What Do You Really Own in the Ownership Economy?

The ownership economy is a promising space. But right now those promises are not being fulfilled. The blockchain is the future. That's what we're told anyway.

The ownership economy is a hot topic these days. With the rise of Web3 and NFTs, people are talking a lot about what it really means to own something in the digital age. But as Ducoff points out in his article, the answer is often more complicated than you might think.

When you buy an NFT, for example, you might think you're buying the associated asset—a piece of art, a music track, a physical object. But in reality, all you can prove you own in many cases is the tokenID and contract address. The legal right to control the item may or may not be intrinsically part of the NFT.

Copyright law introduces additional complexity. Transferring ownership does not inherently transfer copyright. U.S. copyright law has stringent requirements for transferring copyright, which are not guaranteed to be met by smart contracts.

So when you purchase an NFT, what you actually own is the token’s metadata (including its tokenID and the contract address) – not necessarily the work itself. Furthermore, the token doesn’t actually reside in your wallet, but rather the token’s ledger is updated to reflect that your wallet owns one. This introduces a number of issues related to ownership and copyright.

Ducoff also points out that buying an NFT representing a physical object doesn’t guarantee that you will receive the goods. Purchasing the NFT doesn't trigger a process wherein a robot fulfills and ships an order from a warehouse, for example. There’s a human in the loop. And if the order isn’t fulfilled, the blockchain remains immutable. You can't get a chargeback as you could with a purchase you made using a credit card.

It gets even more complicated when the NFT is connected to a digital creative work, in part because of rampant confusion about the relationship between NFTs and copyright law – and specifically U.S. copyright law, which sets a high bar for selling copyright.

If you purchase an NFT of a digital creative work – let’s say a piece of visual art that someone else created – you have, once again, definitely purchased the tokenID and contract address for the artwork. What’s murkier is figuring out who has the ability to create (and profit from) derivatives or copies of that art.

Part of the confusion comes from the fact that, under U.S. copyright law, there is a difference between transferring a copy of something (like a piece of art) and transferring copyright (as in, the right to make other copies of that art). Transferring copyright requires that the transfer occurs in writing, with a signature from the copyright owner – something smart contracts can make surprisingly difficult.

Let’s say, as an example, that Person A creates a piece of digital art. Person B buys an NFT, acquiring full ownership of the copyright as part of the original contract. At some point, Person B decides to sell the NFT.

What happens when Person C buys it? Does copyright automatically transfer to them? Not necessarily! If the smart contract does not specifically include mention of copyright transfer, Person B might still legally hold the copyright – even if Person C now has the NFT.

And what happens if Person B created a ton of derivative material around their NFT before they sold it? Do those revenue streams go with the NFT to Person C, or do they remain with Person B, the copyright holder?

There’s no crystal clear answer to those questions, and yet the legal and financial ramifications of those answers are significant.

News source：https://www.kdj.com/cryptocurrencies-news/articles/ownership-economy.html

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