The Use of Blockchain in the Metaverse for Protecting the Rights of Authors and Artists (Part 2)

• Introduction
• Examples of Blockchain Use in the Metaverse
  • Digital Art Trade Platforms
  • Blockchain-based Virtual World Games
  • Metaverse Auctions and Art Sales
  • Protection of Brands and Commercial Assets in the Metaverse
  • Virtual Education and Conferences in the Metaverse
  • Direct Revenue Generation for Artists
• Challenges
  • Ownership of Digital Assets
  • Copyright
  • Trademarks
  • Territoriality of Intellectual Property Laws
  • Privacy and Data Protection
  • AI-related Rights
• NFT-related Ownership Rights
  • Definition of NFT Ownership
  • Intellectual Property Rights Related to NFTs
  • Legal Issues Concerning NFT Transfers
  • Platform Ownership Issues
  • Execution Problems
  • Rights Related to NFT Applications
  • Legal Issues Related to Blockchain Technology
• Suggestions

Introduction

After examining the intellectual property challenges in the digital world and the metaverse, this section will explore the role of blockchain in protecting these rights. As an innovative and transformative technology, blockchain has unparalleled potential to solve existing legal problems in the digital space. Blockchain’s unique features, such as transparency, high security, and decentralization, can effectively protect the rights of authors and artists in the metaverse. This section will discuss blockchain applications in preventing intellectual property violations, combating counterfeiting, and simplifying the enforcement of intellectual property rights globally. Additionally, it will address the new challenges blockchain presents in tackling legal issues arising from works created by AI and other related matters.

The aim of this section is to provide solutions on how blockchain can be used to best protect the rights of artists and content creators in the digital world and the metaverse.

Examples of Blockchain Use in the Metaverse

Blockchain technology, as one of the cornerstones of the metaverse, has provided a powerful platform for developing and managing digital content and assets. This technology not only facilitates the protection of intellectual property rights but also offers unprecedented opportunities for artists, companies, and users to create, manage, and profit from content in the metaverse. Below are notable examples of successful blockchain applications in the metaverse.

• Digital Art Trade Platforms
  • OpenSea
    OpenSea is known as one of the largest NFT marketplaces in the metaverse. This platform allows artists to directly register and sell their digital artworks as NFTs. The key feature of OpenSea is the transparency and security of blockchain transactions, enabling users to purchase original works and ensure the authenticity of their ownership.
  • Rarible
    Rarible is another popular blockchain-based platform focusing on empowering independent and anonymous artists. It allows users to create and offer their works as NFTs without intermediaries.
• Blockchain-based Virtual Worlds and Games
  • Decentraland
    Decentraland is one of the most prominent examples of a blockchain-based virtual world, allowing users to buy virtual land and develop it as they wish. All transactions in this platform are recorded on the Ethereum blockchain, ensuring high security and transparency for buyers and sellers.
  • The Sandbox
    The Sandbox is another metaverse platform focused on user creativity. It enables users to design and sell their virtual assets and games in the Sandbox marketplace. All assets are registered as NFTs.
• Metaverse Auctions and Art Sales
  • Beeple Project
    One of the most famous examples of successful blockchain use in the metaverse is the sale of the digital artwork Everydays: The First 5000 Days by digital artist Beeple. This work was sold as an NFT at Christie’s auction house for $69 million.
• Protection of Brands and Commercial Assets in the Metaverse
  • Gucci
    This luxury brand has launched a collection of digital handbags and shoes as NFTs. These products are usable in metaverse platforms like Roblox, and all transactions are recorded on the blockchain.
  • Nike
    Nike introduced Cryptokicks, a series of digital shoes registered as NFTs. These shoes allow tracking of ownership and authenticity.
• Virtual Education and Conferences in the Metaverse Blockchain is also used in the metaverse for hosting educational events and virtual conferences. For example:
  • LearnWorlds Platform
    This platform uses blockchain to issue educational certificates in the metaverse. These certificates are issued as NFTs, and their authenticity and ownership are permanently recorded on the blockchain.
  • Virtual Conferences in Spatial
    This platform facilitates virtual meetings and conferences, storing all documents and materials presented during these events securely on the blockchain.
• Direct Revenue Generation for Artists

Blockchain allows artists to earn revenue directly from their works. In traditional models, intermediaries took a significant portion of the artist’s income. However, in the metaverse, artists can directly present their works to audiences and retain full revenue from every sale.

Challenges

Intellectual property issues in the metaverse are complex due to its digital, borderless, and decentralized nature. This section examines some of the most significant challenges in this area:

