Papers associated with Bitcoin and related topics in law: Part XXIV

This article was first published on Dr. Craig Wright’s blog, and we republished with permission from the author. Read Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, Part 10, Part 11, Part 12, Part 13, Part 14, Part 15, Part 16, Part 17, Part 18, Part 19, Part 20, Part 21, Part 22, and Part 23.

El Faqir et al. (2020) provide an overview of decentralized autonomous organizations (DAOs) on the blockchain, discussing their potential for governance and highlighting various DAO platforms such as Aragon, DAOstack, DAOhaus, and Colony. They emphasize the need for further interdisciplinary research on DAOs and their effectiveness as decentralized organizational structures. The authors point out that DAOs challenge existing legal frameworks with their decentralized and serverless nature, raising questions about governance, liability, and regulatory compliance. Despite being in their infancy, DAOs face similar challenges to other sociotechnical systems, including governance, accountability, security, and scalability.

Additionally, El Faqir et al. (2020) emphasize the importance of understanding the technological and sociological aspects of DAOs, drawing upon existing research and lessons from similar systems. DAOs share characteristics with common law partnerships, as they bring individuals together with shared goals and pooled resources to achieve common objectives. Yet, DAOs leverage smart contracts and blockchain technology for transparent and efficient governance, distinguishing them from traditional partnerships. The combination of shared goals, pooled resources, and decentralized decision-making makes DAOs resemble unregistered common law partnerships, but with advanced technological features. Overall, further exploration and understanding of DAOs are essential to navigate the complexities surrounding their governance, legal implications, and long-term sustainability.

Samuelson (2020) explores the implications of stricter copyright ISP liability rules. While the paper does not directly address partnership law or open-source blockchain developers, potential connections can be made based on the broader themes discussed in the article. Partnership law governs the relationships and responsibilities among partners in a business venture. In the context of open-source blockchain developers, who often collaborate and contribute to decentralized projects, partnership law may come into play in defining the legal status and obligations of the individuals involved. Open-source development usually operates on principles of cooperation and collaboration, similar to partnerships, where contributors pool their resources and efforts to achieve common goals.

With stricter copyright ISP liability rules, open-source blockchain developers may face challenges regarding potential liability for copyright infringement. As contributors share and modify code within the open-source community, there is a risk that copyrighted material may be unintentionally included or shared without proper licensing. This raises questions about the legal responsibilities of individual developers and the potential impact on their liability under partnership law.

The article highlights the need for a balanced approach in considering any changes to ISP liability rules, taking into account the interests of various stakeholders. Similarly, it is crucial to balance protecting intellectual property rights and fostering a collaborative and innovative environment in open-source blockchain development. Therefore, developers must navigate legal considerations, such as licensing requirements and compliance with copyright laws, while promoting open sharing and collaboration within the community.

Dreyfuss (2020, p. 1) has contended that “[t]he intellectual property (IP) system is facing formidable challenges. Scientific progress, rapid technological change, and new methods of conducting business have altered the ways in which information is generated, utilized, and monetized”. Such changes have reshaped how information is generated, utilized, and monetized, with increased specialization, declining vertical integration, and the rise of value chains. In addition, the shift from sales to licensing and freemium transactions has disrupted traditional revenue models. In this context, open-source blockchain development and partnership law intersect, introducing opportunities and risks.

Open-source innovations, such as Linux and Wikipedia, provide opportunities for skill development, recognition, and community collaboration. Yet, IP rights still attach to such open-source outputs, leading to instances where prices rise, output decreases, and deadweight loss occurs, impacting innovation. Additionally, the threat of secondary liability for intermediaries involved in open-source platforms can hinder technological advancements and result in removing content even when something may be considered fair use.

In the realm of blockchain technology and partnerships, the challenges of IP protection and liability become particularly pronounced. Blockchain’s distributed structure based on a collaborative development approach may involve multiple stakeholders, raising questions about ownership, licensing, and control over innovative contributions. Partnership law is crucial in structuring such collaborations and managing associated risks. In addition, issues related to IP rights, attribution, and contractual agreements arise, requiring careful consideration to balance protecting creators’ interests and promoting creative reuse.

