By J. Merritt Francis

 

On May 1, 2007, Mike Winkelmann created a piece of digital art, and posted it online.[1]  The Charleston, South Carolina-based artist, known as Beeple, did this every day for the next five-thousand days, and combined them to make, “Everydays: The First 5000 Days” (Everydays). [2]

February 16, 2021, Beeple “minted” the massive jpeg file (21,069 x 21,069 pixels) using blockchain technology, which allows for secure record of ownership.[3]  This exclusively digital work, and the corresponding “immutable” record of ownership, is a non-fungible token (NFT).[4]

On March 11, 2021, Everydays sold for $69,346,250 in an online auction.[5]  It was the first purely digital artwork ever sold by Christie’s Auction Company, resulting in the third-highest price paid at auction for a living artist’s work.[6]  The purchaser: Metapurse, a crypto-exclusive fund headquartered in Singapore.[7]  So—what is Metapurse permitted to do with its $69.3 million jpeg file, and what is Beeple allowed to do?

As a prefatory matter, NFTs can be programmed in an almost limitless variety of ways, using “smart contract” technology.[8]  This technology could incorporate contractual rights into NFTs, providing the original artist a commission on all future sales.[9]  Most NFTs, though, are programmed similar to deeds for property: You have legal ownership of the work with your deed, but the title stays with the artist.[10]  This is how Beeple programmed Everydays.

Metapurse’s ownership of Everydays amounts to a non-exclusive, non-transferrable license of the work.[11]  Under a non-exclusive license, the NFT artist remains free to exploit the same intellectual property and to allow any number of other licensees to also exploit the same property.[12]  But, a non-transferrable license prevents Beeple from transferring ownership rights to the NFT to anyone else.[13]  As Winkelman explained in an interview, “If you buy a painting, you bought the painting, you did not buy the copyright to that picture.”[14]

Beeple proved his ability to profit off Everydays’ intellectual property just days after the auction, as he auctioned off one of the five-thousand squares of the $69.3 million work.[15]  The runner-up bidder for Everydays won the auction, spending $6 million on the piece.[16]

In short, Metapurse is entitled to sell its ownership rights to the work, and bragging rights.  They’ll receive “essentially a long string of numbers and letters,” which represents “a code that exists on the Ethereum blockchain.  It is a block in the chain that will be [sent to them].”[17]

These limited rights did not concern its purchaser, however, as he believes its “going to be a billion-dollar piece someday.”[18]  The company began collecting NFTs, which they consider “virtual real estate,” because “the fact you could own land and that ownership is immutable,” appealed to them.[19]

On top of the long list of code and ownership rights, Metapurse will also receive a “gigantic JPEG.  A massive, high-resolution JPEG.  It’s hundred[s] of megabytes[.]”[20]  Evidently, Metapurse is more concerned with the tax implications of buying the piece, rather than the underlying intellectual property.

 

[1] Beeple’s Opus, Christie’s, https://www.christies.com/features/Monumental-collage-by-Beeple-is-first-purely-digital-artwork-NFT-to-come-to-auction-11510-7.aspx.

[2] Id.

[3] Sebastian Smee, Beeple’s digital ‘artwork’ sold for more than any painting by Titian or Raphael.  But as art, it’s a great big zero., Washington Post (Mar. 16, 2021, 7:00 AM), https://www.washingtonpost.com/entertainment/museums/beeple-digital-artwork-sale-perspective/2021/03/15/6afc1540-8369-11eb-81db-b02f0398f49a_story.html.

[4] Id.

[5] Beeple’s Opus, supra note 1.

[6] Smee, supra note 3.

[7] Id.

[8] Daniel Barsky, Non-fungible Tokens and Intellectual Property Law: Key Considerations, HK Law, July 2021, at 1.

[9] Id.

[10] Id. at 2.

[11] Ned Sackman, NFTs and intellectual property: How do you assess the value of an intangible, non-fungible asset?, NH Bus. Rev. (Aug. 12, 2021), https://www.nhbr.com/nfts-and-intellectual-property/.

[12] Copyright law explained, Copyright Alliance (Oct. 14, 2021, 10:56 PM), https://copyrightalliance.org/education/copyright-law-explained/copyright-transfers/exclusive-vs-non-exclusive-licenses/.

[13] Id.

[14] Taylor Locke, Millionaire artist Beeple: This is the very important thing ‘I think people don’t understand’ about buying NFTs, CNBC: Next Gen Investing (Mar. 26, 2021, 11:22 AM), https://www.cnbc.com/2021/03/26/digital-artist-beeple-common-misunderstanding-about-nfts.html.

[15] Id.

[16] Grace Kay, Beeple’s latest crypto art just sold for $6 million to the same tech executive who was outbid at the last minute for the record-breaking $69 million auction, Bus. Insider (Mar. 23, 2021, 2:43 PM), https://www.businessinsider.com/beeple-sells-latest-nft-runner-up-bidder-record-crypto-art-2021-3.

[17] Kevin Stankiewicz, Here’s what the buyer of Beeple’s NFT digital art actually gets for $69 million, CNBC: Art & Culture (Mar. 11, 2021, 6:12 PM), https://www.cnbc.com/2021/03/11/beeple-is-a-rich-man-after-nft-sale-christies-art-specialist-noah-davis.html.

[18] Eileen Kinsella, ‘This Is Going to Be a Billion-Dollar Piece Someday’: The Buyer of the $69 Million Beeple NFT on Why It’s the Greatest Artwork in a Generation, Artnet News (Mar. 12, 2021), https://news.artnet.com/market/the-buyer-of-the-69-million-beeple-nft-metapurse-1951561.

[19] Id.

[20] Locke, supra note 14.

Image Source: https://www.christies.com/features/Monumental-collage-by-Beeple-is-first-purely-digital-artwork-NFT-to-come-to-auction-11510-7.aspx