NFT Copyright Infringement Case: Exploring the Legal Landscape of NFT Transactions

NFT Copyright Infringement Case: Exploring the Legal Landscape of NFT Transactions

Introduction:
The recent NFT copyright infringement case has shed light on the legal complexities surrounding the trading of NFT digital artworks. In this article, we will delve into the legislative history, facts, and court rulings of the case, while also examining the nature of NFT transactions and the responsibilities of NFT platforms. Additionally, we will explore the potential consequences of NFT copyright infringements and propose actionable advice for both NFT creators and platforms to ensure legal compliance and protect intellectual property rights.

Legislative History and Court Proceedings:
The case involved a dispute between Hangzhou Yuan Yu Zhou Technology Co., Ltd. (referred to as Yuan Yu Zhou) and Shenzhen Qi Ce Die Chu Culture Creative Co., Ltd. (referred to as Qi Ce). Dissatisfied with the ruling of the Hangzhou Internet Court, Yuan Yu Zhou appealed to a higher court. The court proceedings spanned several months, and the case reached its conclusion recently.

Court Findings and Their Significance:
The first court ruling addressed several key points, including whether the disputed artwork constituted a work of art, Qi Ce's eligibility as a plaintiff, the legal nature of NFT artwork creation and trading, the attributes and liabilities of the accused Bigverse platform, and the determination of civil liabilities. The court's decision held Yuan Yu Zhou responsible for copyright infringement and ordered them to cease their infringing activities while also awarding damages to Qi Ce.

During the second trial, the court examined additional evidence, such as the transaction records between the accused user "anginin" and the platform, as well as the platform's rules for referral activities. It was discovered that Yuan Yu Zhou did not collect fees from user "anginin" during the creation of the NFT artwork in question. However, the court emphasized that the absence of gas fees (transaction fees) did not absolve Yuan Yu Zhou of their legal obligations.

Nature of NFT Transactions and Platform Responsibilities:
NFT trading platforms provide a unique form of internet service with the generation and transfer of proprietary rights. When users convert copyrighted works into NFTs without proper authorization, they not only infringe upon the original creators' rights but also harm the legitimate interests of the parties involved in the subsequent transactions.

According to the provisions outlined in the "Supreme People's Court’s Provisions on Several Issues Concerning the Trial of Civil Disputes Involving Infringement of Information Network Transmission Rights," platform providers must exercise a higher duty of care when they directly benefit from users' copyrighted works. In the case of NFT trading platforms, where revenue is generated through commissions and advertising related to specific works, these provisions apply.

It is worth noting that Yuan Yu Zhou attempted to argue that the fees they collected were general advertising or service fees. However, the court rejected this argument, highlighting that the fees collected from each transaction, including gas fees and a 10% commission, did not fall under the category of general advertising or service fees.

Actionable Advice for NFT Creators and Platforms:

1. Ensure Proof of Ownership: NFT creators should provide preliminary evidence of ownership when uploading their works, such as drafts, original copies, copyright registration certificates, or contracts that establish their rights. This measure will enhance transparency and provide a basis for determining copyright ownership.

2. User Commitments and Guarantees: NFT platforms should require users to pledge that they hold the appropriate rights for the specific NFT artwork they are creating. Platforms may also request additional guarantees when necessary to protect intellectual property rights.

3. Implement Comprehensive Verification Measures: While technological solutions can aid in preventing copyright infringements, they should not replace the requirement for users to provide proof of ownership. NFT platforms should adopt a combination of automated recognition technology and manual verification processes to ensure compliance with copyright laws.

Conclusion:
The recent NFT copyright infringement case has highlighted the need for clear guidelines and responsibilities within the NFT ecosystem. As NFT transactions continue to grow in popularity, it is crucial for both creators and platforms to prioritize intellectual property rights and legal compliance. By implementing the actionable advice provided in this article, stakeholders can contribute to the development of a sustainable and responsible NFT marketplace.