NFTs as Decentralized Intellectual Property

Abstract

This Article is the first to elaborate a theory of decentralized intellectual property (De-IP) to explain the phenomenon of NFTs. This theory of De-IP provides a compelling new understanding of NFTs. Like the current movement to adopt decentralized finance (De-Fi), De-IP utilizes blockchain technology to provide an alternative, decentralized way to engage in activities that have traditionally been governed by a highly centralized regulatory system, typically involving the U.S. government and dominant industry intermediaries who operate as de facto gatekeepers. The primary vehicle for De-IP is a new technology called the non-fungible token (NFT), which consists of a computer program called a smart-contract that authenticates a virtual token on blockchain and that includes a content license setting forth the use and ownership rights (if any) that the NFT buyer receives for the content, often a copyrighted artwork, associated with the NFT. Through a combination of virtual tokens (which are new intellectual property in their own right), code, licenses, and norms, NFTs are providing a viable, decentralized alternative to the copyright system—an alternative that does not eliminate the copyright system, but instead, makes it more responsive to what artists and people want. Although critics may object that De-IP does not adequately consider the public interest in how the copyright system should be reformed, both republican theory of deliberation and the ongoing public debate about copyright on social media and in decentralized autonomous organizations (DAO) allay such concerns. Indeed, the current decentralized debate about NFTs and copyright law may be not only better for democratic deliberation, but also more responsive to the needs of authors and the public.

Keywords: decentralized intellectual property, De-IP, De-Fi, NFTs, non-fungible tokens, blockchain, copyright, Copyright Act, Next Great Copyright Act, private ordering, Web3, cryptocurrency, decentralized collaboration

JEL Classification: K10, K30, L82, M11, M20