12 Apr How to adapt current legislation to the changing virtual world?
Rapid changes in technology
Currently, we are experiencing major changes that come from the evolution of technology, such as the introduction of Artificial Intelligence, the Metaverse, Augmented Reality or Blockchain and Cryptocurrencies. Not only people must adapt to this new “reality”, but it also can be challenging in the legal field, since the current legislation on intellectual property – as in other fields – does not directly and explicitly contemplate new technologies. This is why the courts and administrations must make an effort to interpret current legislation in order to adapt it to these emerging challenges.
One of the first cases settled before the Spanish Courts
The Commercial Court of Barcelona, Section 9, in its judgment 11/2024 of January 11, 2024, had the opportunity to resolve a case related to new technologies and intellectual property.
Visual Entidad de Gestión de Artistas Plásticos (VEGAP), a copyright management organization, sued Punto Fa, S.L. (Mango) for infringement of the moral rights of integrity and dissemination, and of the economic rights of reproduction, transformation and public communication, on behalf of three authors of physical works of art, under articles 14 and 17 of the Spanish Intellectual Property Law.
The facts of the case date back to the spring of 2022, when the popular clothing chain Mango opened a shop on Fifth Avenue in New York. At the opening, works of art painted by the three artists, which had been loaned to Mango by a third company which owned them, were displayed. At the same time, on the days of the opening, digital artworks, created from the physical artworks of the three artists by crypto-artists hired by Mango, were exhibited on the Opensea platform and Decentreland. The crypto-artists transformed the physical works in order to create the digital works.
The digital works were not converted into blockchain assets to be traded, but they could only be viewed by the public for a certain period of time.
In its judgment, the Court states that the question to be decided is whether the defendant’s use of the works should be considered a legitimate use that does not require authorisation or, on the contrary, whether the defendant infringed the authors’ intellectual property rights by transforming and publicly displaying the work in the virtual world without authorisation.
Moral right to disseminate the work
The Court states that article 4 of the Law on Intellectual Property clearly indicates that the dissemination of a work requires the author’s consent when it is first made accessible to the public. In this case, the works were previously exhibited to the public by their authors between the years 1970 and 1991, so their exhibition at the opening of Mango was not the first dissemination. As it was not the first exhibition, the moral right to disseminate the authors’ work had already been exhausted and, therefore, there was no infringement of the moral right to disseminate their work.
Economic right to public communication
According to article 20 of the Law on Intellectual Property, the public communication of the work is the act by which a plurality of persons can have access to the work, such as, for
example, the public exhibition of works of art. On the other hand, article 56.2 of the Law on Intellectual Property confers on the owner of the medium the right of public exhibition of the work unless the author has expressly forbidden it when selling the work or when the exhibition damages the author’s honour or professional reputation.
In this case, there is no evidence that the authors had limited the right of exhibition when transferred their works. The Court further considers that the public exhibition of the works – i.e. the physical works along with the new virtual works with an indication of the authors – did not harm the authors’ honour or professional reputation.
Patrimonial right to the transformation of the work
According to article 21 of the Law on Intellectual Property, the author of a work has the right to authorise its transformation. However, it must be clarify that the work resulting from a transformation belongs to its author, in this case to the crypto-artists.
The Court argues that the Intellectual Property Law does not state how judges shall determine whether an act of exploitation may or may not be carried out without authorisation, so it is necessary to turn to article 7 of the Civil Code, which establishes that rights must be exercised in accordance with the requirements of good faith. The Court then resorts to the doctrine of “fair use” or “fair deal” to determine whether the use made by Mango is an “innocuous” use protected by good faith. This doctrine was previously applied by the Supreme Court’s judgment of 3 April 2012 in the Google case, where the Supreme Court concluded that the Intellectual Property Law does not exclude the application of the “fair use” doctrine.
On the basis of the doctrine of ‘fair use’, the Court finds in the present case that the defendant did not use the works for commercial purposes, since they were only displayed for temporary viewing on the Opensea and Decentraland platforms. This is primarily apparent from the fact that no NFTs were ever created that could be transmitted, downloaded or reproduced. Nor did the Defendant derive any economic benefit from the exhibition of the works, but rather bore the costs of creating the transformed works. Furthermore, there is no evidence that the display of the works has increased the Defendant’s sales, so – the Court concludes – the motives for creating the virtual works are purely sentimental with the purpose of doing something special for the opening of the shop.
The Court adds that, as Mango indicated the authorship of the physical works of art, the use has not only not harmed their authors, but has benefited them through the recognition and prominence which the works obtained at the opening event. On the other hand, the Court also notes that, although the works were transformed in their entirety, they have been endowed with a distinct originality.
Conclusion
Applying the doctrine of “fair use”, the Court esteems that there has been an “innocuous” use of the works of art, and therefore rejects the lawsuit and declares that there has been no infringement of copyright, considering that the defendant, Mango, acted in good faith.
Regardless of the result, the Court has interpreted the Intellectual Property Law to adapt it to a practical case related to new technologies, and everything leads to the conclusion that it is possible to apply traditional law to this new virtual world. With the passage of time, the
current legislation will undoubtedly be modified to adapt and cover these new cases more explicitly, but it does not seem to be an imminent need in view of this ruling.
Author: Mercè Hernández
Photo by Igor Omilaev on Unsplash.com