Digital art and its implications for intellectual property, resale rights

By Patricia Mirasol, Reporter

NON-FUNGIBLE tokens (NFTs) can be used for the preservation of intellectual property in all forms of art. It is also a boon for artist resale rights and limited-edition prints, according to art experts at an Oct. 7 discussion by Galeria Paloma, a multi-genre art gallery and art advisory firm in Manila, Philippines.

NFTs represent real-world objects like art and music. An NFT’s authenticity and ownership is established once it’s minted (recorded) in the blockchain, which is a decentralized, secure, and public digital ledger that cannot be changed in part without changing the whole.

Many have the idea that NFTs equal apes and cartoons which is “unfortunate and reductive,” said Gareth Fletcher, program director of MA Art Logistics at Sotheby’s Institute of Art in London.

“An NFT is almost anything when it comes to data sets,” he said in the Oct. 7 event. “Getting past the apes… what value does timestamping data [give], what use cases can come from that? How can timestamping give you a sense of permanence for whatever it is?”

There’s nothing stopping anyone from minting anything, Mr. Fletcher added. “Performance art, photography, music — these are so NFT-able, it’s not funny.”

Reginald A. Tongol, a Philippine-based lawyer and art collector, noted how blockchain technology protects against copyright and trademark issues. If two fashion designs are similar, it’s hard to know which one is the earlier creation unless there’s a timestamp, he said.

“If you’re a graphic designer and you present to an ad agency, sometimes they get your ideas,” Mr. Tongol told the audience of the same event. “They don’t hire you, and then they get their in-house designers to do [what you proposed] … Blockchain technology eases the pressures of designers to prove they own the design they made.

“Every permutation of the design can be traced in the blockchain, and artists can put their terms for other people to be able to use and license it,” he added.

The same principle can be applied to limited edition copies.

It’s hard to monitor how many limited prints are done, and if the artist gets what he deserves for those prints, Mr. Tongol said. “With blockchain, they can see who bought what, and how much they earn from it. [Each sale] will be credited to them through the cryptocurrency they are subscribed to… It’s important for traditional galleries to adopt blockchain technology.”

Web3 — or the “upgraded” Internet characterized by decentralization and the increased use of artificial intelligence — can likewise benefit artists, including in terms of resale rights, added Mr. Fletcher.

In countries in Europe, there exists a droit de suite (or artist resale royalty), which grants artists a percentage from the resale of their original works of art. Artists who sell NFTs of their work are likewise allowed to receive royalties on resales through a typical sales agreement.

This is a boon for artists in countries where the copyright law does not recognize resale rights, Mr. Fletcher pointed out.

“If I’m operating in a jurisdiction that doesn’t have these safeguards, and I can change some of my output to have this ongoing royalty, then why wouldn’t I consider getting into this space?” asked Mr. Fletcher. “This is an interesting opportunity for artists right now.”