In 2021 we witnessed a real explosion of the NFT (non-fungible token) phenomenon, i.e. digital assets that take the form of image, audio or video and that through an exclusive digital certificate, generally guaranteed by a blockchain system. that the owner is the sole owner of this virtual asset.
According to Forbes, transactions involving NFTs reached $ 23 billion last year with the majority of transactions taking place via cryptocurrencies.
Very often, purchases are made through dedicated platforms such as Opensea or Rarible. These marketplaces offer precise guarantees on the uniqueness of the virtual object and of the ownership “chain” but recently major problems have emerged concerning copyright and counterfeiting of intellectual property rights such as trademarks as well as the subtraction of personality (impersonification).
In the music sector, for example, many cases have already appeared of the use of contents not authorized by the right holders, such as record companies or artists, or the subtraction of NFTs generated by artists and passed off by other subjects as their own.
In fact, the system on which the NFTs are based, that is the certification guaranteed on the object, is however not free from frauds and scams concerning the ownership of the content. An image, a video clip or an audio recording can be tokenized but, if at the base they are the object of an illicit reproduction, for example, of the music or video, the derived NFT also poses serious problems to those who buy it, as well as to those who created it.
The music sector, which over the years has accumulated considerable experience in combating digital piracy, has recently activated on this front. In Italy, DcP, Digital Content Protection, a company active in the protection of intellectual and industrial property rights that works for major majors such as Warner Music, Sony Music and Universal Music, at the recent Sanremo Festival, announced the launch of new services dedicated to the world of NFTs and the metaverse on the web3. This is the first service in the world specialized in this market.
NFT and music contend with copyright laws and tax regulations
by Enzo Mazza *
The explosion of these innovative market segments is in fact proposing new challenges for trademark, brand and copyright owners who are faced with the need to ensure their assets the maximum protection from fraud and illegal broad-spectrum activities. The music industry has developed considerable expertise in the field of digital content protection over the long years of fighting online piracy, from Napster to peer to peer, and through this experience, DcP has created a number of new tools to assist companies in contrasting the new illicit phenomena that are spreading in the world of NFTs. By employing sophisticated technological infrastructures associated with advanced human skills on the net, the system monitors the NFT marketplaces to identify illegal content, also as a scam adviser, or investigating potential scams and fraud against rights holders.
The presence of significant quantities of musical NFTs, among the most sought after, after digital art, has seen an exponential growth in fraud also because the financial speculation behind this market is attracting many investments.
“These new technologies, such as NFT and metaverse, are developing at tremendous speed, moving even big financial interests but companies need to know that there are very relevant legal aspects and violations are the order of the day. To approach this new market in a healthy and safe way, high-profile technological safeguards become indispensable ”said Luca Vespignani, CEO of DcP.
From the subtraction of artists’ personalities, copyright or trademark violations to real rug pull scam operations, the NFT sector and more generally the nascent metaverse require dedicated activities with sophisticated skills in order to protect the interests of companies involved. The RIAA, the association of US record companies recently sent a first letter of formal notice to the Hitpiece platform which offered NFT to fans of well-known artists such as Taylor Swift without any authorization. In Italy, DcP has sent removal requests to the Opensea platform.
In addition to NFTs, the new metaverse is also not free from piracy. Among the first interventions there is also the removal of a fake virtual “venue” created in the name of Warner Music for events on Roblox, the famous online gaming platform.
The services to combat these phenomena include monitoring and management of notifications of violations (notice & takedown) as well as the forensic acquisition of valid evidence for the formation of the IT test and technical consultancy able to assist the entitled parties but also the judiciary in legal and institutional protection activities.
This new frontier of virtual counterfeiting will certainly have a significant increase also in the fashion and brand sector, as well as in the audiovisual and sports world where, in addition to defending the interests of the rights holders, it will become very important to avoid consumer scams that can damage at the same time also the image of the brands, possibly involved in illegal operations without their knowledge.
* CEO, FIMI – Federation of the Italian music industry
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