Introduction

Non-fungible token (NFT) is a brand new application of blockchain technology, manifesting the prosperity of the digital economy. NFT is represented as a set of time-stamped metadata on the blockchain. The metadata, in the form of a specific URL link or a set of hash, has unique and permanent directivity with a digital file stored in a certain location in the network. Unlike Bitcoin and Ethercoin which are fungible in order to facilitate exchanges, every NFT is unique and identifiable, which can serve as a trustworthy certificate of authenticity or proof of ownership. The ownership of an NFT is recorded in the irreversible blockchain and can be transferred by the owner, allowing the NFT to be sold and traded. The digital contents traded through NFT platforms are usually works with originality under copyright law, including works of fine art, digital music, audiovisual works, etc. The work traded through NFT is called “NFT digital work” or “NFT digital collection”.

The global NFT market has witnessed rapid development since 2017 and experienced dramatic growth from 2020 to 2021: the trading of NFTs in 2021 increased to more than $17 billion, up by 21,000% over 2020’s total of $82 million. It is predictable that with the development of Metaverse, the emerging NFT market will continuously expand in the future. However, such a new transaction mode also presents significant challenges to the relatively lagging legal governance. In 2022, China’s first NFT copyright infringement decision (hereinafter “the first NFT case”) was handed down in Hangzhou Internet Court, attracting heated discussions over the legal characterization of the transaction of NFT digital work under the Copyright Law of the People’s Republic of China (2020 Amendment) (hereinafter Copyright Law (2020)).

Part I of this article will first highlight the core issue of the debate by identifying the stages in the NFT digital work transaction. A theoretical comparison of distribution and information network dissemination will be depicted in Part II. Part III will therefore illustrate that the sale of NFT digital works is more appropriate to be deemed as an act of distribution instead of information network dissemination. Part IV will further focus on the flaws of the judgment of China’s first NFT case. Finally, Part V will conclude the article and prospect the future of China’s copyright law legislation or interpretation.