Blockchain: Securing copyright agreements through smart contracts

By Joseph Mugauri, LLM student and research assistant

Cases of breach of contract in intellectual property (IP) law agreements are not a coca cola recipe that is kept from the public’s eye, but they are often aired in public. In recent years we have witnessed creative individuals turning to public platforms out of frustration to express their displeasure at how commercial entities fail to honor contractual terms relating to IP and vice versa.  

Kiernan Forbes’s (AKA) Braai Show case fits the narrative. In that case, Cake Media and Makhuducom breached the contract between them and AKA by failing to pay him the agreed 50% of the profits the show made. This dispute received some media attention, but although litigation could have been used to hold the alleged infringer liable, considerations of money, time and reputation led the parties to resolve the matter via arbitration. However, the advent of blockchain 3.0 brought a technology that can eliminate issues relating to contractual breaches between IP  rightholders and businesses entering into agreements. A smart contract is a blockchain-based technology programmed to execute desired obligations automatically when agreed conditions have been met. Illustratively, a contract between a record label and an artist can be programmed to carry out automated monthly payment transactions to the artist equivalent to 1000 streams per song. Additionally, parties may program it to release payments once the transfer of ownership has been completed. For the duration of the contract, the agreed conditions will be continuously automated, and the blockchain’s immutability protects the contract from any unethical alterations. Therefore, it cannot be tampered with. 

Although smart contracts have the potential to address contractual concerns, they have some shortcomings. Since they are based on blockchain technology, this will pose problems in cases where programmers make errors regarding the contractual terms because they will not be able to rectify them as they are immutable. Additionally, the blockchain on which smart contracts are deployed is public, meaning the transaction is open to everyone who joins the blockchain. There is a lack of privacy and confidentiality because once the contract has been deployed, it will be visible to everyone. Consequently, such a case may contradict the confidentiality policies of some companies.