Digital Content Creators in the IP world

In recent years, the online communication and entertainment industry has been profoundly revolutionized thanks to technology and its increasing use, which has created new job opportunities including, for example, the creation of digital contents, capable of generating profits. No one should be surprised, therefore, that an increasing number of young people are trying to make their way in this field in an attempt to realize a unique digital product on the various platforms that is immediately recognisable to the public of web.

These people are called “digital content creators” (a category in which the "influencers" can be included), that we want to analyse in this article, especially in relation to some intellectual property aspects.

The digital contents produced by the content creators are protected by copyright law if the requirement of creativity is met. In this case, any unauthorized reproduction and/or dissemination of such digital contents by third parties is expressly prohibited, unless there is an express consent from the digital content creator, which is usually released in exchange for a monetary compensation.

As a result, first of all, the content creator is the owner of the moral rights of the created content, so only he can be recognized as the author of that content; these rights are inalienable and untransferable. Furthermore, the content creator is also the owner of economic utilization rights of the content, which are transferable, even if only partially.

This is the example of the many advertising contracts signed between companies and content creator/influencer. The latter, according to the advertising contract, agrees to create digital content, such as photos, posts, stories or videos, through which he promotes the products and the services of a particular brand. All this in exchange for a monetary compensation but also, in certain cases, the transfer of the property rights of this content in favour of the company, like the right to use and/or reproduce it for any purpose and in any form without incurring any infringement.

This partnership is not new; in fact, it already existed in the past as celebrity marketing, whereby athletes, actors, singers or celebrities from other sectors used their face and image becoming the brand ambassador of a company, so the representative of that brand. However, in the past, the personalities chosen were already famous for other merits, therefore, the consumer purchased the product and/or the service based on the popularity of these personalities and not on their promotional ability. Totally different is the influencer marketing because often the content creators are not famous, so they are more human and accessible, which is the reason behind the "trust" relationship built with the consumer; moreover, the content creators are chosen precisely for their promotional skills and therefore for their ability to suggest and influence their followers about the choice of a certain product and/or service. Thanks to that ability that the content creator can become a real celebrity.

In light of these considerations, the image of the content creator/influencer in the communication and entertainment industry is central and therefore it deserves to be protected and safeguarded.

In fact, the image is an absolute right of a person that cannot be damaged in any way, so its disclosures and/or reproductions without the consent of the person involved are generally prohibited. The rule does not apply for famous and notorious people because in these cases the consent is not necessary, except if the reproduction and/or disclosure of the image would result in prejudice to the reputation or decorum of the person in question. However, it is not always easy to understand when the use of the image is justified by the celebrity of the person or when it instead constitutes a damage to the person's reputation.

This last aspect shows how it is not always easy to protect the image of famous people, such as precisely the content creators, which is the reason that they often adopt alternative remedies to protect their image. One of these is to register their name as a trademark to prevent third parties to improperly use their popularity by taking financial advantage, or, by damaging their reputation.

As further confirmation of the above, also recent case law has denied to famous people the right to protect their image as an intellectual work, de facto depriving them of an additional defence instrument.

This is the consequence of the judgment no. 219/2/2023 of the Second Instance Tax Court of Piemonte, issued against the football player Cristiano Ronaldo, who, in addition to being known as an athlete and as one of the highest-paid players in the world, he has also utilized his popularity, image, and initials (CR7) over the years to generate new economic income, in order to be part of the celebrity/influencer marketing.

The player, who at the time was playing for the Italian soccer club Juventus, had applied for a preferential tax regime under Article 24-bis of the Italian Income Tax Act (TUIR). The aim of that legislation was to encourage foreign citizens, especially the wealthiest, to transfer their residence in our territory and for this purpose had provided for a fixed flat-rate regime for all new-residents, but only in relation to their foreign source income.

Cristiano Ronaldo had requested access to the preferential tax regime provided by the TUIR since believed that the profits originated with the use of his image, so with the celebrity/ influencer marketing, were separate from the football activity carried out, at that time, in Italy. Tax Court of Piemonte denied the application of Article 24-bis TUIR to CR7.

According to the Court, in fact, the image of any person should be protected only as personal quality, it is not the product of an autonomous work, because notoriety could originate, as we have already said, by an artistic or professional activity or ability, or even by the simple skill to promote the own image on social networks and other digital platforms. So, the image is connected to the person and cannot be separated from his life and work. Therefore, the profits deriving from the use of the image of Cristiano Ronaldo could not be separated from his sporting activity, being directly and intrinsically connected.

Beyond the tax implications of this decision, this ruling has generated important consequences for the whole celebrity/influencer marketing industry. In fact, as we have already said, influencers are the most exposed to the violation and injury of their image right. For this reason, in the absence of specific legislation, over the years, they have tried to find escamotages and use other instruments of protection, often referring to copyright and the industrial property code. However, denying the qualification of intellectual work to the image right, the Tax Court of Piemonte has deprived the content creators of a new instrument of protection, generating a legislative gap in the entertainment and communication sector.

In fact, the image of the more and more influencers consists in a real working tool that, if damaged, could cause not only moral but also economic damage, obstructing or making difficult their work.

Therefore, if the regulation of copyright cannot be extended to effectively protect the image of the content creators, we wonder if the legislator will intervene to introduce new and more specific defence instruments in favour of all individuals involved in celebrity and influencer marketing.

Non Fungible Tokens: a unique opportunity, but for who?

