Blockchain Licensing
Blockchain Licensing
Blockchain Licensing
doi: 10.1093/ijlit/eay014
Article
A BS TR A C T
This article offers a normative analysis of key blockchain technology concepts from the
perspective of copyright law. Some features of blockchain technologies—scarcity, trust,
transparency, decentralized public records and smart contracts—seem to make this
technology compatible with the fundamentals of copyright. Authors can publish works
on blockchain creating a quasi-immutable record of initial ownership, and encode
‘smart’ contracts to license the use of works. Remuneration may happen on online dis-
tribution platforms where the smart contracts reside. In theory, such an automated
setup allows for the private ordering of copyright. Blockchain technology, like Digital
Rights Management 20 years ago, is thus presented as an opportunity to reduce market
friction, and increase both licensing efficiency and the autonomy of creators. Yet, some
of the old problems remain. The article examines the differences between new, smart-
contract-based private ordering regime and the fundamental components of copyright
law, such as exceptions and limitations, the doctrine of exhaustion, restrictions on for-
malities, the public domain and fair remuneration.
K E Y W O R D S : Blockchain, copyright, smart contracts, distributed ledger technology
(DLT), copyright registries, automated licensing, digital rights management (DRM)
I N TRO D UC T IO N
Blockchain is the latest in the series of digital technologies that, due to their decen-
tralized, horizontal, distributed and open source nature, are expected to cause funda-
mental and large scale changes in how our current social, economic, political
* Balázs Bodó, Senior Researcher at the Institute for Information Law (IViR), University of Amsterdam. He is
also the Head of the IViR’s Blockchain and Society Policy Research Lab. The Lab has received funding from
the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation
programme under grant agreement No 759681. E-mail: B.Bodo@uva.nl
† Daniel J. Gervais, Professor of Information Law, in particular trade and investment related aspects of the in-
formation society at the University of Amsterdam. Professor Gervais is also the Milton R. Underwood Chair
in Law at Vanderbilt University Law School and Director of the Vanderbilt Intellectual Property Program.
He is the current President of the International Association for the Advancement of Teaching and Research
in Intellectual Property (ATRIP). E-mail: d.j.gervais2@uva.nl
‡ Jo~ao Pedro Quintais, Postdoctoral Researcher at the Institute for Information Law (IViR), University of
Amsterdam. He is also a researcher at the IViR’s Blockchain and Society Policy Research Lab. E-mail: J.p.
quintais@uva.nl. The authors are listed in alphabetical order, and contributed equally to the development of
ideas, and to the writing of the article.
relations and institutions are organized. Roughly 20 years after the declaration of the
independence of cyberspace1 and the crypto anarchist manifesto,2 and 12 years after
Yochai Benkler outlined how peer production and web 2.0 would enable a brave
new world,3 many now believe blockchain will empower an open, decentralized, dis-
C O P YR IG HT -RE L EV A NT C HA R A C TER I ST IC S OF B LO C KC H A I N
T EC H NO LO GY
Blockchain technology can be defined as a distributed, append only database, which
enables—without a central trusted intermediary—,transactions between human or
software agents.11 In reality, there is no such thing as ‘the Blockchain’. Instead, there
is a range of different DLTs, which share some fundamental principles, but vary inter
9 The most relevant international treaties in copyright law are the Berne Convention for the Protection of
Literary and Artistic Works (1971 Act) [hereinafter ‘Berne Convention’], the 1994 Agreement on Trade-
Related Aspects of Intellectual Property Rights [hereinafter ‘TRIPS’] and, in relation to use over digital
networks, the 1996 WIPO Copyright Treaty [hereinafter ‘WCT’] and WIPO Performances and
Phonograms Treaty [hereinafter ‘WPPT’].
10 WCT, ibid arts 11–12, and WPPT, ibid, arts 18–19.
11 We treat specific technological design and implementation choices as mostly external to our discussion.
As such, we only address them where relevant to our analysis. Interested readers can find additional infor-
mation in: J Bacon and others, ‘Blockchain Demystified’ (21 December 2017). Queen Mary School of Law
Legal Studies Research Paper No 268/2017 <https://ssrn.com/abstract¼3091218> accessed 16 July
2018; A Narayanan and others, Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction
(Princeton University Press 2016); P De Filippi and A Wright, Blockchain and the Law: The Rule of Code
(Harvard University Press 2018).