The intellectual property landscape in the digital age presents multifaceted challenges that require careful consideration. Samuelson (2020) discusses the complexities surrounding ISP liability rules and the need for a balanced approach to addressing copyright infringement by users on online platforms. She highlights the shortcomings of the European Union’s Article 17 and the US Copyright Office’s Section 512 Study, emphasizing the importance of protecting user freedoms and fostering innovation. Similarly, Dreyfuss (2020) delves into the broader challenges faced by the IP system, highlighting the transformative impact of scientific progress, rapid technological change, and new business models. The author explores the need for systematic assessment and research to ensure that IP law effectively supports and structures innovation in the knowledge economy. The risks faced by open-source blockchain developers and open-source software structures are discussed by Dreyfuss (2020) concerning the potential limitations imposed by risk-averse intermediaries and the removal of content deemed fair under the law. These authors collectively highlight the importance of balancing protecting intellectual property rights, preserving user freedoms, and fostering an environment conducive to innovation in the digital era.

Brauneis and Schechter (2022) analyzed three principal cases: Google LLC v. Oracle America, Inc., Georgia v. Public.Resources.Org, and Andy Warhol Foundation v. Goldsmith. The Supreme Court’s fair use decision in the Google v. Oracle case guides using copyrighted material in software development, which has implications for open-source projects. Georgia v. Public.Resources.Org case confirms that official state statutes cannot be copyrighted, allowing open-source developers to utilize public domain works without infringement concerns. The Andy Warhol Foundation v. Goldsmith case focuses on the concept of transformative use, the outcome of which will impact the extent to which derivative works can be created and shared within the open-source community. The cases collectively contribute to the legal landscape surrounding open-source development, addressing fair use, copyright protection of public domain materials, and transformative use, and requiring developers to navigate copyright law to ensure compliance and make informed decisions regarding incorporating copyrighted material in open-source projects (Brauneis & Schechter, 2022).

In the 1990s, there was considerable scepticism about the commercial viability of open-source software, which was seen as embodying the collaborative spirit celebrated by Barlow (Samuelson & Hashimoto, 2019). Yet, free and open-source software has defied expectations and emerged as a significant force in the industry, with financially viable business models (Samuelson & Hashimoto, 2019). As a community-developed open-source project, the Linux operating system has gained prominence, and numerous other open-source projects thrive today (Samuelson & Hashimoto, 2019). Even mainstream corporations like IBM, Adobe, and Google contribute substantial resources to support open-source projects (Samuelson & Hashimoto, 2019).

Such success is evident in Google’s monetization of the Android platform for smartphones through alternative means beyond direct sales (Samuelson & Hashimoto, 2019, p. 109). In addition, open-source software providers have found ways to recoup investments through value-added services and complementary assets (Samuelson & Hashimoto, 2019, p. 110). Such developments illustrate the evolving and profitable nature of open-source software, challenging earlier scepticism and highlighting its potential in the industry. As open-source blockchain development and partnership law converge, there is a need for comprehensive research and assessment of the implications involved. The discussed papers shed light on various aspects relevant to this intersection. Samuelson and Hashimoto (2019) highlight the evolving nature of open-source software, which has become a significant force in the industry, attracting support from global corporations and demonstrating financially viable business models. This emphasizes the importance of understanding the evolving landscape of open-source rights and the role of intellectual property (IP) law.

Dreyfuss (2020) explores the challenges faced by the IP system in the digital age, including the impact on open-source development. The paper emphasizes the need to address secondary liability and the risk-averse nature of intermediaries, which may lead to removing material even when it falls under fair use. This highlights the potential risks and limitations open-source developers face in accessing and sharing copyrighted material.

Brauneis and Schechter (2022) focus on recent developments in copyright law. The discussed cases, such as Google LLC v. Oracle America, Inc., Georgia v. Public.Resources.Org, and Andy Warhol Foundation v. Goldsmith, have implications for open-source development. The cases touch upon fair use, copyright protection of public domain materials, and transformative use, all of which impact the operation of open-source projects and the use of copyrighted material within them.

The papers underscore the importance of understanding IP law, fair use, liability, and transformative use in open-source blockchain development. Comprehensive research and assessment are necessary to navigate the evolving landscape and address the challenges and risks associated with the intersection of open-source development and partnership law. By doing so, stakeholders can foster a conducive environment for open-source innovation, while ensuring compliance with legal frameworks.

