Jodorowsky’s Dune – How Understanding Copyright Can Save You $3 Million

Recently, the concept of NFTs, or Non-Fungible Tokens, have taken over the internet as the new, hot investment. Unfortunately, so too have people’s misconceptions about what owning an NFT actually is. Many investors think that owning an NFT of a digital image means owning the underlying copyright to the image. Spoiler alert – it doesn’t.

The quintessential example of this is when investors bought a copy of the book, Dune (yes, that Dune) for about $3 million thinking they would then hold the copyright for the story. Sadly, that’s not quite how copyright works.

Whether you are hoping to invest in NFTs, are a casual fan, or plan on becoming an attorney, it’s important to know just what the law protects. This is especially true with emerging technology and trends such as NFTs. So let’s take a look at what NFTs are and how copyright protects them. Let’s use the the infamous Dune investment as an example, so you can learn what you can do to avoid making the same mistakes.

NFTs – What Are They?

Before we understand copyright protection regarding NFTs, it’s important to understand just what an NFT is. NFTs come in a variety of digital forms such as a still image or video. Essentially, NFTs are unique, one-of-a-kind digital files that can be traded and purchased using cryptocurrency like Bitcoin. The sale or exchange is done through the cryptocurrency markets, or blockchain, where it tracks who owns the original files. Think of it like a piece of art, except in a digital file. No one else has the original work of art, but they can have reproductions of it (like art prints).

NFTs can be worth a lot. For example, an image of the internet meme “Doge” sold for $4 million. The musician Grimes sold several images and videos depicting War Nymphs for $6 million recently.

What is a Copyright?

Now that we know what an NFT is, how does copyright come into all this? Copyright is legal protection granted to creative works. This includes things like literature, art, computer code, music, etc. The work must be original to the author and not made by someone else. Next, there needs to be minimal creativity, but this is a low standard that can even be met by selecting or arranging information in an original way. Then, as long as the work is in a tangible form – like a physical document or a digital file, and not barred from protection by a statute, then it has protection under US coypright law.

A copyright owner generally has rights to exclude others from a variety of things, such as copying the work, or making other work based on it, which are considered “derivative works.” The copyright owner also has the right to transfer the copyright to another or allow specific individuals to use the work through licensing. The licenses can be for specific situations, such as playing the song in my store or including it in a video game.

However, purchasing a copyrighted work does not grant the buyer ownership of the underlying copyright. They simply own that specific work. If a purchaser wants to own the underlying copyright protections to the work, they need to come to a separate agreement with the creator that transfers the rights to the copyright.

For example, if I purchase a Billy Joel CD (which is copyrighted), I get a physical copy of the music that I can listen to all day long. What I don’t get is the ability to use a song from the CD in my independent movie, because that would violate the copyright owner’s (Billy Joel) right to make a work with his copyrighted music. That’s a right reserved to the copyright owner, Billy Joel. If I wanted to use that song for my movie, I would need to get permission from Billy Joel through a license or purchase the copyright altogether.

The Multi-Million Dollar Mistake

That brings us to the infamous Jodorowsky Dune incident. The group Spice DAO bought a copy of Frank Herbert’s Dune. This specific book was rare because it featured illustrations by filmmaker Alejandro Jodorowsky from when he unsuccessfully tried to adapt the book to film. Because of that, it was worth a lot of money – projected to be worth around 25,000 euros approximately.

However, Spice DAO blew that projection out of the water by spending about $3 million to purchase the book. Right after they bought the book, they infamously tweeted that they would make NFTs out of the book, make the book public, produce animation based on the book, and create community inspired “derivative works”, i.e. things based on the original book they just purchased.

Their declaration was met by a lot of scorn and mockery. This is because the investors had no right to do any of the actions above. They hadn’t purchased a copyright, they had simply purchased a book. Much like my example with the CD, Spice DAO would have had to enter into an agreement with the copyright holder to have the right to preform these actions, like a entering lisencing agreement with the owner that outlined their intentions with the Dune work.

Any competent attorney could have warmed them of this fact, had they bothered to consult one.

What Should You Know

It’s easy to mock Spice DAO for making such a colossal mistake, because they were completely misinformed. But they’re far from the only ones who misunderstand copyrightt – especially as it concerns the crypto world. Let’s face it: the law is a confusing beast and intellectual property is no different.

This isn’t to say that NFTs are bad and people should steer clear. If you’re an artist, NFTs can commercialize types of art that previously didn’t have a large market. And if you’re an art aficionado, why shouldn’t you purchase a piece of art that brings you joy or in an attempt to support the creator? However, people should be properly informed of just what they are giving up or buying when it involves copyright.

So what can you do? Be an informed consumer and read up on what a copyright entails. There’s plenty of law firms that have written about intellectual property in more easily understood terms than the Copyright Act. If you’re creating or purchasing NFTs, it’s a good idea to consult an attorney before spending hundreds, thousands, or even millions on a product.

So next time your friend from high school approaches you with a great investment opportunity, make sure they understand the legal consequences of their actions – it may just save you 3 million dollars.

<em>Andy Sutherland</em>

<em>Associate Blogger</em>

<em>Loyola University School of Law, JD Candidate 2023</em>