4 Blockchain and smart contracts
alia in their design, purpose and affordances.12 For the purposes of this overview we
focus on some of the common characteristics relevant to the copyright domain: dis-
tributed ledgers; tokenization and digital scarcity; smart contracts and decentraliza-
tion. We explain each one in turn below, as well as the relevance of design choices in
Distributed ledgers
In its simplest description, a blockchain is a distributed ledger, or an append only
database, of which every user has a continuously updated authoritative copy. Anyone
who has access to the ledger has access to the same full transaction history and the
ability to verify the validity of all records.13 Sophisticated consensus mechanisms en-
sure that new entries can only be added to this distributed database if they are con-
sistent with earlier records. This distributed database has the capacity to record any
kinds of data. One can save an arbitrary piece of information on blockchain, which
becomes part of the permanent record. Ledgers can also be used to keep track of
tokens belonging to specific accounts (or ‘wallets’) and the time-stamped transac-
tions of tokens between accounts. In that case, DLTs can ensure that the transactions
are consistent over time, and tokens are not spent twice. Depending on the actual
technological design, an account holder can be an (anonymous/pseudonymous) in-
dividual, a legal entity, a smart contract (software code), or any group or combin-
ation thereof. Tokens, as we show in the next section, can represent almost anything:
a unit of virtual currency, an asset, a physical object in the world, or any other ab-
stract entity. Beyond these simple facts, different blockchains may follow different
designs principles. As we explain later, this fundamentally impacts their
functioning.14
Distributed ledgers are a general-purpose technology, meaning that they are freely
configurable to any and every application. In theory, this makes it relatively easy to
correspond the core building blocks of blockchain technology to fundamental con-
cepts in copyright law. Consequentially, multiple DLT configurations are being
explored in the copyright domain. For example: if tokens represent rights, and wallet
holders represent rights holders, DLTs may host public copyright registries, which
record—in a transparent manner—the ownership, distribution, use and remuner-
ation of works.15 Another example would be a private distributed database set up by
CMOs to facilitate the inter-organizational identification of works and payment of
royalties.
12 For an overview and taxonomy see: X Xu and others, ‘A Taxonomy of Blockchain-based Systems for
Architecture Design’ in Software Architecture (ICSA), 2017 IEEE International Conference on Software
Architecture (IEEE April 2017), 243–52.
13 On public blockchains access is unlimited, in private ones only approved members can read the transac-
tion history. See Narayanan and others (n 11) (Ch 2).
14 See below at sub-section ‘Design choices: from open to closed’.
15 See below at Section ‘Blockchain and copyright intersections’.
Blockchain and smart contracts 5
Smart contracts
The first generation of DLTs, such as the bitcoin blockchain, offered very few built-
in tools to automate transactions. The second generation of DLTs, like the
Ethereum network, changed that by adding a Turing complete computer-language22
to the technology. This language enables users to write complex software that inter-
acts with the distributed ledger, and is said to share the same characteristics: self-
enforcing, immutable, etc. In these second generation DLTs, smart contracts are
16 See, making reference to some of these elements, H Sheraton and B Clark, ‘Blockchain and IP: Crystal
Ball-gazing or Real Opportunity?’ PLC Maganize (October 2017) 39–44.
17 As mentioned earlier DLTs can keep track of any information. In practice this means that RMI can be
recorded on a DLT without being tokenized. We explore this option briefly later.
18 WCT (n 9), art 12(2), defining RMI as ‘information which identifies the work, the author of the work,
the owner of any right in the work, or information about the terms and conditions of use of the work,
and any numbers or codes that represent such information, when any of these items of information is
attached to a copy of a work or appears in connection with the communication of a work to the public’.
19 See Creative Commons, About the Licenses <https://creativecommons.org/licenses/?lang¼en> accessed
17 July 2018.
20 J Goldenfein and D Hunter, ‘Blockchains, Orphan Works, and the Public Domain’ (2017) 41(1)
Columbia Journal of Law & the Arts.
21 An example is a term that identifies a work as being in the public domain.
22 Turing completeness in computer science terms means that any and every computing problem can be
solved by using the smart contract computer language.
6 Blockchain and smart contracts
algorithmic account holders on the blockchain. They are pieces of code that generate
transactions if the conditions encoded in them are met. In most cases, smart con-
tracts encode ‘if-then’ conditions, such as: if a user pays X amount of cryptocurrency
to the smart contract account then the contract grants them access to a digital copy
23 Dumb transactions are easily automatable transactions. They are simple and straightforward enough to be
described by simple if-then rules, and don’t require sophisticated fallback infrastructures to operate, such
as dispute resolution or real-world enforcement.
24 See K Levy, ‘Book-Smart, Not Street-Smart: Blockchain-Based Smart Contracts and The Social Workings
of Law’ Engaging Science, Technology, and Society, [S.l.], v 3, 1–15 (February 2017), posing identical or
similar questions.
