Ip and Art: an International Perspective

• Jurisdiction: European Union
• Author: Cristina Manasse, James C. Roberts III
• Publication year: 2021
• Citation: Vol. 46 No. 3

IP AND ART: AN INTERNATIONAL PERSPECTIVE

AUTHORS

Cristina Manasse

Manasse Studio Legale, Milan

James C. Roberts III

Global Capital Law Group PC

A BANKSY WORK GOES UP IN FLAMES

With the 2021 digital sale—for some $69,000,000—of rights in the artwork, Everydays: The First 5000 Days, the world woke up to a new type of art transaction: using non-fungible tokens (NFTs) to "sell" digital works, or at least digital versions of physical works, or perhaps just the right of access to a digital version of such works (we are all waiting for the dust to settle).¹

Now arrives a transaction involving tokenizing and then destroying a physical artwork, and a Banksy work is involved. Several years ago, a Banksy piece, Girl with the Balloon, was partially destroyed when it started to shred itself minutes after being sold at auction. This year, the purchaser of a copy of Banksy's Morons of 2006 purposely destroyed it as part of an NFT transaction. And Banksy was not even involved (we think).²

NFT-based art transactions raise burning questions under European Union principles of the two "buckets" of intellectual property—"economic rights" and "moral rights," legal terms that differ from their US counterparts, at least in their application. As creative or ironic (or weird or just plain stupid) as the purchase, tokenization and destruction in an art transaction might seem, let's look at a few of the EU legal issues that could arise regarding this transaction.

THE (FIERY) TRANSACTION

The artwork in question, Banksy's Morons, depicts an art auction that includes a painting with the sentence "I can't believe you morons actually buy this shit." A blockchain company, Injective Protocol, acquired a copy of Morons from an art gallery. Injective paid $95,000 to acquire the 325th print of 950 "official" prints. (In theory, 949 copies remain in existence.) Injective digitized that physical print—i.e., created a copy in a new medium—and then tokenized "it" and auctioned off the tokens.

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The destruction (after tokenization) was a somewhat bizarre, streamed event. An individual who was somehow connected to Injective Protocol explained the transaction and took out a cigarette lighter and...at first failed to light Morons on fire. He finally managed it and the print slowly turned to ashes. (You can watch the burning online.³) Destroying this print meant that only a digital copy of it existed. Finally, the last step: with smoke curling up from the ashes, the "fire lighter" announced that the NFT auction would take place the next day, which it did—raising $380,000.⁴

IP RIGHTS ISSUES WITH MORONS: THE EU PERSPECTIVE

Under EU law, as it interprets the basis of IP law, the Berne Convention, there are at least three issues at play here. They are: (1) creating a copy of the artwork in a different format; (2) destroying the original artwork (burning the 325th copy of Morons); and (3) the more complicated issues of the tokenization—i.e., whether this was a resale of the artwork.

Digitizing Morons

It is clear that EU law recognizes that economic rights include the right of reproduction. Those rights reside with the author (the EU equivalent of "artist"):

Authors of literary and artistic works protected by this Convention shall have the exclusive right of authorizing the reproduction of these works, in any manner or form.⁵

EU case law since the WIPO Copyright Treaty of 1996 makes it clear that digitization equals a reproduction and is therefore one of the economic rights held by the author. The "Agreed statements" notes to the WIPO 1996 copyright treaty states

The reproduction right, as set out in Article 9 of the Berne Convention, and the exceptions permitted thereunder, fully apply in the digital environment, in particular to the use of works in digital form. It is understood that the storage of a protected work in digital form in an electronic medium constitutes a reproduction within the meaning of Article 9 of the Berne Convention.⁶

Without further analysis, we know that the 325th copy of Morons was a protected work (a work created by an author). We know that it was reproduced in digital form. We also know that the copy—or at least one copy—is stored in digital form, so it is the exercise of the economic right of reproduction.

Obviously, the exercise of an economic right by someone who is not the author in question is not of itself a violation of that right. It depends on whether the person exercising that right possessed that right. Economic rights, like all other rights, start with the author and the author can transfer them (unlike moral rights). Therefore, Injective Protocol could have violated Banksy's economic right if Banksy did not transfer that right in the first place. No one (except Banksy?) really knows.

Burning Morons⁷

We now come to the issue of "moral rights." In general, EU member states follow the Berne Convention's description of moral rights as

[...] the right to claim authorship of the work and the right to object to any mutilation, deformation or other modification of, or other derogatory action in relation to, the work that would be prejudicial to the author's honor or reputation.⁸

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Before tokenizing the digital work, Injective Protocol (or someone...