NFTs Rescue Resale Royalties? The Wonderfully Complicated Ability of NFT Smart Contracts to Allow Resale Royalty Rights

Abstract

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NFTs Rescue Resale Royalties? The Wonderfully Complicated Ability of NFT Smart Contracts to Allow Resale Royalty Rights, 14 CASE W. RESERVE J.L. TECH. & INTERNET 208 (2023):

Resale royalty rights (also known by the French phrase, droit de suite or “right of continuation” rights) give artists a right to participate in the proceeds realized from the resale of their works. While copyright laws give the creator of a work the right to control reproduction of the work, many visual artists do not benefit as directly as print authors do from this aspect of copyright protection.

Congress has not acted to provide for artists’ resale royalties, and bold and valiant state efforts like California’s have failed. But the void in legal initiatives has been filled by a technological innovation: Non-fungible tokens (NFTs) with smart contracts that seek to allow resale royalty payments on every resale of NFTs. What NFTs have done is make the calculation and payment of a resale royalty a built-in option that can be programmed into the smart contract of the NFT. This article explains this process, and assesses the risk of copyright preemption of the process.

Keywords: NFT, non-fungible tokens, tokens, blockchain, cryptocurrency, copyright, resale royalty, resale royalty right, droit de suite, copyright preemption, digital artworks, art

JEL Classification: K1, K10, K3, K30, K40, K41