25 The so-called DAO hack is usually used to demonstrate many of the unresolved issues between smart
contracts and law. See: M Leising, ‘The Ether Thief’ Bloomberg Markets (13 June 2017) <https://www.
bloomberg.com/features/2017-the-ether-thief/> accessed 16 July 2018.
26 On this point, see the discussion below at sub-section ‘Private ordering’ and the Section ‘Discussion: be-
tween promise and hype’.
27 We use the term ‘trustless’ in a very narrow, technical sense, which refers to the expectations on the reli-
ability of an individual technical node in a blockchain network. In a wider context, which also takes into
account the social, economic, geographical, political contexts in which blockchain networks operate, and
Blockchain and smart contracts 7
transactions through central trusted third parties for ‘untrusting’ entities to be able to
engage with each other. The rules embedded in the design of the technology are
meant to ensure that interacting actors remain honest, at least vis-à-vis on-chain
transactions.28
BL OC K C HA I N A ND C O P YR IG HT IN TE RS E CT IO NS
The explosive development of blockchain technology and the surrounding hype have
led to the emergence of a number of blockchain applications in the domain of copy-
right, mainly in the online music sector. The development of market applications has
been accompanied by a growing body of scholarship that investigates the implica-
tions of blockchain from the perspective of information law and technology, with a
focus on regulation, smart contracts and an emerging strand of scholarship on priv-
acy and data protection.42 Still, there is relatively little research on the intersection of
blockchain and copyright law.43
39 See for example the pitch of Potentiam, a startup in the music and blockchain domain: ‘The Potentiam
platform wants to use the blockchain to encourage artists to connect directly with their fans in an effort
to cut out the monumental cost of middlemen such as managers, booking agents, digital service providers,
and many more entities that take up to 80% of the revenue generated from the music industry.’ S Osea,
Potentiam: Revamping the Music Industry Using Blockchain Technology, Medium.com, <https://medium.
com/potentiam/potentiam-revamping-the-music-industry-using-blockchain-technology-2fda8f4ccdac>
accessed 17 July 2018.
40 Rightshare is a Dutch company founded by a former director of a CMO. It proved relatively successful in
facilitating blockchain-based licensing of electronic dance music in the Netherlands. See Rightshare,
<http://rightsshare.com> accessed 16 July 2018.
41 K Yeung, ‘Regulation by Blockchain: The Emerging Battle for Supremacy between the Code of Law and
Code as Law’ Modern Law Review (forthcoming). (July 2, 2018). Available at SSRN: https://ssrn.com/
abstract=3206546
42 See, eg De Filippi and Wright (n 11); M Swan, Blockchain: Blueprint for a New Economy (O’Reilly 2015);
Tapscott and Tapscott (n 4); J Bacon and others (n 11); Yeung, ibid; M Raskin, ‘The Law and Legality of
Smart Contracts’ (2017) 1 Georgetown Law Technology Review 304; S Hassan and P De Filippi, ‘The
Expansion of Algorithmic Governance: From Code Is Law to Law Is Code’ (2017) Field Actions Science
Reports: The Journal of Field Actions Special issue 17: Artificial Intelligence and Robotics in the City,
Open Edition Journals; Cuccuru (n 8); S Shackelford and S Myers, ‘Block-by-Block: Leveraging the Power
of Blockchain Technology to Build Trust and Promote Cyber Peace’ (2017) 19(1) Yale Journal of Law and
Technology 335–88. On data protection, see eg S Sater, ‘Blockchain and the European Union’s General
Data Protection Regulation: A Chance to Harmonize International Data Flows’ (6 November 2017)
https://ssrn.com/abstract¼3080987 accessed 17 July 2018; M Finck, ‘Blockchains and Data Protection in
the European Union’ (30 November 2017), Max Planck Institute for Innovation & Competition Research
Paper No. 18-01 <http://dx.doi.org/10.2139/ssrn.3080322> accessed 17 July 2018.
43 See eg Tapscott and Tapscott (n 4); M O’Dair and others, Music On The Blockchain, Blockchain
For Creative Industries Research Cluster Middlesex University, Report No 1 (July 2016) <https://
10 Blockchain and smart contracts
This article has identified four copyright domains where the implementation of
blockchain technology is both promising and challenging, giving rise to a host of
complex (and often interconnected) legal issues. These are the potential overreach
of smart contracts and private ordering, copyright registries, the articulation with the
Private ordering
Fragmentation
Can the blockchain be used as a licensing tool for ‘international’ copyright rights?