During the last few months there has been a matter that has generated great interest among finance professionals, Youtubers and the most famous art galleries: we are of course talking about NFTs, which is an acronym for “Non Fungible Tokens”.

To understand what NFTs are, it is necessary to consider first the technology that lays at their foundation, namely blockchain.

In summary, blockchain refers to a database – meaning a group of data organized in accordance with defined criteria – which is formed by “blocks”, that is sequences of individually identifiable information which, instead of being stored in a single central server, are distributed in identical replications on the terminals of those who have installed the related computer protocol.

Those who access and partake in the blockchain, which is open and freely accessible by anyone, can find information presented in numerical sequences which acquires value inasmuch as it is certain and basically unchangeable. This result is achieved via several levels of protection, the first of which is that altering a single block necessarily requires “reprogramming” the sequence of the entire chain, which is made even more difficult by the presence of cryptographic instruments.

The unchangeable nature of the individual blocks of information guarantees the reliability of transactions which are carried out by exchanging the blocks, without the need for an external entity to check or approve those transactions.

In this sense, it is clear why this technology has found widespread use in the field of digital currency: every transaction that is performed on the blockchain is registered in the individual blocks in full transparency, without fear of theft or manipulation.

Within this context, NFTs perform an additional function, which is to enable the transfer of this certainty – attributable to each individual block of the blockchain – to other digital contents, such as images, videos, and GIFs. Instead of exchanging something similar to a coin, which carries a certain value but may be exchanged with anything else, thanks to NFTs it is possible to transfer a good which is un-substitutable (for example, let us think of a collector’s item).

The advantage that such technology may have is evident, insofar as it eliminates the need to perform long checks for establishing the authenticity of information or digital content, especially if we consider the importance of digital databases managed by public entities.

For this reason, renown artists and other famous people have begun offering for sale on dedicated digital platforms their videos, artistic creations of various kinds and even mere tweets, all of which has been “transformed” into NFTs.

The feedback from the public has gone beyond any expectation, thereby generating great profits, in some cases even in the range of millions[1]. In exchange, purchasers have obtained ownership of those videos, images, and so on.

NFTs therefore appear to be introducing a new horizon of possibilities for the world of artistic production because they can guarantee in the digital world – which, by definition, is a world of identical copies subject to unlimited reproduction – the existence of a single original that remains unchangeable in time.

Also, thanks to NFTs content creators now have a source of revenue as well as an easy-to-use instrument that allows them to prove ownership over their works and, at the same time, to transfer the right of ownership to third parties.

A space in which NFTs are already used is that of online gaming, where players can buy weapons or other “unique” objects to be used or exchanged during gaming sessions. However, it is also reasonable to speculate a wider use of NFTs in the field of industrial property; for example, let us think about the possibility of using such instrument in order to prove the prior use of an industrial machine, thereby invalidating a third party patent and transforming in NFT the related YouTube video which would come to represent unalterable and unassailable evidence of the prior divulgation of the machine within the market.

That being said, there are some aspects surrounding NFTs that would need to be further analysed and kept into consideration.

Firstly, the authenticity and ownership of NFT content is in turn based on declarations of the interested parties, who in general should be the authors or at any hand the owners, or licensees, of the rights of economic exploitation over the work. Currently, there are platforms where users are asked to register and that enable the execution of transactions which guarantee transparency as to the actual ownership of contents, but in theory anyone could create an NFT that incorporates digital content belonging to someone else. There is no initial check on the actual ownership of the asset which the user intends to transfer via NFT and this is a circumstance that may lead to disputes concerning the property of the content being transferred.

Further clarification is also necessary with regard to the tax regime applicable to such instruments (especially as concerns the possible profits obtained via NFT sales) before they become a widespread tool in the creative sphere.

Finally, another point to be considered concerns the rights of consumers who, after having made a purchase, do not have the possibility of retracing their steps by exercising their right of withdrawal which is provided for distance purchases (including of course online purchases).

Once we set aside the euphoria – which at times has been mostly speculative – that has been brought about by these new instruments, in our view NFTs may represent a potential shift in our lives, especially with regard to all those services and goods that are premised and require a certification of authenticity of information and digital contents, such as ownership, origin, rights of temporary utilization.

However, in order for these instruments to be used on a widespread scale, it is necessary that – on the one hand – platforms introduce and guarantee an efficient system of checks as to the ownership of the transferred asset in order to avoid possible disputes, and – on the other hand – it is also necessary that the legislator intervene so as to provide for specific guarantees to protect purchasers (like the aforementioned right of withdrawal) and, in general, a coherent ad hoc regulatory system (which should include, among other things, a tax regime adapted to the nature of NFTs).

[1] A famous case is that of the artist Beeple, who sold via the auction house Christie’s his work “Everydays: The First 5000 Days” at a price exceeding USD 69 million, and that of Jack Dorsey, the founder of Twitter, who sold the first tweet in history at a price of USD 2,9 million.

Insight welcomes Caterina!

Our team continues to grow… we are excited to announce that Ms. Caterina Bo has joined our team as a trainee. She will deal with Intellectual property and Litigation.

Caterina participated in the 25th edition of the Willem C. Vis International Arbitration Moot as oralist on the merits of the case and is now junior coach of the University of Pavia team for the preparation of the written and oral phases of the competition.

She is also clerk assistant at the Court of Appeal of Milan, first division (Business division), where she assists the assigned judge in preparing for hearings and in the drafting of decisions.

For her complete profile click here.

Welcome on board Caterina!