The concept of smart contract predates the blockchain and was first presented in 1994 by Nick Szabo who defined it as ‘a computerized transaction protocol that executes the terms of a contract.’ The promise of automated execution has become even more alluring with the new generation of smart contracts, that are a collection of code and data (…) that is deployed using cryptographically signed transactions on the blockchain network.’ Indeed, these new smart contracts inherit all the features of the underlying blockchain infrastructure, including ‘the tamperproof nature (…) that anchors their automated execution.’ In a music copyright context, smart contracts could be used for several purposes, such as to automate the execution of a licence or as a form of digital rights management (DRM).
Whilst the use of blockchain-based smart contracts in copyright can be praised or criticised for a number of reasons, this article will assess their compatibility with a principle that we deem inherent to our legal system, i.e. the right to change one’s mind. Contract law is designed to recognise such a right. This can be inferred by the compensatory nature of damages pursuant to the theory of efficient breach, and the prevalence of damages over specific performance. Since smart contracts ‘prohibit or make more costly efficient breach,’ should their adoption be encouraged?
Please find the full text of the blog post at https://infolawcentre.blogs.sas.ac.uk/2019/10/16/blockchain-enabled-smart-contracts-copyright-licensing-and-the-right-to-change-ones-mind-guido-noto-la-diega-phd-fhea/