February 16, 2021, Beeple \u201cminted\u201d the massive jpeg file (21,069 x 21,069 pixels) using blockchain technology, which allows for secure record of ownership.[3]<\/a>\u00a0 This exclusively digital work, and the corresponding \u201cimmutable\u201d record of ownership, is a non-fungible token (NFT).[4]<\/a><\/p>\n On March 11, 2021, Everydays sold for $69,346,250 in an online auction.[5]<\/a>\u00a0 It was the first purely digital artwork ever sold by Christie\u2019s Auction Company, resulting in the third-highest price paid at auction for a living artist\u2019s work.[6]<\/a>\u00a0 The purchaser: Metapurse, a crypto-exclusive fund headquartered in Singapore.[7]<\/a>\u00a0 So\u2014what is Metapurse permitted to do with its $69.3 million jpeg file, and what is Beeple allowed to do?<\/p>\n As a prefatory matter, NFTs can be programmed in an almost limitless variety of ways, using \u201csmart contract\u201d technology.[8]<\/a>\u00a0 This technology could incorporate contractual rights into NFTs, providing the original artist a commission on all future sales.[9]<\/a>\u00a0 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]<\/a>\u00a0 This is how Beeple programmed Everydays.<\/p>\n Metapurse\u2019s ownership of Everydays amounts to a non-exclusive, non-transferrable license of the work.[11]<\/a>\u00a0 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]<\/a>\u00a0 But, a non-transferrable license prevents Beeple from transferring ownership rights to the NFT to anyone else.[13]<\/a>\u00a0 As Winkelman explained in an interview, \u201cIf you buy a painting, you bought the painting, you did not buy the copyright to that picture.\u201d[14]<\/a><\/p>\n Beeple proved his ability to profit off Everydays\u2019 intellectual property just days after the auction, as he auctioned off one of the five-thousand squares of the $69.3 million work.[15]<\/a>\u00a0 The runner-up bidder for Everydays won the auction, spending $6 million on the piece.[16]<\/a><\/p>\n In short, Metapurse is entitled to sell its ownership rights to the work, and bragging rights.\u00a0 They\u2019ll receive \u201cessentially a long string of numbers and letters,\u201d which represents \u201ca code that exists on the Ethereum blockchain.\u00a0 It is a block in the chain that will be [sent to them].\u201d[17]<\/a><\/p>\n These limited rights did not concern its purchaser, however, as he believes its \u201cgoing to be a billion-dollar piece someday.\u201d[18]<\/a>\u00a0 The company began collecting NFTs, which they consider \u201cvirtual real estate,\u201d because \u201cthe fact you could own land and that ownership is immutable,\u201d appealed to them.[19]<\/a><\/p>\n On top of the long list of code and ownership rights, Metapurse will also receive a \u201cgigantic JPEG.\u00a0 A massive, high-resolution JPEG.\u00a0 It\u2019s hundred[s] of megabytes[.]\u201d[20]<\/a>\u00a0 Evidently, Metapurse is more concerned with the tax implications of buying the piece, rather than the underlying intellectual property.<\/p>\n <\/p>\n [1]<\/a> Beeple\u2019s Opus<\/em>, Christie\u2019s, https:\/\/www.christies.com\/features\/Monumental-collage-by-Beeple-is-first-purely-digital-artwork-NFT-to-come-to-auction-11510-7.aspx<\/a>.<\/p>\n [2]<\/a> Id<\/em>.<\/p>\n [3]<\/a> Sebastian Smee, Beeple\u2019s digital \u2018artwork\u2019 sold for more than any painting by Titian or Raphael.\u00a0 But as art, it\u2019s a great big zero.<\/em>, 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<\/a>.<\/p>\n [4]<\/a> Id<\/em>.<\/p>\n [5]<\/a> Beeple\u2019s Opus<\/em>, supra<\/em> note 1.<\/p>\n [6]<\/a> Smee, supra<\/em> note 3.<\/p>\n [7]<\/a> Id<\/em>.<\/p>\n [8]<\/a> Daniel Barsky, Non-fungible Tokens and Intellectual Property Law: Key Considerations<\/em>, HK Law, July 2021, at 1.<\/p>\n [9]<\/a> Id<\/em>.<\/p>\n [10]<\/a> Id<\/em>. at 2.<\/p>\n [11]<\/a> Ned Sackman, NFTs and intellectual property: How do you assess the value of an intangible, non-fungible asset?<\/em>, NH Bus. Rev. (Aug. 12, 2021), https:\/\/www.nhbr.com\/nfts-and-intellectual-property\/<\/a>.<\/p>\n [12]<\/a> Copyright law explained<\/em>, Copyright Alliance (Oct. 14, 2021, 10:56 PM), https:\/\/copyrightalliance.org\/education\/copyright-law-explained\/copyright-transfers\/exclusive-vs-non-exclusive-licenses\/<\/a>.<\/p>\n [13]<\/a> Id<\/em>.<\/p>\n [14]<\/a> Taylor Locke, Millionaire artist Beeple: This is the very important thing \u2018I think people don\u2019t understand\u2019 about buying NFTs<\/em>, 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<\/a>.<\/p>\n [15]<\/a> Id<\/em>.<\/p>\n [16]<\/a> Grace Kay, Beeple\u2019s 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<\/em>, Bus. Insider (Mar. 23, 2021, 2:43 PM), https:\/\/www.businessinsider.com\/beeple-sells-latest-nft-runner-up-bidder-record-crypto-art-2021-3<\/a>.<\/p>\n [17]<\/a> Kevin Stankiewicz, Here\u2019s what the buyer of Beeple\u2019s NFT digital art actually gets for $69 million<\/em>, 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<\/a>.<\/p>\n [18]<\/a> Eileen Kinsella, \u2018This Is Going to Be a Billion-Dollar Piece Someday\u2019: The Buyer of the $69 Million Beeple NFT on Why It\u2019s the Greatest Artwork in a Generation<\/em>, Artnet News (Mar. 12, 2021), https:\/\/news.artnet.com\/market\/the-buyer-of-the-69-million-beeple-nft-metapurse-1951561<\/a>.<\/p>\n
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