by Edward Lehman
Introduction:
In an insightful 2022 decision, the Hangzhou Intermediate Court has delivered China’s first judgment on copyright infringement involving NFTs. The Fat Tiger case sheds light on the rights associated with NFT digital artwork transaction platforms and addresses the challenges posed by decentralized blockchain technology within centralized regulatory frameworks. As the digital ecosystem expands, questions regarding the rights and legalities of NFT digital artworks continue to arise. This landmark ruling provides valuable insights and sets a significant standard for similar cases, offering guidance to intellectual property stakeholders in the metaverse.
Q: What rights were involved and addressed in the Fat Tiger case?
The judgment confirmed that the trading of NFT digital artworks constitutes a transfer of property rights. It also addressed the complexities arising from the decentralized nature of blockchain technology within centralized regulatory frameworks. The court defined NFT digital works as unique digitalized works that utilize blockchain technology. It ruled that unauthorized sales of NFT digital works infringe upon the copyright owner’s right to information network dissemination, but not reproduction or distribution rights.
Q: Is the doctrine of right exhaustion applicable to NFT digital artworks transactions?
No, the court ruled that the doctrine of right exhaustion does not apply in this context. Right exhaustion typically applies when original copies or permitted reproductions of works are resold or distributed with the copyright owner’s consent. In the case of NFT digital artworks, they are solely cast by Internet users without prior consent from copyright owners. Therefore, the exhaustion of distribution rights does not apply.
Q: How did the court define the liability of NFT digital artwork transaction platforms?
The court classified NFT digital artwork transaction platforms as a new type of Internet service provider (ISP). These platforms provide Internet services for the casting and transaction of NFT digital artworks. They are not considered content service providers but fall under the category of ISPs. When assessing their liability, the court considers factors such as the nature of NFTs, internet service functions, and the platform’s control over user actions. The court emphasized that these platforms should anticipate the possibility of copyright infringement and take necessary measures to prevent it. Establishing an IP review system is one such measure to ensure non-infringement by users.
Q: What actions did the court demand for infringement cessation?
Recognizing that deleting pictures and blocking NFT linkages may not effectively destroy casted NFTs on the blockchain, the court demanded additional measures to ensure infringement cessation. Disconnecting the accused NFT digital work on the blockchain was deemed necessary to cut off all access to it, effectively sending it into an IP address black hole.
Conclusion:
The Hangzhou Intermediate Court’s ruling in the Fat Tiger case marks a groundbreaking moment in China’s approach to NFT digital artworks within the metaverse. The judgment defines the rights involved in NFT transactions and clarifies the liability of NFT digital artwork transaction platforms. It establishes a valuable precedent for copyright infringement disputes and provides reference value for other intellectual property rights, including trademarks and patents, in the metaverse. As the digital art market and NFTs continue to thrive, this ruling highlights the importance of legal clarity and responsible practices in this evolving landscape. #ChinaNFTRuling #HangzhouCourt #CopyrightInfringement #NFTDigitalArtworks #MetaverseIPRights #BlockchainTechnology #TrademarkProtection #PatentRights #DigitalArtMarket #ResponsiblePractices