Although it is not inaccurate to speak of international copyright law, as contained for
example in international treaties, there is no such thing as an international copyright
right. The treaties recognize the protection of copyright in multiple jurisdictions, but
based on the law of each jurisdiction. If the author creates a literary work in, say,
Canada or the Netherlands, that work must be protected under the copyright laws of
all other 175 member countries of the Berne Union (that is, countries party to the
Berne Convention44) according to their domestic laws.45 For instance, a very short
‘work’ or a creation with functional characteristics may be protected in one jurisdic-
tion but not in another, on the grounds that it lacks originality. Under the Berne
Convention, an author thus gets 176 different national bundles of copyright rights, if
one counts the author’s own country.46
It gets worse, for each of those copyright rights can be spliced and diced. For ex-
ample, the author of a literary work may license or transfer to a third party only the
right to translate the work in a specific different language or market. In other words,
each right (the term ‘right fragment’ has been used to illustrate this ‘fragmentation’
of rights47) in the copyright bundle can be owned and exploited separately—as far as
the Berne Convention goes—176 times.
www.mdx.ac.uk/__data/assets/pdf_file/0026/230696/Music-On-The-Blockchain.pdf> accessed 16 July
2018; J Silver, ‘Blockchain or the Chaingang? Challenges, Opportunities and Hype: The Music Industry
and Blockchain Technologies’ (2016) CREATe Working Paper 2016/05 <https://www.create.ac.uk/publi
cations/blockchain-or-the-chaingang-challenges-opportunities-and-hype-the-music-industry-and-blockchain-
technologies/> accessed 16 July 2018; Goldenfein and Hunter (n 20); Sheraton and Clark (n 16); A
Savelyev, ‘Copyright in the Blockchain Era: Promises and Challenges’ (2018) 34 Computer Law &
Security Review 550–61.
44 Berne Convention for the Protection of Literary and Artistic Works (September 1886), last revised 1971
[hereinafter ‘Berne Convention’].
45 For the membership of the Berne Convention, see WIPO, ‘WIPO-Administered Treaties, Berne
Convention for the Protection of Literary and Artistic Works’ <http://www.wipo.int/treaties/en/ip/
berne/> accessed 17 July 2018.
46 Sheraton and Clark (n 16).
47 MS Van Houweling, ‘Author Autonomy and Atomism in Copyright Law’ (2010) 96 Virginia Law Review
549.
Blockchain and smart contracts 11
It gets worse still. Each country is free to choose which form of ‘exhaustion’ rule it
will apply, as this matter is yet to be settled at international level.48 There are three
main types of exhaustion: national, regional and international. Under a national ex-
haustion regime, a copy of a work may only be sold with the consent of the copyright
48 See: TRIPS (n 9), art 6 (‘For the purposes of dispute settlement under this Agreement, subject to the
provisions of Articles 3 and 4 nothing in this Agreement shall be used to address the issue of the exhaus-
tion of intellectual property rights.’); WCT (n 9), art 6(2).
49 And, one might add, the right holder having the right concerned. For example, a CMO to which only the
right of public performance in a musical work had been transferred could not license the making and sell-
ing of copies of the work.
50 The notion of parallel importing is not limited to physical products. Electronic transmissions of copyright
works and even services that can involve intellectual property, for example, can be parallel imported. By
way of example, on 3 April 2014, the United States (US) International Trade Commission (ITC) issued
a Summary Notice of Determination affirming an administrative law judge’s conclusion that electronically
transmitted information could constitute an ‘article’, thereby asserting ITC jurisdiction over electronic
transmissions across borders. See In the Matter of Certain Digital Models, Digital Data, and Treatment
Plans for Use in Making Incremental Dental Positioning Adjustment Appliances, the Appliances Made
Therefrom, and Methods of Making the Same, Inv No 337-TA-833 (10 April 2014) (pending). Under s 337
(19 USC § 1337, as amended). See also S Frankel and D Gervais, ‘International Intellectual Property
Rules and Parallel Importing’ in I Calboli and E Lee (eds), Research Handbook on Exhaustion and Parallel
Imports (Edward Elgar 2016) 85–105.
51 Frankel and Gervais, ibid.
52 See art 4(2) Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on
the Harmonization of Certain Aspects of Copyright and Related Rights in the Information Society, 2001
OJ (L 167) 10–19.
53 For example, there are conflicting views on whether a copy put on the market in a country under a com-
pulsory license may be exported to a country using international exhaustion. See Frankel and Gervais
(n 50).
54 A country can decide not to apply Berne Convention protection to its own nationals, as the Convention
(assuming the Convention does not form part of national law according to the national legal order of the
country in question). This is the case in the United States where US authors are subject to a higher level
of obligations (in terms of copyright registration) than foreign authors. See US Copyright Office,
Compendium of U.S. Copyright Office Practices § 101 (3rd edn 2017) at para 2002.2.
