China: Hangzhou Internet Court issues ruling in case on NFT Copyright

On 20 April 2022, the Hangzhou Internet Court has issued a ruling in a case concerning platform responsibility for copyright infringements related to non-fungible tokens (NFT). In the case, the plaintiff had argued that a user of the platform operated by the defendant had minted and released for sale an NFT for which the plaintiff held exclusive copyright. The Court held that the defendant had failed to meet its duty of care to review content for potential copyright infringement, therefore aiding such infringement, ordering compensation of RMB 4'000. The Court discussed extensively the implications of the characteristics of NFTs for their treatment in copyright law. The Court clarified that NFT transactions involve the transfer of property. Platforms enabling NFT transactions bear a higher degree of responsibility than, for example, e-commerce or normal user-generated content platforms because they provide the technical means for, possess review capacities over, and directly profit from NFT transactions. Furthermore, the Court held that the exhaustion principle, limiting right holder control over individual copyrighted works after sale, does not apply to NFTs. Finally, the Court discussed possible means for platforms to combat infringements in such cases.