We previously wrote about the report published by the Digital Culture, Media and Sport (DCMS) Committee regarding NFT marketplaces, and their "safe harbour" protections. Within its report the Committee made two recommendations to address concerns regarding the impact of NFTs on art and culture. The Government has now published its response to these recommendations.
Recommendation 1: Engage with NFT marketplaces and introduce a code of conduct
The Committee's first recommendation was that the Government engage with NFT marketplaces to address the widespread infringement of intellectual property rights on their platforms and to enable owners of copyright to enforce their rights. The Committee further recommended that a code of conduct for online marketplaces in the UK be introduced to address concerns raised by "safe harbour" provisions which, in short, protect NFT marketplaces from liability for infringement of intellectual property rights.
The Government, in its response, acknowledges the intellectual property concerns which NFTs and other new technologies raise, and suggests that a holistic approach is required in order to tackle these issues. Such an approach would involve the use of a combination of legislation, voluntary practices, and practical tools.
The Government, however, rejects the suggestion of a code of conduct on the basis that extensive stakeholder engagement has apparently shown that no code is required in relation to online marketplaces, and it is not aware of any evidence suggesting that the situation for NFT marketplaces is any different.
The Government says it will continue to monitor NFT marketplaces and engage with them to gain a greater understanding of the intellectual property issues which arise.
Recommendation 2: Publish analysis of the implementation of article 17 of the european union directive on copyright in the digital single market
The Committee's second recommendation was that the Government consider adopting a measure similar to Article 17 of the European Union Directive on Copyright in the Digital Single Market. Article 17 provides that online content-sharing service providers can be held liable for copyright infringement where they host content which is protected by copyright. The provision promotes the use of licensing agreements which enable these service providers to avoid liability for copyright infringement by obtaining a licence from the copyright holder.
The Government has however pointed to the fact that the Directive has only recently been implemented by many member states, and so it is not yet able to fully assess the impact of Article 17, with more time needed for its effects to become clear. The Government further notes that Article 17, of course, relates to online content generally (as opposed to NFT marketplaces specifically) and suggests that adopting a similar provision for NFT marketplaces would likely pose challenges.
Whilst it cannot yet assess the impact of Article 17, the Government anticipates that its engagement with NFT marketplaces (as outlined above) will assist in informing future policies in this area and determining whether the introduction of measures equivalent to Article 17 would be effective.
For those hoping that the Government's response would include a commitment to introduce a new policy approach or code of conduct relating to NFT marketplaces, the response may be somewhat disappointing. However, the response does suggest that the Government has a desire to better understand NFT marketplaces and their implications for intellectual property rights which may lay the groundwork for future regulatory developments in this area.