• Jake Goldenfein, Dan Hunter and Annabel Tresise

What Blockchain Can and Can’t do for Copyright

There has been a great deal of optimism around blockchain solutions for some of the deep-seated problems with copyright online. Because obtaining copyright protection does not involve registration, it can be extremely difficult to determine the ownership and copyright status of a work. The absence of registration requirements makes economic coordination complex, and infringement widespread. Private companies and government copyright agencies have tried to build voluntary global databases, catalogues and repositories to facilitate economic exchange for a long time, but consistently fail. Blockchain technology has spurred a new enthusiasm for achieving a coherent copyright system. In ‘What Blockchain Can and Can’t Do for Copyright’ we provide some analysis of the promises and possibilities that blockchain and other distributed ledger technologies might offer to copyright problems online, and conclude that many technical, legal, economic, and institutional problems would need solving before this could be possible.

Blockchain technologies and platforms may very well have an impact on the copyright system over the next decade, affecting registration, licensing, digital rights management, collective management organisations, and the identification of orphan works. However, we see none of these advances as a sure-thing, with each depending on complex technical, political and legal interactions. Registration systems publicise the existence of a work, its state of ownership, and facilitate interaction between owners and users. Other forms of intellectual property like patents, trade marks and designs make registration a formal requirement for protection. Copyright protection however, is born with the work and mandatory registration is prohibited. Several parties have proposed building voluntary registration systems on blockchain platforms. Simple models use blockchain’s time-stamping function as a ‘proof of existence’ that a particular creative work existed at a certain point in time. More complex suggestions involve real-time tracking of rights. Actually building and using such systems requires solving several issues including: how to incentivise the use of a voluntary system; who should pay for, manage, and profit from it; and what technical and institutional form it should take. These are difficult decisions, riddled with much off the complexity and uncertainty to have befallen previous attempts at global databases. In the article, we evaluate several proposals in detail, concluding that comprehensive global registration is unlikely.

We also examine the utility of blockchain technologies for open DRM systems. In theory, DRM systems are intended to help rightsholders protect their digital assets, but are generally perceived by users and pernicious and problematic. They accordingly represent one of the more controversial aspects of copyright law. Blockchain platforms could offer a potential alternative to proprietary DRM by providing an interface between content and user. The blockchain platform would not hold the digital asset, but facilitate access through a smart contract that is encrypted with information regarding the rights and permissions of the asset. This would not afford a total solution to rights management, but could be a key aspect to moving away from proprietary systems. Our article provides more detail on how this might work, as well as its potential limitations. Whereas DRM systems deal with access and control of permissions, blockchain platforms could also facilitate licensing to manage the exchange of permissions for remuneration. Increased control over licensing has proved desirable in creative industries, especially with solutions that could eliminate any middle-men, generate immediate payments, and potentially automated encoded royalties and mandates. Blockchain platforms accordingly present an opportunity for rightsholders to license directly with users. But the practicality of such a system is still questionable. It is unclear whether blockchain platforms can scale to a level and speed that would make this approach a viable technological approach.

The final two areas where we explore potential copyright applications for blockchain include orphan works identification and collective copyright management. We (Jake Goldenfein and Dan Hunter) have dealt with the question of orphan works in more detail elsewhere, so will only outline applications relevant to CMOs here. If the above applications could be made technically, institutionally, and legally possible, blockchain platforms could effectively usurp the role of CMOs. Collective rights management offers substantial economic benefits for creators and authors by reducing transaction costs. However, they are often criticised for a lack of transparency, time lags in payments, and abuse of their monopoly position. They also operate in conditions of conflicted interest, and their blanket licensing models introduce the possibility of technical infringement. These problems have provoked discussion on how new technologies might augment or replace the intermediary function of CMOs, leading to explorations of blockchain platforms as rights clearinghouses. But as noted, this one-stop-shop function depends entirely on solving the problems plaguing the more discrete applications of blockchain to copyright, challenging its inevitability, especially as CMOs remain entrenched economic actors.

Jake Goldenfein, Dan Hunter and Annabel Tresise, Swinburne Law School

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