Social media has changed how people and companies interact and has provided us with some technological innovations that have raised copyright issues. In an effort to keep our readers informed of some recent developments involving social media, we wanted to provide some background relating to some headlines combining social media, copyright, and blockchain, and we will provide some clarifications and explanations.

A company named QuickCoin, Inc. offers a service called Blockai. It describes the service as working with Instagram and enabling registered users to claim ownership in their original photos posted on Instagram by using the hashtag #Blockai.  The company then places each photograph and owner information on a distributed ledger known as a blockchain.

Copyright in the United States

In the U.S., copyright attaches to an original creative work when it is fixed in a tangible medium of expression. The author of the work must register the work the U.S. Copyright Office in order to bring a lawsuit for copyright infringement in the U.S.  (Electronic registration costs approximately $55 as of the date of this post.)  The U.S. copyright law permits the author to claim actual damages due to an infringement, but, more importantly, the author can claim “statutory damages” ranging from $300 to $50,000 per infringed work.  If infringement is found to be willful, then statutory damages can increase up to $150,000 per infringed work.  Our longtime readers may recall our posts on photographer Daniel Morel’s jury award of $150,000 for each of eight photographs he had posted on Twitter, which were used without his permission.

What is a Blockchain?

A blockchain is a form of distributed database that can track assets. First gaining public attention as the recordkeeping methodology for the virtual currency known as bitcoin, the technology is attracting attention and billions in investments around the world.

With respect to bitcoin, the way a blockchain works is that groups (or “blocks”) of approved bitcoin transactions entered into over a period of time (say, 10 minutes) are added to a ledger. Every member of the bitcoin network has its own copy of the ledger (making it “distributed”), and entries cannot be changed once added to the ledger (because the copies of the ledger must match).

In addition, the header of each block of transactions is tied to the header of the immediately preceding block, and the two headers are run through a complex mathematical algorithm (called a “hash”). Any change to a block would result in a change to the header, which would result in a change in the hash.  Again, because copies of the ledger must match, one hash that doesn’t match will not be approved for addition to the ledger.  This form of security is why transactions on a blockchain are frequently described as “immutable”—changes to past transactions will not be accepted.

Transaction errors could be corrected going forward, if both parties agree to a second transaction. (If I paid you $10 for an item when the purchase price was $5, we could not undo the approved transaction posted on a blockchain:  instead, we would enter into a second transaction where you would pay me $5 and that second transaction would also appear on the blockchain.)

Readers interested in learning more about virtual currency and blockchain (or “distributed ledger technology”) should look for posts on our sister blog, Financial Services: Regulation Tomorrow, or, for more detailed information, see the publications here.