFTs) related to his cult film “Pulp Fiction”. Tarantino’s NFTs will feature hand-written script pages, audio commentary and other ‘secret’ material only accessible to the owner.
NFTs are digital certificates of authenticity rendered through blockchain technology. Stored across computers and impossible to destroy, they are unique and make it easier to prove ownership of artistic work. They are essentially a new way of generating scarcity and value.
However, the Django Unchained director’s scheme is being challenged, in a potentially history-making lawsuit. Entertainment company Miramax claims that Tarantino’s plan will violate the rights they hold to the movie and are suing him to prevent the sale of the digital artworks.
For his part, Tarantino insists that he has the right to sell the NFTs under his existing contract.
While the case may be unique, the use of NFTs by artists is not. Musician Grimes has sold NFTs of her work worth $6 million (€5.3m), Star Trek actor William Shatner made $90,000 (€80,197.83) from virtual trading cards, and actress Lindsay Lohan has traded in images of her face for cash.
These activities are part of a copyright sales bonanza taking place in the entertainment industry. Stars including Tina Turner, Stevie Nicks and Bob Dylan have all taken advantage of a new marketplace dominated by streaming; with the durability of their hit songs allowing them to cash in on a changing listening landscape.
But how will Tarantino’s lawsuit unfold? Are NFTs on a collision course with copyright law? And what potential do they have to shake up the entertainment industry?
The people vs NFTs
Some argue that, while NFTs represent a significant new technological development, they aren’t going to change much when it comes to ownership.
“It is a 2021 way of people making money out of assets,” says Michael Coyle, Solicitor Advocate at Lawdit Solicitors.
Lawdit was set up in 2001 as an internet-based legal firm, and represents cryptocurrency, Litecoin. Coyle believes that NFTs must interact with existing legislation on data-protection, intellectual property, and contract law. He estimates we are five to seven years away from specific blockchain legislation, and NFTs should be treated like other merchandise.
“There is no difference between a t-shirt and an NFT,” he states.
“Lots of the so-called cool people will think that because it is a blockchain people can do what they want and there will be no rules applying to it.”
However, lawyer Harry Richt disagrees.
“The dispute between Miramax and Tarantino starkly illustrates a clash between new and old that has been brewing ever since NFTs have gone mainstream,” says Richt.
Miramax’s case against Tarantino rests on an agreement from the 90s before computers were widely used. Meanwhile, some of the IP, security and contract laws (which vary between nations) governing NFTs were thought up before even car ownership was common.
The idea that the contract would account for NFTs is impossible, says Richt. But in his opinion, Tarantino’s “reserved rights” over the film - which include remaking rights and interactive media - may include the creation of NFTs.
If the case progresses to court, it could set a precedent for artists going forward.
“We are getting a front-row seat to these established regimes being challenged by an unprecedented stream of innovation,” Richt adds.
“We might get clarity via much-needed legal precedent to help mature and further drive growth in the NFT and broader blockchain ecosystems.”
NFTs for art’s sake?
So for the likes of Tarantino, Shatner and Grimes NFTs stand to be a digital windfall. But it may not be good news for artists lower down the creative ladder, or for that matter, audiences.
Dr Neil Fox, Associate Professor of Film Practice and Pedagogy at Falmouth University, is concerned this is another way in which ordinary people will be priced out of film and film history.
“It’s a joy and a pleasure to be able to witness scripts, props and costumes in museums and exhibitions open to members of the public, but we’re witnessing a shift to a narrower, more exclusive medium,” he says.
To some, NFTs pose the same dangers as streaming services, which provide small returns for artists while increasing the share of big business. At the same time, Fox fears the very audiences whose loyalty makes film careers will be left out of this new technological age.
“The top 1%...will no doubt be able to call the shots and reap the benefits,” Fox says.
But the ability of NFTs to make digital work measurable could prove vital in our new industrial wave. The famous ‘Charlie Bit My Finger’ video achieved an NFT value of $760,999 (€620,995), proving their value to viral sensations.
The Tarantino case may shake up the world of copyright law, or it may be quietly settled out of court. But legislators and artists will need to reconcile themselves to the fact that NFTs are here to stay, and their potential to disrupt the established order is only just being unleashed.