Fake NFT, where is the way forward?
“There is no doubt that decentralized NFT platforms are responsible for users’ infringements” — Katt Gu, Director of Compliance at Dimension
On Jan 29th, BCA posted a video “Don’t Copy and Mint” on Twitter and our audience might wonder what had really happened. This article is to reveal the story from the inside-out.
On Jan 25th, BCA(BlockCreateArt) team discovered that a large number of fake NFTs were being distributed and sold through CROSS, a new decentralized NFT platform developed by CyberVein. Fifty-eight artworks originated from BCAEX, including 10 Bitcoin series by BCA studio and 48 artworks by affiliated artists were listed on CROSS. Anyone who has been following BCA should know that BCA’s Bitcoin NFT series dated back to 2018. It is thanks to the entire team that a simple idea developed into NFT artworks. It is sad to see that they are being copied and plagiarized. Many famous crypto artists (i.g. Beeple, Trevor Jones and Mark Constantine Inducil) also become victims of alleged copyright infringement.
A similar incident happened on OpenSea in 2019. Trevor Jones, creator of the programmable artwork “Eth Boy” accused OpenSea of selling his artwork “Satoshi” without his permission. OpenSea immediately responded and took it down from the website.
When BCA encountered the same problem, the team contacted CROSS staff in the first place. However, the way they chose to handle the situation was awfully disappointing:
- They refused to take down 58 infringing artworks on the pretext that decentralized platforms have no right to remove user’s contents.
- After receiving our complaint, they promptly changed the web page to “beta version”, hinting that the web undergoes in-house testing.
- Someone continued to upload infringing artworks.
The key question is “ Were 58 infringing artwork, as claimed by CROSS uploaded by an unknown user?” We don’t want to jump to a conclusion. Some evidence is indicated below, it is up to readers to make their own judgment.
Firstly, the plagiarized artworks on CROSS are prohibited reproduction of BCA's creation. What they did was simply integrate the CROSS logo into artworks.
Secondly, thanks to the transparency and irreversibility of blockchain technology, it is easy to trace back and see who uploads and mints these artworks. One BCA team member investigated it and found out that a bunch of counterfeits users tokenized artwork at an average rate of about one per minute. The tokenization of artworks appears to be mechanical, thus it is hard to believe that artists themselves initiated this process.
While the diffusion of fake NFT artworks has been happening all over the place due to the low barrier to entry, we’d like to draw people’s attention to this increasingly common phenomenon. We interviewed many artists and blockchain experts to express their views with regard to fake NFT. We hope their comments, which can be found at the end of the article can help readers better understand the importance of strengthening the protection of intellectual property rights for digital art.
As Katt Gu said, Director of Compliance at Dimension said, “there is no doubt that platforms are responsible for users’ infringements”. If such infringement were left undisclosed or unpunished, unprincipled operations would do no harm to platforms that blatantly sell FAKES. It is artists and collectors who become innocent victims. This often means that artists cannot benefit from the resale of their infringing artworks and collectors unconsciously purchase counterfeits.
The impunity of copyright infringement can never be tolerated. In order to protect artists' and collectors’ rights, BCA has sent over a cease-and-desist letter, asking CROSS to take down infringing artworks immediately. Meanwhile, we also anticipate a formal response from them.
The NFT field is still very new, and we are navigating the way to ensure that the benefits of blockchain technology can be fully realized. BCA is a marketplace for authentic and original digital art and we expressly forbid artists from posting unauthorized, copied, or otherwise unoriginal content. Any posting, repurposing, or remixing the work of other artists without permission should be refrained. We believe it is our responsibility to certify the authorship before tokenizing any artwork. As part of the crypto-art community, there is still a long way to go.
Q&A
What do you think of the fact that the NFT platform mint fake artworks?
“This is suicidal and very stupid. The art collection can be seen as social behavior. Collectors would suffer from significant financial losses by purchasing and collecting infringing artworks and counterfeits. No collectors would want to become a laughing-stock in the community, so any platforms that sell FAKES will be spontaneously boycotted by collectors, and no artists would be willing to collaborate with such platforms. The operators of these platforms who tolerate or even personally participate in plagiarism can be said to know neither encryption nor art.”
“The fact that an opportunistic NFT platform, without communicating with creators or agent platforms, and without their permissions, listed unauthorized artworks for profit-making purposes greatly harms the crypto art market as a whole, no matter from artistic, commercial, or moral perspectives. The platform took advantage of the concept of NFT to deny the rights of intellectual property demonstrates the unprofessionalism of the platform’s practitioners. They shoot themself on their feet, which shows that they lacked a sense of cooperation. As creators, we firmly resist all speculative behaviors in the creative process and “illegal poaching” in the free market.
