Fungible Banksy: NFTs, Copyright and Digital Art Collide with the Burning of Morons

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We previously wrote on non-fungible tokens (NFTs) that represent art and how that concept is starting to be embraced by the art world. Enter Banksy, a celebrated graffiti artist and political activist whose real name and identity remain unconfirmed. For the past couple of decades, Banksy’s popularity has grown, including a celebrity following, and some of his art pieces have fetched $500,000 or more. One of Banksy’s most famous stunts was having one of his pieces, Girl with Balloon, self-destruct right after being sold at a Sotheby auction. (A shredding mechanism was built into the golden frame holding the work and, as soon as the auctioneer’s gavel fell, selling the piece for about $1.4 million, the piece started passing through the frame which started shredding the canvas.) The winning bidder ultimately opted to keep the piece in its shredded form, and Sotheby’s described the event as “the first work in history ever created during a live auction.” The piece has since been on display at a prestigious German art gallery, and experts suspect the value has increased at least by 50 percent. Go figure.

A few days ago in Brooklyn, NY, another Banksy work achieved notoriety, but not by Banksy’s hands. In the latest stunt to make waves in the art world, Injective Protocol, a cryptocurrency company providing a decentralized exchange protocol, purchased an original Banksy print entitled Morons, and then burned it while broadcasting live through a Twitter account @BurntBanksy. However, before going up in flames, the piece was digitized into an NFT. (Ironically, Morons makes fun of art collectors who are willing to pay exorbitant amounts on paintings.)

As we explained in our prior post, NFTs are unique blockchain-based digital assets that represent an increasing number of commodities, from art and real estate to collectibles like sports trading cards. NFTs have been growing significantly in popularity in recent years because of this potential to “tokenize” anything and provide a way to transfer ownership of digital assets to holders. In this context, a NFT can be used to verify ownership and authenticity of the digitized art and will be permanently recorded on the blockchain.

The digital token representing Morons has been recorded onto SuperFarm, a cross-chain DeFi protocol for NFTs. The owner will hold an auction on OpenSea, where investors can make bids using cryptocurrencies until March 9. The winner will receive the unique digital code that identifies the work and the Pest Control certificate of authenticity. The original print was one of 500 prints and was authenticated by Pest Control, an organization formed to certify Banksy’s art (and the only organization with the authority to do so). Pest Control’s website humorously labels itself as “Parent/legal guardian for the artist Banksy.” While it was reported that Banksy was not involved in the event, event organizers claim he was aware of it. This leads to the question whether, if he cares, Banksy has any legal grounds to object to this action. As the original has been destroyed, the NFT could be characterized as an unauthorized reproduction. As noted on Pest Control’s website, one is “welcome to use Banksy’s images for non-commercial, personal amusement.” Even though “Banksy wrote copyright is for losers in his book,” he’s not giving others free rein to use his images as they please. Unless the terms of sale included a transfer of ownership of the copyright in Morons, Injective Protocol’s actions could arguably constitute copyright infringement.

Both the 1909 and 1976 Copyright Acts clearly state that ownership of a physical object and ownership of the underlying copyright are two separate and distinct things. For example, Section 202 of the 1976 Copyright Act provides:

Ownership of a copyright, or of any of the exclusive rights under a copyright, is distinct from ownership of any material object in which the work is embodied. Transfer of ownership of any material object, including the copy or phonorecord in which the work is first fixed, does not of itself convey any rights in the copyrighted work embodied in the object; nor, in the absence of an agreement, does transfer of ownership of a copyright or of any exclusive rights under a copyright convey property rights in any material object.

But if Banksy’s own prior conduct is any indication, this author is inclined to believe he approves.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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