Cat Lawyer | Is issuing NFTs for "Er Gen's Cultivation Chat Group" considered paying homage or plagiarism?

The author of this article is Lawyer Mao Dong, currently the Vice Chairman of the Taiwan Virtual Currency Anti-Money Laundering Association and the founder of fintech.legal IG, dedicated to becoming a lawyer deeply involved in blockchain. IG: fintech.legal

Digital art piracy has come to the forefront due to the booming NFT market. Currently, OpenSea holds a high market share in the NFT trading market, but the platform officially acknowledges that many NFTs issued on the platform are counterfeit, plagiarized, or over-issued works. Among them, "plagiarism" is the most controversial issue. Is it considered copyright infringement for NFT artists or issuers to create NFTs based on others' physical creations?

This issue has actually existed long before, but it was not in the concept of NFT at that time. Instead, the question was framed as "Is it legal to create peripheral products with the face of cartoon characters?" or "Is it illegal to apply Marvel movie characters to game characters?" The concept is essentially the same. The reason is that NFT changes the medium of creation, but whether it infringes on the copyright of the original creator still needs to be judged from a legal perspective.

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Tribute vs. Plagiarism: Is There a Difference?

Let's first talk about what "tribute" and "plagiarism" mean. In copyright law, there isn't a clear definition for tribute or plagiarism, but based on the judgments of most courts, the issues of tribute and plagiarism often involve the concepts of "reproduction" and "adaptation" in copyright law. "Reproduction" refers to simply duplicating without further modification, while "adaptation" means modifying or adding one's own creativity to the original elements. If we delve into the semantic explanation of "derivative work," it indeed pertains more to the concept of "adaptation" in copyright law.

So, what constitutes an infringement of the original creator's adaptation rights? What falls within the legal scope of reference? According to the practical judgments of Taiwanese courts, there are criteria to follow. Generally, whether a creation infringes on someone else's reproduction and adaptation rights and has the potential for illegality, the author of the derivative work will be assessed on whether they meet the requirements of "contact" and "substantial similarity." "Contact" refers to the derivative creator having prior exposure (usually meaning seeing or hearing) to the original creator's work, and if there is "substantial similarity" between the two works, then it can be said that the derivative creator's work constitutes plagiarism.

When determining whether plagiarism has occurred or not, the most challenging aspect lies in identifying whether the two works are "substantially similar." In practice, "substantial similarity" may vary slightly depending on the medium of creation, but the assessment generally revolves around the standards of "quantitative similarity" and "qualitative similarity." "Quantitative similarity" refers to judging the extent of the copied content, while "qualitative similarity" pertains to whether the similar parts involve crucial elements and core content of the creation.

Take NFTs as an example; since NFT creation involves concepts like images, graphics, and art, when assessing whether two works are similar, the focus will primarily be on comparing details such as composition, overall appearance, main features, colors, shapes, angles, forms, and compositional elements. Further evaluation will consider whether the two works indeed give the general public a similar overall concept and feeling.

Will NFT Derivatives be Considered Plagiarism?

Some derivative creators might argue, "My work is a tribute, not plagiarism." This is indeed one of the most common defenses encountered in practical judgments. However, paying tribute to the original creator does not mean that one can skip obtaining consent or authorization, as reproduction and adaptation under copyright law, unless further agreements are made, fall within the rights of the original creator. Moreover, turning derivative works into commodities or NFTs for sale already constitutes a profit-making activity, making it challenging to claim fair use under copyright law.

The key difference between NFTs and traditional art lies in the techniques and mediums of creation. Although there haven't been specific NFT-related court rulings yet, based on civil judgments from the Taiwan Intellectual Property and Commercial Court, the medium of transformation will not be a determining factor in whether plagiarism has occurred.

For example, Pokémon game characters were first introduced in 1996, and over the years, they have appeared in different versions (2D or 3D) to suit various gaming platforms and the needs of different game works. They may have different body shapes, expressions, colors, accessories, and other added elements depending on the storylines, settings, and contexts. Even with these medium differences, as long as the main features maintain consistency and can evoke the original Pokémon character in people's minds, there is still a possibility of substantial similarity and potential for plagiarism.

Therefore, we can boldly assume that in the future, courts will likely refer to similar contexts to determine whether derivative NFTs constitute plagiarism. If creators wish to release NFTs based on the concepts of original flat or physical works, they must be particularly vigilant in ensuring that their works do not substantially resemble the original creations. Do not assume that creating virtual works through different medium technologies exempts you from legal implications!