“Platforms that sell other artists’ artworks without being granted copyrights is very likely to mislead people. When collectors fail to certify the authorship, it would be detrimental to the crypto-art market, especially when foreign collectors don’t know artists that well, and mistake that the encrypted address belongs to the artist. Therefore, it is advisable that artists clearly indicate their address and cooperating galleries on social media, so that collectors can verify. Alternatively, artists should choose professional and trustworthy NFT platforms like BCA.”
How can we put an end to such misconduct?
“Due to the fact that many current self-proclaimed decentralized platforms are not essentially decentralized and it is not that platforms have no control over users’ behavior. For example, the platform can still warn users or ban users' accounts after multiple warnings. Therefore, it is impossible in law that platforms just use “decentralization” as an excuse to get rid of their own responsibilities. This is because, if that is the case, the platform has to prove that they have no power over users. Moreover, if the platform intentionally infringes on the rights of artists, or ignore user’s infringement and do nothing about it, the platform is still held liable for such violations.
Many precedents can be found in the US. For example, in A&M v.NAPSTER (2001) case, the court ruled that (1) the plaintiff only needs to prove that a defendant has knowledge of infringement. (Napster knew that its users were distributing copyrighted content without permission across its network.) (2) The defendant supplies substantive material to that infringement, proving contributory infringement; similarly, if the plaintiff proves that (1) defendant is capable of supervising and controlling infringing conduct and (2) there is direct financial benefit from the infringing activity and that the defendant’s behavior can constitute a vicarious infringement. In MGM v.Gloucester(2005) case, the U.S. Supreme Court held that if someone distributes a product with the purpose of promoting its use to infringe copyright, (shown by clear expression or other affirmative steps taken to foster infringement), then he/she is liable for the infringement of third parties. Hence, according to current copyright, it is impossible for a platform to escape liability on the grounds of decentralization.”
“We must take legal means against this. We should also unit artists, just like what BCA does— fight back in a creative way; and leverage the power of social media to inform and educate more people.”
As creators/artists, how do you evaluate the safety and reliability of a decentralised NFT paltform?
“At the moment, there is no NFT-specific regulations in China and other countries. Therefore, current copyright law applies to NFT platforms, like all other internet service providers. The governance of NFT platforms depends on how effective the enforcement of copyright is in every country. As I said before, some European countries and the United States emphasize copyright protection. (For example, France introduced Internet Intellectual Property Protection Law — Haute Autorité pour la Diffusion des Œuvres et la Protection des droits d’auteur sur Internet, which legalized the internet disconnection of copyright infringers, but was later suspended because the Constitutional Council declared access to the internet a basic human right.) It is clear that some copyright infringement cases provide guidance and are still relevant today.
Although China has indeed lagged behind Europe and the United States in protecting copyright, after the signing of China-EU Comprehensive Agreement on Investment last year, the government official stated that strengthening intellectual property rights is the greatest incentive to improve China’s economic competitiveness. Recently, people working for YYsTS.com, one of the oldest video streaming websites in China, have been arrested for alleged copyright infringement, demonstrating a heightened awareness about intellectual property rights. The gap between China and Europe in protecting copyright will be gradually narrowed, and blockchain practitioners will thus benefit from this. The improved legal system will serve as a powerful weapon to protect their rights.”
“The first criteria is originality and authenticity. If there is any suspicious forgery found on NFT platform, I will completely avoid it, no to mention large-scale plagiarism. Secondly, I will pay attention to which artists register on this platform. Artists who take their artistic careers seriously wouldn't risk their own reputation by cooperating with a platform that is problematic. Therefore, if a platform doesn’t represent any well-known artists, it could be suspicious. Thirdly, the background of the platform’s founder concerns me. It is important to know whether he/she has experience in the art industry; whether he/she graduated from a professional art school, whether he/she has a unique and solid understanding of cryptoart, and whether he/she respects art instead of seeing it as a way to reap big commercial profits.”
“The first thing is to evaluate user’s experience of a platform, from the web interface and interaction design to navigation and information architecture. All of these reflect the degree of functionality of a website. Then, it is recommended to do some research on the platform, in terms of artists, collectors, artworks, and historical transactions. Personally, I would look into artists’ and collectors’ social platforms such as Twitter/Instagram/Weibo to see if there is any news related to the platform. I would also track the source of NFT. If such information is not disclosed, the platform is less credible. Lastly, I would check the history of the company’s social media to see its past activities and engagements.”