55 Black’s, 8th edn at 1522, WEST GROUP.
12 Blockchain and smart contracts
each can theoretically have a different owner. If one were to posit that there are on
average 10 right fragments per territory for each copyright work, that would means
1 760 rights fragments and thus 1 760 ‘titles’. Each such title can be exploited and
transferred independently of all others—it being understood that certain uses of
Licensing coordination
Using blockchain technology for copyright licensing requires a massive amount of
coordination both on-chain, and between on- and off-chain transactions. While co-
ordination of strictly on-chain uses and users can be to an extent automated via smart
contracts, we argue that conflict resolution may require off-chain institutions. This
challenge is by orders of magnitude more complex when it comes to making sure
that the reality as represented on a blockchain and the reality as represented through
non-blockchain contracts and traditional institutions remains synchronous.
To empower the development of blockchain-based smart contracts, the simplest
solution would be that authors retain all their copyright rights. Each author could
then allow some uses under exclusive licenses if and when appropriate, and then use
blockchain technology to license mass uses on a non-exclusive basis. Because each
author would retain, in our hypothetical, all 1 760 titles to each of their works, the
smart contracts authorizing their use would be prima facie valid in each and every
territory.
That does not prevent all potential conflicts, however. A non-exclusive licensee’s
right to use might conflict with the rights of an exclusive licensee in a given terri-
tory—even if both were done through a blockchain. This may then become a matter
of contract rather than copyright law (and possible infringement) between the
56 For example, a broadcaster who wishes to make a permanent copy of a musical work on her server and
then broadcast it may need both the reproduction right and the right of communication to the public.
57 For a discussion on smart contracts as legal contracts, see De Filippi and Wright (n 11) 72–88.
Blockchain and smart contracts 13
author and the exclusive licensee. Few, if any, courts would be likely to find the non-
exclusive licensee liable in such a scenario and if they did, sanctions would probably
be minimal.58
Authors could do this by being in direct contact with users. As alluded to in the
Registries
Formalities
By ‘copyright registries’ we mean the range of DLT applications that create a regis-
information is organized, and the types of actors, who could make sure that on-chain transactions’ poten-
tial off-chain consequences are executed and enforced. While current intermediaries in the copyright do-
main are best positioned to fulfil the dual roles of Oracles and Enforcers as Coordinators, they are the
most threatened by the disintermediation effect of the technology.
60 SACEM, ASCAP, SACEM, AND PRS FOR MUSIC initiate joint Blockchain Project to improve data accuracy for
rightsholders <https://societe.sacem.fr/en/press-resources/per-publication/press-releases/ascap-sacem-and-
prs-for-music-initiate-joint-blockchain-project-to-improve-data-accuracy-for-rightsholders> accessed 17 July
2018. SACEM is the French Society of Authors, Composers and Publishers of Music. ASCAP is the
American Society of Composers, Authors and Publishers. PRS for music is the UK Performing Right Society.
61 Namely, the International Standard Recording Code (ISRC) and the International Standard Work Code
(ISWC). See ISRC, The International Standard Recording Code <http://isrc.ifpi.org/en/> accessed 17
July 2018; and ISWC International Agency, ‘Home’ <http://www.iswc.org/> accessed 17 July 2018.
62 See: K Milosic, ‘GRD’s Failure’ Berklee College of Music Music Business Journal (August 2015)
<http://www.thembj.org/2015/08/grds-failure/> accessed 17 July 2018; Goldenfein and Hunter
(n 20) 12.
Blockchain and smart contracts 15
the system would have a hard time securing this level of protection, providing the ne-
cessary (if in itself inadequate) incentive to register. While not imposed by law, regis-
tration on such a ledger would become de facto an essential prerequisite to
exploitation. The main legal issue that arises in this context is whether such a registry
63 NB the prohibition is not absolute. See D Gervais, ‘Collective Management of Copyright: Theory and
Practice in the Digital Age’ in D Gervais (ed), Collective Management of Copyright and Related Rights (3rd
edn, Kluwer Law International 2016) 3, 30.
64 S van Gompel, Formalities in Copyright Law: An Analysis of Their History, Rationales and Possible Future
(Kluwer Law International 2011) 15–27.
65 S van Gompel, ‘Copyright Formalities in the Internet Age: Filters of Protection or Facilitators of
Licensing’ (2013) 3 Berkeley Technology Law Journal 1439.
66 These include for example formalities that present only evidentiary or procedural advantages, operating
as incentives rather than obligations. See van Gompel, ibid 1439.
