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Polka-dotted Crocs and the war over copyrights in NFT art

November 23, 2021, 12:30 AM UTC

In August, a digital artist who closely guards his personal identity, going only by the online alias “loafgren,” did what the masters of his trade do best. He stole. Loafgren slapped a copy of “polka dots,” a famous work by Damien Hirst, one of the world’s most prominent artists, on a digital image of a pair of Crocs.

That was just the start. Loafgren then turned the parodic mash-up into an NFT, or non-fungible token, a unique piece of crypto-linked digital media that can be tracked and traded on a blockchain, the public ledger that underpins cryptocurrencies. He put the creation up for sale, and someone bought the virtual item in an online auction for 0.5 Ether, or $2,000 in Ethereum cryptocurrency.

Loafgren’s cheeky homage didn’t go unnoticed. Days later, Hirst’s official Twitter account asked him in a direct message to “refrain from using my artwork without my direct permission.” Loafgren wasn’t surprised by the outreach, but he did wish, somewhat counterintuitively, that Hirst had taken harsher action. “[I’m] upset Hirst hasn’t sent a DMCA yet,” Loafgren told Fortune later, referring to the Digital Millennium Copyright Act, effectively a legal takedown notice.

When people issue DMCAs, they can result in more attention being paid to targeted works—and, crucially, given the increase in awareness, boost their market value. That would have proven valuable for Loafgren’s next act. After receiving Hirst’s “direct message,” Loafgren screenshotted the DM and sold an NFT version of the image for 0.154 Ether, or $600. “If Hirst’s goal was for me to not make money off of his art, he should’ve just ignored it. I’m thankful he didn’t,” Loafgren told Fortune.

(Hirst’s studio did not reply to a request for confirmation of the private Twitter interaction.)

Loafgren’s hijinks are just one example of the ongoing collision between traditional art world sensibilities and the frequently fast-and-loose, irreverently remix-friendly culture of crypto art. The quarrel also points to a new frontier that has opened for online legal disputes. Similar scandals have erupted even within the increasingly less niche crypto world, including over CryptoPunks, whose thousands of pixelated NFT avatars have spread like kudzu across social networks; its creator, the startup LarvaLabs, has lodged complaints about ripoffs such as CryptoPhunks, which sell on nose-thumbing marketplaces like NotLarvaLabs. Another artist, SHL0MS, sold tokenized shards of a smashed toilet as an homage to conceptual artist Marcel Duchamp’s famous Fountain urinal masterpiece. He says the work is intended as a statement about how “all rights reserved” conflicts with the ethos of Web 3.0, a term often invoked to describe a coming iteration of the Internet powered by crypto and NFTs.

Artists generally have little recourse to prevent anyone from aping their work. Standard options include complaining or, more formally, issuing DMCA notices. The latter typically demands that places like auction houses remove images of supposedly offending NFTs from their sites. The tool has limitations though. Scrubbing an NFT from the blockchain—the immutable ledger that forms the basis of Ethereum and other cryptocurrencies—is technically infeasible and almost always impossible in practice.

DMCA notices have zero jurisdiction on the blockchain, in other words. Blockchain entries, once embedded, tend to live forever on these ledgers. Oftentimes, even after an auction site, like Foundation or SuperRare, strikes down an NFT listing after receiving a DMCA notice, the offending NFT will still be visible on another site, like OpenSea, often called the eBay of NFTs. Records are, generally, permanent; only a token owner can burn a given token.

While Loafgren supports the use of DMCAs as a form of free marketing, other artists resort to them because there are few alternatives for protecting original works. Chris Torres, an established NFT artist and maker of the flying feline Nyan Cat meme, says the notices are useful. He described to Fortune how he faces Nyan copycats almost daily. He has used DMCA notices at least 30 times in the last few months to get digital marketplaces to take down imposters and prevent people from being tricked into buying fake ones, he says.

Loafgren believes Torres’s use of DMCAs is hypocritical. “For someone who owes his entire career to fair use and the freedom to redistribute art via the Internet, you would think he’d be more supportive, or at least not proactively against, derivative works,” Loafgren says of Torres. He notes that the body of the eponymous cat in Nyan Cat is itself a reproduction of a Pop-Tart. “Maybe Kellogg’s should DMCA him for using their brand and he’ll change his mind about this rights circus. Good artists copy, great artists steal, fake artists send DMCA notices.”

Loafgren’s anything-goes attitude has supporters. “As long as it’s fair use and there’s something visually or conceptually distinct from the original, I think takedowns have no place in art,” SCHL0MS says. “I always say yes when people ask to riff on my work.”

Ray Genco is an entertainment and intellectual property lawyer who has studied NFTs. DMCA notices are “a great tool for an IP holder to choke the proliferation of an infringing work,” he says. “It requires the platform, or the public interface, to ‘delist’ the potentially infringing item. If the secondary artist disagrees there is a process to escalate it and get an adjudication.”

That system worked well up until recently. On the status quo web, where centralized entity middlemen, like YouTube, can receive and respond to requests, there’s generally no problem. But the advent of blockchains changes things. Even when a secondary work is taken off of an NFT listing site, like OpenSea, “the blockchain allows it to continue to be traded,” Genco says.

CryptoPhunks, the infamous CryptoPunk copy that was taken down from OpenSea only to launch their successful independent marketplace, epitomizes the conflict. New Web 3.0 technologies, which can spin up decentralized marketplaces, “create IP and copyright issues left and right. But I’m convinced the proliferation of NFTs is a net positive for artists,” Genco says. “Paintings can be forged and sold as works of masters, but provenance is actually clear & transparent.”

Genco says that most cases either get dropped or reach a settlement outside the courts. It’s hard to litigate art, after all. “Does the secondary work, even though it incorporates a prior work, or looks similar, add a new meaning, message, or expression? The law is not specific. It is ambiguous and allows each case to be creatively argued.”

Web 3.0 is an intellectual property wild west, and was designed to be that way. Numerous artists see their work copied and resold again and again. While DMCA notices are being used as a deterrent, they have become an artform on their own, inspiring copycats to use the takedown notices for PR to launch new knock-off marketplaces.

Slighted artists’ only solace: Imitation is the ultimate form of flattery.

Nimrod Kamer is an active NFT artist and collector in the web3 token community.

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