1/6 🚨 That cool NFT you bought on @opensea was an illegal transfer (without prior agreement) due to a loophole in copyright law: there is no “digital first sale” doctrine. So NFT creators could legally claw back secondary sales, under current law, leaving you with nothing 🤷🏻‍♂️

2/6 The “first sale” doctrine enables people to sell/control/use/etc. their personal property even if it contains copyrighted material, like being able to resell your physical book. This is a fundamental consumer protection.

3/6 However, policymakers have consistently prohibited a first sale doctrine in the context of digital media, so Amazon can sell you a kindle book but then prohibit you from reselling it, Amazon could even disown you of the book entirely if you break one of its terms.

4/6 Imagine if publishers could do that with physical book 🤢. Well, due to technical limitations before blockchain, you couldn’t sell a digital file without ensuring the seller didn’t maintain a copy or reproduction of it, there was a “double spend” problem, sound familiar?

5/6 So, there has been no “digital first sale” since digital transfers infringed the copyright reproduction right. However now, blockchain tech resolves this issue, to the point where a digital first sale exists through a textualist reading of the doctrine, 17 U.S.C § 109 🤯

6/6 I stress in my recent paper that the Copyright Office should issue guidance enabling a digital first sale with non-infringing NFT sales, otherwise the NFT market could implode with a limited secondary market (if it hasn’t already) due to an outdated/incorrect reading of § 109

Thank you to the team at @WFULawJBIPL for publishing this piece!

View my article here: papers.ssrn.com/sol3/papers.cfm?abstract_id=4365074