67 ibid 1435. See also C Sprigman, ‘Berne’s Vanishing Ban on Formalities’ (2013) 28 Berkeley Technology
Law Journal 1565–82, mentioning new-style formalities.
68 For an overview of different models of collective rights management, see: Gervais (n 63); JP Quintais,
Copyright in the Age of Online Access: Alternative Compensation Systems in EU Law (Kluwer Law
International 2017) 85–138.
69 Art 2 Directive 2012/28/EU of the European Parliament and of the Council of 25 October 2012 on cer-
tain permitted uses of orphan works OJ L 299, 27.10.2012, pp 5–12 [hereinafter ‘Orphan Works
Directive’].
16 Blockchain and smart contracts
works’.70 In their proposal, an artificial intelligence system would carry out the dili-
gent search for copyright owners of an orphan work. A blockchain would then be
developed and implemented to record all diligent searches.71 Finally, the law would
be amended so as to qualify the work as an orphan and allow its use upon satisfac-
82 Goldenfein and Hunter (n 20) 39, noting that in a system of compulsory licensing, the blockchain could
in addition ‘support payment and escrow of a license fee’.
83 ibid 10–11, raising these points when discussing the governance of blockchains in general.
84 See: K Erickson, ‘How Crowdsourcing Might Solve the Astronomical Challenge of Copyright Clearance’
CREATe Blog (8 January 2016) <http://www.create.ac.uk/blog/2016/01/08/how-crowdsourcing-might-
solve-the-astronomical-challenge-of-copyright-clearance/> accessed 17 July 2018; M Borghi, K Erickson
and M Favale, ‘With Enough Eyeballs All Searches Are Diligent: Mobilizing the Crowd in Copyright
Clearance for Mass Digitization’ (2016) 16(1) Chicago-Kent Journal of Intellectual Property 135–66.
85 Goldenfein and Hunter (n 20) 42.
86 ibid 28–30.
87 ibid 23–24. On the latter point, see D Gervais and D Renaud, ‘The Future of United States Copyright
Formalities: Why We Should Prioritize Recordation, and How to Do It’ (2013) 28 Berkeley Technology
Law Journal 13–40.
88 See Singer Mfg Co v June Mfg Co, 163 US 169, 186 (1896); and, in the specific context of copyright, Micro
Star v Formgen Inc, 154 F.3d 1107, 1114 (9th Cir 1998) (‘It is well settled that rights gained under the
Copyright Act may be abandoned.’).
89 This is reminiscent of the debate in both Eldred v Ashcroft, 537 US 186 (2003) and Golan v Holder, 132
S.Ct 873 (2012). See D Gervais, ‘Golan v. Holder, A Look at the Constraints Imposed by the Berne
Convention’ (2011) 64 Vanderbilt Law Review en banc 147–63.
18 Blockchain and smart contracts
need to have a third party determine ownership, but it does not eliminate the need
for other functions provided by such third parties. That said, a shift is likely to occur
once (and if) a significant amount of data is entrusted to one or several blockchains.
As this pool of open data grows, proprietary control of rights data becomes propor-
Fair remuneration
In the context of ensuring creator remuneration, blockchain technology can play
three types of role. Firstly, it can enable payments similar to those already taking
place through existing platforms. Secondly, it may open up uses currently licensed
through statutory or compulsory licenses and collective rights management schemes
to smart contract licensing. Thirdly, blockchains may provide greater transparency,
especially from the perspective of authors and performers.
An example of the first role might be ‘a blockchain-empowered rights and pay-
ments’ system93 used by an artist or even a CMO, especially for a one-off license to
perform or use musical works and recordings. In our view, if the system merely adds
a mode of payment, then its impact will be minor. Whether cryptocurrencies will be
commonly used to conduct micropayments by a substantial number of users for a
substantial number of uses, is orthogonal to our analysis. Even if they do, the exist-
ence of an additional payment channel for normal uses of works does not raise fun-
damental challenges to the status quo in copyright law. It may affect which CMO
collects what, which in turn raises issues of the role of CMO in national economies.94
There would have to be measurable transparency benefits for a new blockchain-
based system to make a notable difference in this scenario.
