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Jay-Z's NFT Feud Spotlights Legal Peril in Hot Investment Trend (bloomberg.com) 24

Posted by msmash from the closer-look dept.
As a young rapper, Jay-Z once teamed up with Damon Dash to sell CDs of his music out of a car in the Brooklyn projects. Today, the co-founders of Roc-A-Fella Records are embroiled in a legal fight involving one of the most cutting-edge investments: non-fungible tokens. From a report: The lawsuit is among a flurry involving NFTs as U.S. courts begin to grapple with the novel legal issues surrounding ownership and regulation of the assets, which have recently exploded in value. More than half a dozen suits citing NFTs have been filed in federal courts alone since the start of 2020, as monthly trading volume in the world's biggest NFT marketplace, OpenSea, soared from $8 million six months ago to more than $1 billion in August.

The dispute began in June, when Roc-A-Fella sued Dash, seeking to stop him from auctioning off the copyright to Jay-Z's debut album, Reasonable Doubt, as an NFT, which represents ownership of a digital object on a blockchain. Roc-A-Fella says that while Dash holds a one-third stake in the company, it owns the album itself, and he has no legal right to sell the NFT. The Jay-Z suit should serve as a warning to buyers and sellers of NFTs to make sure both sides know exactly what's being sold, said Christopher A. Cole, a partner with Crowell & Moring LLP in Washington. "They need to be very careful up front, when the NFT is created, to ensure that it's a valid instrument and the creators had the rights they needed to what's being sold, so that it's not attacked down the road," Cole said. More litigation involving NFTs is likely, from lawsuits on behalf of consumers who didn't understand the nature of the rights they were acquiring to government enforcement actions to protect them, said Pratin Vallabhaneni, a partner with White & Case in Washington.
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Jay-Z's NFT Feud Spotlights Legal Peril in Hot Investment Trend More

Jay-Z's NFT Feud Spotlights Legal Peril in Hot Investment Trend

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  • While somebody was attempting to sell the copyright to a Jay-Z album, they may not have full ownership of that album. This is fully and completely a copyright dispute. It wouldn't matter if the attempted sale was NFT, contractual, or through some other method of sale.

    So the implication here is shady people do shady things? SHOCK OF ALL SHOCKS! This isn't a technology related story. It's a human scumbag story. Next.

    • Re: (Score:2)

      by NFN_NLN ( 633283 )

      This is genius... I'm going to go next level and start selling "NFT bridges".

    • Re: (Score:2)

      by jpapon ( 1877296 )
      It kind of sounds like he's actually auctioning off his 1/3 share of the royalties in the album. It's attached to an NFT just as a marketing ploy to pump the price.

      The bigger question though is do you need to own the copyright for something to sell an NFT linked to it? I don't really see why you would... you're not selling the underlying asset, you're selling a token hashed from it, right? So you're just selling a number very loosely derived from it, and from which you can't reproduce the original in any

      • Here is a central misconception: ... as an NFT, which represents ownership of a digital object on a blockchain.... Copyright is NOT a digital object. Copyright cannot be "hashed". In fact an NFT is simply an ownership contract that identifies something, as a deed identifies a certain house, for instance. The thing need not be digital at all, and I think that the NFT has no stronger connection with its thing than a paper contract has. So yes, this is a dispute around copyright, and the dispute would be
  • Who owns what wrapped up in NFT clickbait. NFT auctions are like so many auctions involving goods who providence is not always clear. If the deal JayZ made gave away ownership rights, that may have been an unfortunate decision by a young man, much like making an implied sex video with a fifteen year old girl, but not anything to do with the law. I donâ(TM)t think uncertainty has cooled the auction market for any goods.
  • This is going to break people's brains trying to figure this shit out. This is where the NFT blockchain ownership either gets codified as the system moving forward or gets rekt and sent back to the dotcom graveyard with the other failed projects. It's really like any "Certificate of Authenticity" problem in the past. How do you prove that the real object was actually present by the owner when the certificate was issued? You can't other than to have some "authority" stake their reputation on ensuring the

    • NFT auctions seem like a stock market where any rando can claim to have a 1,000 share certificate of Goog.

      But I think an NFT platform with smart contracts would be a good way to securitize interests in IP. The owners could say: We own the copyright to Jay-Z $ALBUMNAME. You can sell it digitally under the following terms, payment in $, payable in ETH, due upon each sale. And then the earnings would be automatically distributed to the owners of the NFT.

      (With so much automated, why not sell the MP3s yourself?

    • Re: (Score:3)

      by Pascoea ( 968200 )

      NFT is really worthless as anything other than a point of record.

      That's the point, though. The "value" of the NFT is that point of record. Proof that the pile of 1's and 0's in your possession was created by entity "X" and was transferred to entity "Y". That whole thing works for the other examples we've seen, where the NFT isn't a physical/contractual "thing" being sold. You're buying an authorized reproduction of the non-physical thing that the owner has decided to sell. It falls apart as soon as the original owner decides they want to produce more authorized copi

      • Re: (Score:2)

        by tlhIngan ( 30335 )

        That's the point, though. The "value" of the NFT is that point of record. Proof that the pile of 1's and 0's in your possession was created by entity "X" and was transferred to entity "Y". That whole thing works for the other examples we've seen, where the NFT isn't a physical/contractual "thing" being sold. You're buying an authorized reproduction of the non-physical thing that the owner has decided to sell. It falls apart as soon as the original owner decides they want to produce more authorized copies, a

        • Re: (Score:3)

          by Pascoea ( 968200 )

          I don't pretend to know much about blockchain beyond what I said in my first post, and I don't want to come across as argumentative (or just plain dumb), so take my input for what it is: A random dope on the Internet...

          Of course there are multiple blockchains, and even if there were only one, the fact that the same thing can be sold multiple times will always be there. But, my understanding is that a specific NFT is tied to a specific transaction on a specific ledger/blockchain. Attempting to sell the sa

  • Something very surreal about this. ""They need to be very careful up front, when the NFT is created, to ensure that it's a valid instrument and the creators had the rights they needed to what's being sold, so that it's not attacked down the road,""

    It's like arguing about who owns the phlogiston ...

  • The Jay-Z suit should serve as a warning to buyers and sellers of NFTs to make sure both sides know exactly what's being sold [...] "They need to be very careful up front, when the NFT is created, to ensure that it's a valid instrument and the creators had the rights they needed to what's being sold, so that it's not attacked down the road" [...] More litigation involving NFTs is likely, from lawsuits on behalf of consumers who didn't understand the nature of the rights they were acquiring

    Here comes the NFT-equivalent of Mortgage Title Insurance in 3, 2, 1...

    Of course, assigning a value to a tangible asset like a house is much easier than assigning a (real) value to an NFT, but you can bet the insurance companies are actively working on figuring it out.

  • This is the beauty of bitcoin vs the fuzziness of other 'blockchain' based systems.

    For btc, the value is in the coin itself -- it is its own asset. Yes we can argue if it is worth anything, but you don't need an outside party to tell you that your 1 btc is actually worth 1 btc.
    With NFT's, the value is that it supposedly 'represents' some other thing, but that is only true if the rest of the worlds legal / contract system agrees with you. A court somewhere can state that the asset underlying the NFT actually

  • You mean fake good that fake money buys to be more interesting?
  • Comment removed based on user account deletion

  • Just when you thought that jobs for lawyers were in short supply , then SPACS came into vogue. Literally armies of law grads now do SPACs full time.

    NFTs seem to be just as promising as fertile legal ground for Property law.

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