Annotated bibliography

El Faqir, Y., Arroyo, J., & Hassan, S. (2020). An overview of decentralized autonomous organizations on the blockchain. Proceedings of the 16th International Symposium on Open Collaboration, 1–8. https://doi.org/10.1145/3412569.3412579

El Faqir et al. (2020) provide an overview of decentralized autonomous organizations (DAOs) on the blockchain. It highlights the potential of blockchain technology for governance. It explores the concept of DAOs, organizations where member interactions are mediated by a blockchain application controlled by embedded rules in its source code. The authors discuss the emergence and development of DAO platforms such as Aragon, DAOstack, DAOhaus, and Colony. They also present existing visualization tools for DAOs and introduce their instrument, DAO-Analyzer, for analyzing DAOstack communities. Finally, the paper emphasizes the need for further interdisciplinary research on DAOs and their effectiveness as decentralized organizational structures.

It is noted that “DAOs are novel sociotechnical systems that set a new way for online coordination and decision-making” (El Faqir et al., 2020, p. 7). However, the authors imply that the structure of a system when online changes the existing legal frameworks. The argument is represented by noting that these decentralized autonomous organizations operate on the blockchain, which is decentralized and serverless with immutable records; their unique characteristics challenge traditional legal frameworks and raise questions regarding governance, liability, and regulatory compliance. However, the implication is that the form of technology leads to how legal structures work.

The emergence of decentralized autonomous organizations (DAOs) presents challenges and considerations that extend beyond technological advancements, but these cannot be considered unique. “Despite being in their infancy, these sociotechnical systems are already facing problems that may relate to those that affect other sociotechnical systems and have already been studied in the literature” (El Faqir et al., 2020, p. 7). While these systems redefine traditional organizational structures, they encounter governance, accountability, security, and scalability issues. The literature on sociotechnical systems offers valuable insights into these challenges, providing a framework for understanding and addressing the complexities arising from the intersection of technology and social dynamics. It becomes evident that the successful implementation and long-term sustainability of DAOs require careful examination of both technological and sociological aspects, drawing upon existing research and lessons learned from similar systems. Therefore, while technological innovations play a crucial role, it is essential to recognize that changes to corporate structures and partnerships do not occur merely because of new technology but also require a comprehensive understanding of the social, legal, and economic implications surrounding DAOs.

The authors state that “DAOs are shared by people with common goals and resources to accomplish them” (2020, p. 3). This shared purpose and the desire to generate profit or value within a DAO aligns with the characteristics of a common-law partnership. Similar to partnerships, DAOs unite individuals who pool their resources, skills, and efforts to achieve common objectives. In this decentralized organizational structure, participants contribute their expertise, financial assets, or other resources to the DAO, expecting to share in the rewards or benefits generated by the collective endeavor.

Like partnerships, DAOs often operate on cooperation, collaboration, and shared decision-making principles, where members collectively manage the organization’s affairs and allocate resources. However, unlike traditional partnerships, DAOs typically rely on smart contracts and blockchain technology to automate and enforce the rules and agreements among the participants, facilitating transparent and efficient governance. This combination of shared goals, pooled resources, and decentralized decision-making makes DAOs resemble unregistered common law partnerships but with a more efficient means of disseminating information through technological features that enhance their productivity and scalability.

Samuelson, P. (2020). Pushing Back on Stricter Copyright ISP Liability Rules. Michigan Technology Law Review, 27(2), 299–344. https://heinonline.org/HOL/P?h=hein.journals/mttlr27&i=313

Samuelson (2020) Samuelson critically analyzes the proposed stricter copyright ISP liability rules. First, the author discusses the safe harbor rules that shield internet service providers (ISPs) from copyright liability and examines the criticisms and concerns raised by significant copyright industry groups. Next, the paper focuses on the European Union’s Directive on Copyright and Related Rights in the Digital Single Market, specifically Article 17, which imposes stricter obligations on for-profit ISPs hosting large amounts of user-generated content. Samuelson argues that Article 17 is internally contradictory, ambiguous, and potentially harmful to small and medium-sized companies and user freedoms of expression. Samuelson further suggests that Article 17 may violate the European Charter of Fundamental Rights. The Section 512 Study, by contrast, recommended imposing greater obligations on all ISPs” (Samuelson, 2020, p. 341).