An example of the second type of role would be a full switch to a rights and royal-
ties management system based on blockchain technology, as EY and Microsoft have
proposed in a joint project.95 The claim is that blockchains may negate the original
conditions that historically led to the development of compulsory licensing and, as a
result, may render this legal instrument obsolete in general, or as regards its applica-
tion to particular cases. Compulsory licenses developed for a number of different rea-
sons, such as refusal to deal, inadequate supply, public interest, or because of
transactions costs in the analogue era prohibited the exact monitoring of mass use,
and therefore individual licensing.96 In the context of blockchain technologies, this
93 Heap (n 31). UJOMusic, a blockchain platform has been offering a few music albums, Including Imogen
Heap’s Tiny Human for sale for the Ethereum cryptocurrency. See: <www.ujomusic.com> accessed 17 July
2018. The results so far are somewhat disappointing. See: D Gerard, ‘Ujo Attempts Music On The Blockchain
A Second Time With: EGO By RAC [Op-Ed]’ (Hypebot.com, 2017) <http://www.hypebot.com/hypebot/
2017/11/ujo-attempts-music-on-the-blockchain-a-second-time-with-ego-by-rac.html> accessed 17 July 2018.
94 See D Gervais, ‘The Cultural Role of Copyright Collectives’ (2018) 40(6) European Intellectual Property
Review 349–56.
95 EY and Microsoft launch blockchain solution for content rights and royalties management for media and
entertainment industry, 20 June 2018, <https://www.prnewswire.com/news-releases/ey-and-microsoft-
launch-blockchain-solution-for-content-rights-and-royalties-management-for-media-and-entertainment-in
dustry-300669800.html> accessed 17 July 2018.
96 See: C Correa, ‘Intellectual Property Rights and the Use of Compulsory Licenses: Options for
Developing Countries’ (Geneva: South Centre 1999); DJ Brennan, ‘The First Compulsory Licensing of
Patents and Copyright’ (2017) Legal History 1–45.
20 Blockchain and smart contracts
97 See J Ginsburg, ‘Fair Use for Free, or Permitted-but-Paid?’ (2015) 29(3) Berkeley Technology Law
Journal 1383–446.
98 Such as the compulsory license for mechanical reproduction of musical works contained in s 115 of the
US Copyright Act.
99 See: S Besen and SN Kirby, Compensating Creators of Intellectual Property – Collectives That Collect (The
RAND Corporation 1989); C Handke and R Towse, ‘Economics of Copyright Collecting Societies’
(2007) 38(8) International Review of Intellectual Property and Competition Law 937–57.
100 See B Rosenblatt, ‘Watermarking Technology and Blockchains in the Music Industry’ (2017) Digimarc.
101 See the Creative Commons Metrics page for an (unfortunately outdated) set of statistics on license
adoption: <https://wiki.creativecommons.org/wiki/Metrics> accessed 17 July 2018.
Blockchain and smart contracts 21
DLT-based smart contracting has the potential to aid similar standardization for
commercial licenses.
It remains to be seen to what extent DLTs that now transcend national and juris-
dictional borders remain a low-friction infrastructure for cross-border transactions.
D I S CU S SI ON : BE TW E EN P R OM IS E A ND H Y P E
In 2017, when we launched the debate that led to this article,105 we asked how block-
chain and copyright interact. The initial discussion concluded that, at best, block-
chain was an opportunity for incremental improvement of efficiency and
transparency of online music licensing and rights management, while offering artists
an additional avenue for direct licensing. At worst, blockchain was a seriously over-
hyped fad with none of the predicted revolutionary potential. A more measured, the-
oretical, normative analysis, as the one we try to provide in this article, reveals both
promises for improving copyright based practices, and frictions between the design
of the technology and the legal architecture. In this part, we hope to set the level of
expectations to a somewhat realistic level. To better understand the possible role of
blockchain technology, a quick look back at the purpose of copyright seems useful.
Copyright emerged in the UK in the Statute of Anne (1709–1710) as a means of
creating scarcity (mostly of physical copies) of books, sheet music and other works
102 For our purposes these two terms can be seen as synonyms. See Quintais (n 68) 25–27, 126–32, with a
conceptual analysis of the terms.
103 E Schwartz, ‘Coda: Fair Trade Music: Letting the Light Shine in’ in S Frankel and D Gervais (eds), The
Evolution and Equilibrium of Copyright in the Digital Age (CUP 2017) 312–16.
104 ibid.
105 JP Quintais, B Bodó and L Groeneveld, ‘Blockchain Copyright Symposium: Summary Report’ Kluwer
Copyright Blog (3 August 2017) <http://copyrightblog.kluweriplaw.com/2017/08/03/blockchain-copy
right-symposium-summary-report/> accessed 17 July 2018.
22 Blockchain and smart contracts
of art and literature.106 The purpose of the Statute, which was more or less copied
by many colonies of the future US and which finds a direct echo in the 1790 US
Copyright Act and in the state statutes that preceded the formation of the republic,
was to replace a monopoly on book publishing granted decades earlier to the
before us are different. Given the extreme complexity of copyright, could blockchain
technology be used by right holders to bypass copyright’s structural complexity and
replace it with standardized technological solutions? Will DLTs standardize RMIs?
