Blockchain and the intellectual property: beyond copyright
Note: this story orignally appeared on aqer.tech
Intellectual property, in its various forms (patents, copyright and trademarks) is one of the fundamental building blocks of our economy, if not of our very social fabric. Giving a protection to the rights of innovators, creative artists or established firms is in the public interest, as this provides a viable infrastructure to compensate one’s efforts. The rationale of intellectual property rights goes as as follows: innovation and creativity are good for the society, thus it is in our interest to promote them; but the innovative and creative capabilities are not evenly distributed among the various members of any given society and require a considerable amount of time and work to bear their fruits. And furthermore, it is a very uncertain process. Thus, we must incentivize innovative and creative individuals by providing them with a definite and reliable framework to protect their work and provide the opportunity for financial gains from its exploitation.
This is why intellectual rights are interpreted as a form of property: the inventor, or the creator, has introduced into the world something perceived as new by common social standards and this very novelty, being the product of the authors’ labour and ingenuity, is part of them, a property in its purest form. This means that owners can regulate access to their property and even cede their rights to it in return for satisfactory compensation. In practice, this leads to a model where authors have two basic choices: selling their property outright or reaching an agreement for its exploitation with third parties. The latter form is much more significant, not only because is prevalent in most forms of copyright and patents, but also because it has been the basis for the definition itself of copyright and the ensuing norms.
Copyright defines, quite literally, the right to make copies: it applies to the forms of creation that can be copied in large numbers, without a loss of the intrinsic value of the work of art, and that are typically accessible to the public in the form of copies. It is quite apparent that this issue only became relevant when the circulation of a high number of copies became feasible and economically viable. The first example in this sense came with the advent of the printing press, which was the catalyst for an exponential growth in the number of books in Europe, from a few thousand available before Gutenberg’s invention (1436) to the about ten million estimated at the end of the Fifteenth century, a mere 50 years later (see here for an extensive coverage of the story of copyright law).
The first measures enacted to grant a form of protection to the right of making copies of a book were the so called “Privileges”, i.e. the authorisation for a printer to be the sole person legally allowed to make copies of a certain book (a more complete overview of the history of early copyright can be found here). However, the first statute to define copyright in the modern sense was the so-called Statute of Anne (1710, 8 Ann., c. 19 (Eng.), named after the then Queen of Anne who supported the creative arts), which contains the following:
[T]he Author of any Book or Books already Printed, who hath not Transferred to any other the Copy or Copies of such Book or Books, Share or Shares thereof, or the Bookseller or Booksellers, Printer or Printers, or other Person or Persons, who hath or have Purchased or Acquired the Copy or Copies of any Book or Books, in order to Print or Reprint the same, shall have the sole Right and Liberty of Printing such Book and Books for the Term of One and twenty Years,… and no longer; and that the Author of any Book or Books already Composed and not Printed and Published, or that shall hereafter be Composed, and his Assignee or Assigns, shall have the sole Liberty of Printing and Reprinting such Book and Books for the Term of Fourteen Years, to Commence from the Day of the First Publishing the same, and no longer.
As we can see, the essence of modern copyright law is already here: the owner of the rights has exclusive control over the copies for a limited period of time, before the works become part of the public domain. This articulation tries to strike a balance between two conflicting public interests: incentivizing the creation of art and knowledge, by providing a legal framework for its advantageous financial exploitation, and limiting this right, to ensure accessibility to these works once the author has earned their just reward.
But there is another element to be considered: the ability to make copies has been reliant, for many years, on access to expensive and capital-intensive machinery and labour. In other terms, printing presses and the whole printing industry of the Modern era were typical instantiations of the industrial paradigm, where a limited number of enterprises had the means to produce physical copies, while a larger number of people (the authors) had the ability to produce content and an even larger number (the public) the desire to access this content. This framework remained quasi unchanged for recorded music and video, to the point that the concept of copyright, devised to protect the intellectual property of books, could be easily applied to music and film. This conception has shaped the whole publishing industry as well all those who have followed its model: recording, film, entertainment and video games. In it, the publishers act as gatekeepers to the whole system: since they controlled the resources for production and distribution, they always had the power to decide whether to invest or not in an author’s work or not.
The advent of technological innovation has brought about a disruptive transformation of these industries. A perfect example is that of music, where the new phenomena of punk and hip-hop gave rise to independent productions and self-production as early as the late Seventies, with independent distribution networks creating relevant market niches for these independent musicians. The impetus for this transformation was the availability of cheap recording facilities and, more importantly, a new medium — the musicassette — ready to be recorded and copied onto any home stereo.
In the late Nineties, the widespread diffusion of digital devices and, more generally, the digitization of content — from written texts and illustrations to music, sound, video and films — gave every user the ability to make an indefinite number of copies and distribute them to an indefinite number of other Internet users. It was here that the centralized ability to copy, the founding pillar of the copyright system, collapsed. Yes, there is still a need to legally protect the intellectual property of authors. And, obviously, there is still a publishing industry and many others rooted in the copyright system. However, it’s quite apparent that controlling the copies produced by a limited number of industrial actors can no longer be the term of reference. On the other hand, the complete freedom to copy could be a true menace to authors, who need strong, straightforward and viable protection of their work. This is where a blockchain-based system could be the solution.
Within the blockchain, each and every transaction is documented on a public, open, transparent, distributed and unmodifiable ledger. This means that each copy of a piece of content can have an individual and univocal identification. Copies are no longer produced in a single, centralized outlet and then distributed along rigidly controlled chains. Instead, they are created directly on a user’s device and certified as a transaction, made possible through invoicing (smart contracts) and payment (cryptocurrencies) systems that also reside in the blockchain. In this way, digital objects have the same uniqueness of physical ones. Consequently, all the measures implemented to prevent illegal copying, which also restrict the use of these objects, have no reason to exist. A blockchain-based solution has the following key features:
- The system is completely digital-native: as the whole production and distribution process takes part on a decentralized network, the industrial logic of the traditional system becomes obsolete;
- Digital objects can be used without the usual restrictions associated with DRMs, namely they can be loaned, gifted and resold with every transaction documented;
- Authors can partake in any transaction, on the basis of the underlying smart contract. Thus, if the transaction generates financial transfers (e.g. a file is resold as a “used” copy), the owner of the intellectual property can have a share;
- Authors’ rights are protected via smart contracts, by the very system that produces the copies for end-users: there is no more need for a gatekeeper.
While these are just the most obvious aspects of the impending revolution in intellectual property rights, they can help to gauge its magnitude. In the next post on this subject, we will delve a bit deeper into this revolution and try to understand its possible consequences.