Additionally, the article discusses the US Copyright Office’s Section 512 Study, which recommended significant changes to the existing safe harbor rules in the United States. Samuelson critiques the study for primarily favoring pro-copyright industry positions, neglecting other stakeholder interests, and potentially undermining First Amendment freedoms. The author emphasizes the importance of a balanced approach in regulating ISPs and calls for considering the interests of various stakeholders, including successful U.S.-based internet platforms, smaller ISPs, startups, content creators, and the millions of internet users who engage in user-generated content.

Samuelson (2020) discusses the implications of stricter copyright ISP liability rules on various stakeholders, including open-source development. While the article does not explicitly focus on open-source development, it raises concerns about the potential harm to small and medium-sized companies and user freedoms of expression due to these rules. Open-source development relies on collaborative efforts and the sharing of code and resources among developers. Hence, the mention of harm to small and medium-sized companies suggests that such entities, including those involved in open-source development, may face challenges in complying with stricter copyright rules and dealing with potential liability issues. Additionally, the discussion on user freedoms of expression highlights the importance of maintaining an environment conducive to open-source development, where users can contribute, modify, and distribute software.

Furthermore, the article’s criticism of the US Copyright Office’s Section 512 Study, which recommends greater obligations on ISPs, raises concerns about the potential impact on platforms that facilitate open-source development. Imposing additional obligations on ISPs may increase their burden and potentially hinder the sharing and distribution of open-source software. Here it is argued that “[t]he US Copyright Office Section 512 Study does not fairly balance stakeholder interests” (Samuelson, 2020, p. 330).

Overall, while the article does not explicitly focus on open-source development, its discussions on the implications of stricter copyright ISP liability rules can have consequences for the open-source community regarding compliance, liability concerns, and preserving user freedoms and collaboration. The article highlights the complexities and implications of stricter copyright ISP liability rules and advocates for comprehensive and balanced reforms that address the concerns of all stakeholders involved.

Dreyfuss, R. C. (2020). The challenges facing IP systems: Researching for the future. In P. Drahos, G. Ghidini, & H. Ullrich (Eds.), Kritika: Essays on Intellectual Property. Edward Elgar Publishing. https://doi.org/10.4337/9781839101342.00008

Dreyfuss (2020, p. 9) contends that “because intermediaries are risk-averse, the threat of liability can lead them to remove material from their platforms even when under the law, the use is considered fair and not compensable” (Dreyfuss, 2020, p. 9). Dreyfuss (2020) further highlights the challenges that open-source Blockchain developers and open-source software structures face when they fail to implement protection against corporate controls and configurations. The author emphasizes that intermediaries, such as platforms or internet service providers, tend to be risk-averse to avoid potential liability. As a result, even if a particular use of copyrighted material is considered fair and not compensable under the law, intermediaries may remove such material from their platforms due to the threat of legal repercussions (Dreyfuss, 2020, p. 9). This situation can have adverse consequences for open-source developers who rely on the freedom to use and share copyrighted content within the boundaries of fair use. Furthermore, it underscores the need for open-source developers to navigate the complexities of intellectual property laws and corporate interests to ensure their work remains protected and accessible. Therefore, properly implementing legal safeguards and understanding the intersection between partnership law, open-source development, and intellectual property rights are crucial for maintaining the integrity and sustainability of open-source Blockchain projects (Dreyfuss, 2020).

Dreyfuss (2020) explores the formidable challenges confronting the intellectual property (IP) system. The author discusses how scientific progress, rapid technological change, and new business methods have transformed information generation, utilization, and monetization. The article highlights the impact of technologies like the internet, smartphone, and cloud, which have reduced the cost of global information distribution and facilitated novel forms of creativity, collaboration, and information production. Dreyfuss notes the shift from sales to licensing or “freemium” transactions and the rise of value chains in the Knowledge Economy. The author examines the role of traditional IP rights and international agreements in enabling these changes and the expansion of IP protection to cover new forms of knowledge. Dreyfuss raises essential questions about the effectiveness of existing IP laws in the face of extensive changes and discusses the need for systematic assessment and research to adapt to the evolving creative environment. The article also explores extrinsic incentives for creativity, such as reputation and acclaim, and raises concerns about the future of IP protection in a post-scarcity society. Overall, the article calls for further research and analysis to understand the challenges and develop strategies for managing innovation in the Information Age.

