The use of massive data sets containing Intellectual Property (IP) of many millions of human content creatives, is becoming a poison pill at the heart of generative AI systems.

We recently detailed how big tech companies are now taking pains to assure customers that they will use their mega billions to fight IP lawsuits, and that end users won’t eat the costs for any liabilities.

Crypto technology might hold the key to bringing copyrights more impactfully into the digital realm, forging a way for content creatives to retain greater control over their IP, and make it harder for AI companies to steal that IP with opaque data and content collection practices.

New research out of Texas A&M University School of Law details how blockchain crypto technology solves a number of complex requirements surrounding establishing and effectively tracking copyrights.

It makes the case that copyrights represent an opportune use case for the technology.

What the Blockchain can do for IP

The paper, “Deploying Blockchain Technology in the Copyright Office,” published on 1 November at SSRN, argues that blockchains have a feature set that makes sense for moving copyrights squarely into the digital space.

The proven tamper resistance and immutability of blockchain databases is a key attribute, notes paper author Peter K. Yu:

Quasi-immutability, or very strong tamper-resistance, is a primary reason why cryptocurrencies and other similar assets have become viable without the involvement of governments. On a blockchain, once a transaction has been recorded, it is virtually impossible to alter that record.[4] 

Should the transaction be wrongly recorded, a new transaction will have to be hashed into the blockchain to provide correction. The immutability feature has therefore made blockchain technology very attractive for registering copyright, storing ownership and licensing records, or completing other similar tasks.[5]

Private siloed databases, whether operated by corporations or governments, do not have the same transparent immutability that permissionless blockchains like Bitcoin, Ethereum, Solana, Cardano and others are known for.

The paper says the public nature of blockchain verifiability positions the technology as a good solution for building a copyright system that can transcend borders, and potentially limit IP theft.

The Trends Journal has long noted that the United States, a leader in creative content as well as advanced technology IP, sustains hundreds of billions in losses to China and other countries in IP theft annually. (See, for example, “CHINA BUSINESS ESPIONAGE NETS $500 BILLION A YEAR” 29 Jun 2021, “CHINA ‘TALENT PROGRAM’ GIFTED AT STEALING AMERICAN IP” 26 Oct 2021 and “ASML IDENTIFIES CHINA IN IP THEFT OF ADVANCED CHIP FABRICATION TECHNOLOGY” 28 Feb 2023.)

Crypto technology would hardly deter rival powers from stealing valuable weapons technology.

But more reliably establishing and tracking other forms of IP would give authorities greater precision to protect IP holders and ban commercial violators from selling knock-offs and unauthorized copies:

When coordinated across the world, blockchain technology could also be used to create a global registration or recordation system.[8] To the extent that copyright holders and their lawyers are interested in using blockchain based records in litigation, before customs authorities, or for other enforcement purposes, those records can serve important evidentiary functions.”

The transparency and tamper-resistant nature of blockchains could benefit countries plagued by governmental and corporate corruption, by increasing investor confidence.

That would allow investment to flow to promising projects in a way which is not currently considered prudent, given the obstacles:

“Transparency will be even more important in countries in which foreign copyright holders and their supportive industries harbour substantial concerns about protectionist measures or other unfair treatments by local governments.[25] For countries struggling with corruption, the transparency provided by blockchain-based records will further boost the confidence of foreign investors. Such increased confidence will help host states attract foreign investments, especially in the creative sector.”

The ability of crypto networks to pair copyright traceability with smart contracting that can automate things like royalty payments for digital content purchase and usage, is another powerful innovation, Yu notes:

“The ability to use blockchain technology to store rights management information, in turn, has facilitated the development of royalty arrangements that are fairer, and can be more favourable, to authors and artists[14]—for instance, by ‘cutting down on intermediaries’ and thereby maximizing royalty payouts.” 

The paper does point out several potential challenges of using crypto-based blockchains for copyrights, including the costs associated with using crypto networks.

But the paper mentions those costs in terms of “Layer 1” backbone crypto networks like Bitcoin and Ethererum.

Anyone who has transacted directly on these networks knows the fees can be substantial. But there are many so-called “Layer 2” crypto networks that bundle transactions and perform other tasks in technologically innovative ways, vastly reducing the costs of utilizing the backbone features of “Layer 1” networks.

Recommendations for Moving to Crypto Copyrights

The paper concludes with a section of recommendations for transforming current copyright systems to the blockchain.

Here the paper gets into the thorny issue of how much governments should be involved in controlling a digital system, and whether such systems should be permissioned or permissionless blockchains.

The paper suggests that the need to retain privacy of some information would point to permissioned blockchains. But there’s no reason why a permissionless blockchain couldn’t empower copyright holders to retain their own control over portions of their data, and what entities have access to it.

And on the other hand, use of permissioned databases would take away one of the key attractions of blockchain technology: the true decentralization that provides assurance that no single entity is controlling—and potentially gaming—the database.

As far as implementing a new crypto based digital system, the paper suggests that a “two-tiered” copyright system might be the way to go.

The higher tier would be the new “smart copyright system,” which would attract higher end copyright activities, for higher fees.

The lower tier would pretty much be the legacy system that now exists.

Yu says that as copyright seekers learned about the advantages and attributes of the digital system, they could choose when and if to join the revolution.

And wider use, together with evolving technology, would bring down costs and make the transition one of choice, rather than a forced makeover.

How it might go, there’s no doubt that the crypto use case for copyrights is compelling, and an opportunity just waiting for entrepreneurial initiative to make it happen.

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