• Ownership of Digital Assets
  A major challenge in the metaverse is determining the real owner of digital assets. In cases like NFTs, ownership of the token does not necessarily mean ownership of the digital content associated with it.
• Copyright
  In the metaverse, users often create content collectively. Determining each individual’s share in the copyright ownership of these works is a complex challenge.
  • Joint Productions and Group Creativity
    In the metaverse, users often collaborate to create content, complicating the determination of each person’s share in the copyright of the works.
  • AI and Creativity
    In cases where digital content is generated by AI, it is unclear who (the human or the algorithm) holds the copyright.
  • Illegal Copying
    Due to the ease of reproducing and sharing content in the metaverse, copyright infringement is very common. New technologies like blockchain can help improve transparency and reduce these violations, though significant challenges remain.
• Trademarks
  • Unauthorized Use of Brands
    Unauthorized use of logos or trademarks in the metaverse can lead to confusion among users and violation of brand ownership rights.
  • Brand Development in the Metaverse
    Many companies have moved their brands into the metaverse. Protecting these brands and dealing with abuses in the decentralized space requires new legal tools.
• Territoriality of Intellectual Property Laws
  • Geographical Boundaries
    Intellectual property laws are typically confined to a particular country or region, but the metaverse is a borderless space. This misalignment can create complexity in the enforcement of laws.
  • Cross-border Disputes
    In case of disputes, it is unclear which law or court has jurisdiction.
• Privacy and Data Protection
  • User Data Ownership
    User data in the metaverse is considered a valuable asset. Determining ownership rights over this data and how it can be used is a critical issue.
  • Right to Be Forgotten
    Users may want to delete or restrict access to their content. This becomes more complicated in the metaverse, where information may be permanently stored on the blockchain.
• AI-related Rights
  • AI-created Works
    Can AI own the rights to works it creates, or do these rights belong to the human (owner of the AI)? This is one of the fundamental challenges of the metaverse.
  • Ethics and Accountability
    AI-generated works in the metaverse may encounter ethical and accountability issues. For example, if the content created violates laws or the rights of others, it may not be clear who is responsible.
  • Blockchain Use
    Blockchain, as the foundational technology for many digital assets in the metaverse, can help manage intellectual property. However, there are still no unified international standards for its use.
  • Smart Contracts
    Smart contracts can play a vital role in ensuring intellectual property rights in the metaverse. However, challenges such as altering or enforcing these contracts still exist.

NFT Ownership Rights

NFT ownership rights are one of the most controversial legal topics in the digital world and the metaverse. These rights encompass legal ownership, usage, transfer, and rights related to digital assets.

• Definition of NFT Ownership
  NFT ownership means owning a unique digital code registered on the blockchain. However, this ownership does not necessarily include intellectual property rights or the copyright of the related content.
  • Token Ownership vs. Digital Asset Ownership
    NFT ownership means owning a unique digital code registered on the blockchain. However, this ownership does not necessarily imply ownership of the intellectual property or copyright of the associated content. For example, purchasing an NFT of a digital artwork does not grant the right to reproduce or reproduce that work.
  • Blockchain-related Rights
    Blockchain, as the infrastructure for NFTs, ensures ownership, authenticity, and transaction history. However, this information is only valid within the blockchain code and may be challenged in external legal matters.
• Intellectual Property Rights Related to NFTs

NFTs do not transfer copyright unless explicitly stated in the purchase contract.

• Copyright for NFTs
  Selling an NFT does not transfer the rights to reproduce, publicly display, or create derivative works from the associated content. These rights require specific legal agreements and licenses.
• Licenses and Contracts
  Smart contracts play a crucial role in determining rights and restrictions related to ownership. These contracts can regulate rights to use content, create derivative works, or transfer to others. However, these contracts must align with legal laws to avoid contradictions.
• Ownership of AI-Generated Works

If a digital work is created by artificial intelligence and sold as an NFT, determining the legal owner (AI owner or user) remains a challenging issue.

• Legal Issues Related to NFT Transfer
  • Cross-Border Digital Ownership: The transfer of NFT ownership in the Metaverse creates challenges due to its decentralized and cross-border nature. For example, a buyer may reside in a country with different laws compared to the seller.
  • Resale Rights and Artist Royalties: Some NFTs include smart contracts that allocate part of the resale profit to the original artist. This could help support artists’ rights, but enforcing these contracts on different platforms may face limitations.
• Platform Ownership Issues
  • User Rights vs. Platform Rights: Many Metaverse platforms have terms of use that limit the user’s ownership rights. For instance, some platforms retain ownership of user-created works or restrict access to NFTs under specific conditions.
  • Privacy and Data Protection: Data related to NFT ownership may be used by platforms, requiring transparency in privacy laws.
• Practical Issues
  • Identifying Ownership in Case of Legal Violation: In the case of intellectual property violations or fraud in NFT transactions, identifying the owner or the lawbreaker in decentralized systems is challenging.
  • Dispute Resolution: Due to the lack of geographical boundaries in the Metaverse and blockchain, determining the competent court for handling NFT-related disputes is complex.
• Rights Related to NFT Applications
  • In Digital Art: Artists can offer and sell their works as NFTs. However, using other people’s digital works in NFTs without permission can be considered copyright infringement.
  • In Video Games: NFTs are used as in-game items. Questions like whether players have the right to transfer or modify these items depend on the game contracts.
  • In Branding and Commerce: Using trademarks in NFTs (such as logos or brand names) without permission can lead to trademark infringement lawsuits.
• Legal Issues Related to Blockchain Technology
  • Immutability and Error-Related Issues: A transaction on the blockchain is immutable. If an ownership record is incorrect, correcting it can be extremely difficult.
  • Security and Fraud: NFTs may be subject to fraud, such as the sale of fake NFTs. Existing laws to address these issues are still being developed.

Suggestions

The ownership rights related to NFTs, due to the newness of the technology, require further scrutiny and the formulation of coordinated laws. Suggestions include:

• Creating Clear Legal Frameworks to determine ownership and rights related to NFTs.

1. Standardizing Smart Contracts at an international level.
2. Educating Users and Artists about their rights and responsibilities regarding NFT ownership.
3. Developing Technologies to enhance security and transparency in NFT transactions.

These actions could help reduce challenges and enhance the efficiency of this emerging technology.