Brauneis, R., & Schechter, R. (2022). Copyright: A Contemporary Approach (SSRN Scholarly Paper No. 4175694). https://doi.org/10.2139/ssrn.4175694

Brauneis and Schechter (2022) provides an in-depth examination of copyright law in the context of modern challenges and developments. The authors present a comprehensive analysis of various aspects of copyright, including its historical background, the principles underlying copyright protection, the scope of copyrightable subject matter, and the exclusive rights conferred to copyright owners. In addition, they delve into contemporary issues such as the impact of digital technology on copyright, the role of fair use and other limitations and exceptions, and the challenges posed by online platforms and user-generated content.

Brauneis and Schechter focus on three new principal cases, including the 2021 fair use decision in Google LLC v. Oracle America, Inc., the 2020 decision in Georgia v. Public.Resources.Org regarding copyright protection for state statutes, and an excerpt from the Second Circuit’s fair use decision in Andy Warhol Foundation v. Goldsmith. The Supreme Court has decided to review the Goldsmith case, and the supplement includes the Second Circuit’s opinion on “transformativeness” until the Supreme Court issues its decision.

In addition to these cases, the supplement includes notes on other cases and introduces new features to enhance the study of US copyright law. For example, it covers the Copyright Claims Board (“CCB”) and its proceedings under the CASE Act, with a new section at the end of Chapter 6 dedicated to this topic. The supplement also features revised chapters on digital audio transmission rights and rights in pre-1972 sound recordings, providing an updated understanding of these areas. Specifically, Chapter 12.E. focuses on the digital streaming of music after the Music Modernization Act, covering rights in sound recordings and musical works.

Samuelson, P., & Hashimoto, K. (2019). The Enigma of Digitized Property: A Tribute to John Perry Barlow The Past and Future of the Internet: A Symposium for John Perry Barlow. Duke Law & Technology Review, 18, 103–126. https://heinonline.org/HOL/P?h=hein.journals/dltr18&i=103
Samuelson and Hashimoto (2019) explore the puzzling digitized property realm and pay tribute to John Perry Barlow’s contributions to understanding property rights. The complex relationship between intellectual property rights, open-source software, and partnership law is examined. By analyzing the challenges posed by the digitization of property and the implications for traditional conceptions of ownership and control, the role of open-source software in facilitating collaboration and innovation, emphasizing the importance of balancing individual rights with the collective goals of the open-source community, is contrasted.

Samuelson and Hashimoto (2019) review the legal aspects of open-source licensing and the challenges associated with navigating partnership law in the context of open-source projects. The authors provide insights into the evolving nature of property rights in the digital age, and offer perspectives on how partnership law can adapt to accommodate the unique characteristics of open-source development. Overall, the paper provides a thought-provoking analysis of the complexities surrounding open-source rights and their interaction with partnership law. The article by Samuelson and Hashimoto explores the commercial viability of open-source software in the 1990s and its evolution into a major force in the software industry. The authors highlight the success of projects like the Linux operating system and the Android platform, which have become widely accepted in enterprise computing environments (2019, p. 123). They also discuss the involvement of mainstream corporations, such as IBM, Adobe, and Google, in supporting open-source projects and investing substantial resources (2019, p. 122). The article emphasizes the financial viability of open-source software through value-added services and complementary assets (2019, p. 123). It provides insights into the growth and acceptance of open-source software as a significant player in the industry.

References

Brauneis, R., & Schechter, R. (2022). Copyright: A Contemporary Approach (SSRN Scholarly Paper No. 4175694). https://doi.org/10.2139/ssrn.4175694
Dreyfuss, R. C. (2020). The challenges facing IP systems: Researching for the future. In P. Drahos, G. Ghidini, & H. Ullrich (Eds.), Kritika: Essays on Intellectual Property. Edward Elgar Publishing. https://doi.org/10.4337/9781839101342.00008

El Faqir, Y., Arroyo, J., & Hassan, S. (2020). An overview of decentralized autonomous organizations on the blockchain. Proceedings of the 16th International Symposium on Open Collaboration, 1–8. https://doi.org/10.1145/3412569.3412579

Samuelson, P. (2020). Pushing Back on Stricter Copyright ISP Liability Rules. Michigan Technology Law Review, 27(2), 299–344.
Samuelson, P., & Hashimoto, K. (2019). The Enigma of Digitized Property: A Tribute to John Perry Barlow The Past and Future of the Internet: A Symposium for John Perry Barlow. Duke Law & Technology Review, 18, 103–126.

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