Review Reports

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The paper addresses a timely and relevant topic. However, several aspects would benefit from further clarification and deeper analysis.

First, it would be advisable to specify at the outset the legal system upon which the analysis is based. In the European Union, transactions involving NFTs may intersect with specific legislative frameworks governing intellectual property and consumer protection. Clarifying the jurisdictional basis of the argument would enhance doctrinal precision and avoid potential ambiguity. In this regard, see inter alia The US “MetaBirkins” Case in the Light of EU IP and Consumer Protection Law, International Journal of Law in Changing World (IJLCW), 2023, Special Issue NFTs, pp. 118–140.

Second, the legal analysis appears somewhat cursory. A more detailed examination of the different categories of contractual terms embedded in smart contracts would significantly strengthen the contribution. For instance, the structure and content of a smart contract will necessarily vary depending on whether the underlying transaction involves a full transfer of rights, a partial assignment, a license, or a sale. The paper should explore how such distinctions are reflected in the contractual architecture and how these legal nuances can be technically implemented within the smart contract code. The adaptability of the smart contract to the specificities of each transaction is both a legal and a technical matter, and it deserves explicit discussion.

Third, the cross-border dimension of NFT transactions is not sufficiently addressed. Given the inherently transnational nature of blockchain-based transactions, the applicable law may differ from the legal system on which the analysis is based. Questions of private international law, jurisdiction, and conflict of laws should therefore be considered, at least in outline.

Fourth, the paper should clarify which intellectual property rights may potentially subsist in connection with an NFT, and under what conditions. The title appears to suggest a broader analysis than copyright alone.

Finally, NFT transactions raise issues extending beyond intellectual property law. Contract law questions, such as proper performance, withdrawal rights, remedies, the role of intermediaries, etc., deserve attention. The paper would benefit from addressing how the envisaged smart contract structure interacts with contractual provisions unrelated to IP.

Addressing these points would considerably enhance the depth, coherence, and practical relevance of the paper.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

My review concerns the legal issues and NFTs generally, not the details of the smart contract coding and some other technical matters.

NFTs and copyright are a topical issue and a number of projects have explored whether blockchain/smart contracts can be used to facilitate various aspects of copyright.

The article talks about commercialisation a number of times, but it does not explain what is meant by commercialisation. It would be useful to clarify at the outset what commercialisation means. Does commercialisation mean to display the underlying NFT as the NFT buyer (NFT owner) sees fit, for example, displaying the NFT on the NFT buyer’s website? And, if the NFT buyer was a business, displaying that NFT on a computer monitor in the physical offices of the business. Or does it also extend to using the underlying artwork as a trade mark for the NFT buyer’s business, even registering it as a trade mark? Note: the buyer does not need to own the copyright in the underlying artwork to do any of these things, they can all be achieved by granting the NFT owner a license.

And, as people buy tangible artworks all the time without owning the underlying copyright, it would be good to explain clearly the difference between a physical piece of artwork and an NFT.

A key problem is what happens if the “author” of the underlying work, doesn’t own the copyright in the underlying artwork? This can occur if that “author” has simply copied another artwork. Copying of another artwork is relatively common and is called copy minting. Or that “author” may have already assigned the copyright in the underlying work to another person, or the “author” made the underlying work in the course of employment. In that case, the “author” is not the copyright owner, so the NFT purchaser cannot become the copyright owner. Therefore, the statement in the introduction that “NFTs also function as certificates of authenticity or digital deeds linked to the artwork, which not only facilitate its commercialisation but also provide buyers with security by guaranteeing that they are acquiring an original piece” is not always correct. What can be guaranteed is that once information has been published on a blockchain that information is extremely unlikely to be changed by bad actors. But blockchain does not magically mean the initial recording of the information was correct/accurate.  

There is some misunderstanding of NFTs, so quite a bit of what has been published is incorrect. Which means just because something is said in a peer reviewed journal article does not mean it is correct. One area of misunderstand is that not all NFTs are unique. While some artists do create unique NFTs, other artists produce editions, so multiple NFTs of the same artwork, similar to how an artist can produce limited edition prints. And some artists have sold a “unique” 1 of 1 NFT to one person, but they then also mint other NFTs that look identical, so using the same underlying artwork. Which can mean the purchasers do not realise they are not purchasing a unique NFT. This has been called double minting: https://medium.com/geekculture/solving-the-nft-double-minting-problem-with-computer-vision-c57bbbb4652d.  Therefore, the quote: “the digitalisation of works through the minting of NFTs provides certain advantages to the art market, the fundamental one being that it confers on the artistic work singularity or uniqueness, and therefore the value of exclusivity strictu sensu”, is not accurate for all NFTs.

And because two or more NFTs of the same underlying artwork can be minted, only one of those NFTs could have the ownership rights (copyright) attached to it. But if a license was used then all the NFT owners with the same underlying artwork can be granted the same rights to use it.

On page 8 it correctly says “linked asset or service”, but in the next paragraph it says “However, other crypto-assets, such as NFTs, acquire value exclusively from the relationship established with another asset: digital artworks or tangible goods in the real world (such as immovable property).” This statement is saying that NFTs only cover digital artworks and tangible good, but NFTs are much broader than that. For example, a concert ticket, which is not a tangible good, can be an NFT, see e.g. https://scand.com/company/blog/how-nft-ticketing-works/

From the article it appears that the main issue is that purchasers of NFTs do not know what rights they are obtaining, for example, can they use the NFT for commercial purposes? The transfer of copyright ownership to enable commercial use appears to be the primary solution to solve this issue. However, an easier method, which would also circumvent the double minting issue is to grant a license to use that work commercially. To be sure, licenses are mentioned, but only later in the article. Although licensing, of course, won’t solve the problem if copy minting has occurred as the buyer has no rights to do anything with the underlying artwork.

The statements on page 9 “In short, since an NFT derives its market value from the asset to which it is linked, the commercialisation of the token will only make economic sense if its transfer also entails the transfer of the underlying asset” and “In most cases, a person creates or acquires an NFT with the intention of commercialising it, seeking to obtain an economic gain derived from such an operation” are curious. Some NFTs have commanded very high prices without the NFT owner owning the copyright in them. Also, the normal way that people have obtained a commercial gain through NFTs is by on selling them. The reason why people have been willing to pay high prices for some NFTs is simply because they own that NFT. People are irrational! Plus, people can and do on sell NFTs without owning the copyright in the underlying artwork. Also essentially the same argument about market value is repeated at the bottom of page 12.

Moral rights are mentioned on page 10 and it is correctly noted that the moral rights of the author cannot be transferred. However, moral rights are really important because they may affect how the buyer can use the NFT. Some jurisdictions allow the author to waive their moral rights, which could be included in the smart contract.     

I do not understand the quote “the holder of the token is the one who creates it, not the author of the tokenised work”.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

One of the most debated aspects of NFTs are the IP law issues and your content as well as your references do not reflect this high volume of literature and related discussions. I believe that you can address in more detail what problems were detected in the literature and how your smart contract addresses them in a more structured way. 

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Round 2

Reviewer 3 Report

Comments and Suggestions for Authors

Thank you very much for making the effort to improve your article and I believe it is much more thorough now.