Will smart contracts standardize mass produced licensor–licensee relationships?112
112 J Beniger, The Control Revolution: Technological and Economic Origins of the Information Society (Harvard
University Press 2009).
113 Gervais (n 63).
114 As pointed out by Finck, a blockchain is immutable only ‘to the extent that its human creators decide
not to intervene’. See Finck (n 37) 3.
115 Contrast the US approaches in the US and EU, discussed eg by J Ginsburg and L Budiardjo, ‘Liability
for Providing Hyperlinks to Copyright-Infringing Content: International and Comparative Law
Perspectives’ (2018) 41 Columbia Journal of Law & the Arts 153.
24 Blockchain and smart contracts
term of rights may also vary for at least two reasons. First, some countries
(eg Canada and New Zealand) protect rights for the life of the author plus 50 years,
the minimum standard under Berne. A vast number of major jurisdictions, including
the EU and the US, have moved to 70 years after the death of the author.116
116 This gets even more complicated because the principle of national treatment does not apply mandatorily
here. This means that a country using a life plus seventy years term may refuse to protect works originat-
ing from a country where the shorter term applies beyond that shorter term.
117 See (n 45) above.
118 See TRIPS (n 9), art 6 (‘For the purposes of dispute settlement under this Agreement, subject to the
provisions of Articles 3 and 4 nothing in this Agreement shall be used to address the issue of the exhaus-
tion of intellectual property rights.’); WCT (n 9), art 6(2).
119 The user who is presumably in good faith would likely face reduced penalties and would have a recourse
against the ‘wrong’ licensor.
120 L Guibault, Copyright Limitations and Contracts: An Analysis of the Contractual Overridability of
Limitations on Copyright (Kluwer Law International 2002).
121 J Urban, J Karaganis and B Schofield, ‘Notice and Takedown in Everyday Practice’ UC Berkeley Public
Law Research Paper No 2755628 (22 March 2017), 44 (‘ . . . by all accounts, the actual use of counter
notices is extremely infrequent’).
122 The Creative Commons CC0 license is perhaps the closest we have come. See Creative Commons,
Public Domain, CC0, <https://creativecommons.org/share-your-work/public-domain/cc0/> accessed
17 July 2018.
Blockchain and smart contracts 25
dedicated, a world in which smart contracts put in place a form of technologically en-
forceable private ordering to replace copyright, while technically feasible, seems a
very distant goal indeed.
A second method of action would be legislative responses recognizing the role of
C ON CL US I ON
Copyright-based practices have changed almost beyond recognition: from a scarcity
and exclusivity-based monetization model, to an all-you-can-eat access based one;
from a one-to-many dissemination model curated by professionals, such as publishers
and producers, to a mostly unfiltered many-to-many infrastructure where major
internet platforms generate revenue by maximizing access to ‘content’. Enter the
blockchain and the smart contracts it empowers: does it provide the means to retool
copyright, or will it replace it?
123 Regarding so-called safe-harbors, see, in EU law, arts 12–15 of Directive 2000/31/EC of the European
Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in
particular electronic commerce, in the Internal Market, 2000 OJ (L 178) 1–16 and, in the US, 17 USC
§ 512 (Limitations on liability relating to material online).
124 ‘Miners’ or ‘mining nodes’ are a set of computers in a DLT network tasked with the validation of trans-
actions broadcasted by network participants or wallet holders. As neither wallet holders nor other valida-
tor nodes are to be trusted, sophisticated algorithms must ensure that only the only transactions
validated are those consistent with earlier records. As a result, miners are by design the enforcers the
technologically encoded rules on a blockchain. Since the physical location of, as well as the operating
(legal) entities behind these validator computers are relatively easy to uncover (and current economic
incentives encourage the concentration of mining activities in the hands of a few large entities), miners
are ideal regulatory enforcement targets. See A Efe Gencer and others, ‘Decentralization in Bitcoin and
Ethereum Networks’ arXiv.org (9 February 2018) <http://arxiv.org/abs/1801.03998> accessed 17 July
2018.
125 See, eg the often-cited C Clark, ‘The Answer to the Machine is in the Machine’ in P Bernt Hugenholtz
(ed), The Future of Copyright in a Digital Environment (Kluwer Law International 1996) 139.
26 Blockchain and smart contracts
126 For a powerful criticism of blockchain technologies, including their application in the music industry, D
Gerard, Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts (2017) Ch 12.