In today’s digital age, the copyright industry faces a formidable challenge: the scarcity of accessible avenues for resolving disputes, particularly those involving low monetary value which extend across international borders. Unlike corporate giants armed with ample legal resources, individuals and smaller entities often find themselves in a predicament. They face the challenge of pursuing legal action against infringing parties situated on distant continents, navigating international arbitration, or resorting to mechanisms like Content ID—each fraught with its own complexities.[1]
One promising development is the emergence of “decentralized dispute resolution” (DDR),[2] a facet within the field of alternative dispute resolution (ADR). DDR refers to a method of resolving digital disputes between private parties using blockchain-assisted technology and a decentralized set of decision-makers, as opposed to a centralized decision-making authority.[3] This innovation assists parties in resolving disputes arising out of “smart contracts”—programs that enable self-enforcing agreements built on blockchains.[4]
What sets DDR apart is its ability to remove the need for a central governing entity, such as YouTube’s Content ID or even courts (at least in the initial phases of dispute resolution). It transforms traditional justice, providing a more accessible and democratic means of resolving cases swiftly, reliably, and economically. One key application is in conjunction with the widely used “notice and takedown” process, where copyright holders request the removal of infringing content. A DDR intervention can enhance this process by offering impartial resolutions, particularly in cases of counter-notification.[5]
DDR and Copyright
DDR has the potential to effectively address issues concerning ownership, licensing, usage rights, and infringement of digital assets registered on blockchains. For instance, disputes over digital art ownership could benefit from the transparent and tamper-proof record-keeping that blockchain provides. Similarly, DDR could automate the resolution of licensing and usage disagreements using smart contracts, ensuring fairness based on predetermined terms. This approach extends to plagiarism and infringement claims, where the immutable ledger can serve as evidence of creation dates and precedence. It has also been claimed that its decentralized decision-making process minimizes bias and offers a neutral platform for resolving conflicts.[6] It should be noted, however, that beyond merely tracking copyrighted work,[7] DDR’s functionalities focus on actual dispute resolution and not just a storehouse for evidence.
Some leading examples of DDR platforms are Kleros and Aragon.[8] Kleros,[9] established in May 2017, was the first operational decentralized justice platform on the Ethereum blockchain. Kleros, based in France, follows a hybrid strategy targeting both blockchain-native and mainstream use cases. Aragon,[10] founded in February 2017, focuses on providing tools for creating DAOs. They launched their decentralized court in November 2019, inspired by Kleros’ work. The number of resolved disputes is undisclosed, but they have hundreds of jurors. Aragon’s court primarily serves DAOs within their ecosystem, particularly for resolving disputes on voting proposals.
Challenges in Decentralized Dispute Resolution
While DDR holds promise, it will only gain substantial traction in copyright enforcement when a substantial number of works are on blockchains—or when more people utilize blockchain-based platforms. It might be true that if all copyright materials are managed through blockchain technology, enforcement would be much easier. But the question is: what are the chances that this would happen soon? Perhaps if existing content creator platforms might adopt DDR, their dispute resolution mechanisms might be more satisfactory.
Also, even though DDR might ensure better dispute resolution, critics have called into question the question of how to ensure that the decentralized set of decision-makers (or “the crowd”) will make quality decisions. It has been found that crowd-judging could potentially suffer from two shortcomings: variability and bias.[11] This is a particularly important consideration in the context of copyright disputes, which often involve complex legal issues. Random selection may not guarantee that jurors have the necessary expertise to understand copyright laws, fair use, licensing agreements, and other related complexities. While a random selection process[12] can help avoid bias, it is vital to strike a balance between randomness and expertise. Ensuring that at least some jurors possess a background or knowledge in copyright law could enhance the fairness and quality of the verdict.
Further, DDR’s feature of being built specifically for the decentralized world might, at least on the face of it, sit well with the field of Dispute System Design (DSD)—as it seems to be focusing on “fitting the forum to the fuss”. At least, it considers the intricacies of decentralized environments and builds a system for it. Nonetheless, there is a need for a thorough assessment of the design of DDR platforms to ensure they are fair and just. Applying DSD principles to formulate policies that cater to the interests of stakeholders in DDR systems would be necessary as it would touch on questions of power and control over the design of these dispute systems.[13]
Lastly, it would be necessary to determine how DDR platforms would interact with legal systems.[14] For example, the European Union’s Copyright Directive requires Member States to ensure that users are provided with out-of-court redress mechanisms for the settlement of disputes. But it adds that users should also have access to a court or another relevant judicial authority to assert the use of an exception or limitation to copyright and related rights.[15] Given that DDR platforms complement the notice and takedown mechanisms of copyright and related rights, they are also bound by this.[16]
Conclusion
Given that the primary distinction between centralized dispute resolution, exemplified by platforms like YouTube’s Content ID, and decentralized dispute resolution lies in the power and control over the platform’s dispute design process, it becomes imperative for developers of DDR systems to prioritize the satisfaction and confidence of key stakeholders in the copyright industry. Striking a balance that ensures fairness, transparency, and effectiveness will be pivotal in garnering trust and support for these innovative decentralized solutions. This will not only pave the way for smoother dispute resolution but also foster a conducive environment for creativity and innovation within the digital copyright landscape.
[1] Mara Karagianni. “Software As Dispute Resolution System: Design, Effect and Cultural Monetization.” Computational Culture 7 (21st October 2019). http://computationalculture.net/software-as-dispute-resolution-system-design-effect-and-cultural-monetization/
[2] More particularly, it has evolved from Online Dispute Resolution, see: Amy Schmitz & Colin Rule, ‘Online Dispute Resolution for Smart Contracts’ (2019) 2019 J Disp Resol 103
[3] Yann Aouidef, Federico Ast, Bruno Deffains, “Decentralized Justice: A Comparative Analysis of Blockchain Online Dispute Resolution Projects”, Front. Blockchain, 16 March 2021, Sec. Blockchain for Good Volume 4 – 2021: https://doi.org/10.3389/fbloc.2021.564551
[4] Sims, Alexandra, Decentralised Autonomous Organisations: Governance, Dispute Resolution and Regulation (May 31, 2021). Available at SSRN: https://ssrn.com/abstract=3971228 or http://dx.doi.org/10.2139/ssrn.3971228
[5] Ennio Paolo Archila Valle, ‘Kleros and Copyright Disputes in Digital Environments’, Kleros Fellowship of Justice: Third Generation 2020
[6] Federico Ast, ‘Is Kleros a Fair Dispute Resolution System?’, Kleros: https://blog.kleros.io/is-kleros-a-fair-dispute-resolution-system/ accessed 21 September 2023.
[7] Such as how UJO’s application of blockchain and smart contracts is primarily focused on overseeing the music industry, specifically in distributing payments equitably among collaborators. Additionally, Chinese courts leverage a blockchain-based system to affirm ownership, generating a distinct electronic identifier for content and securely storing pertinent details like creation time, location, and creator identity.
[8] Paolo Archila, “Kleros and Copyright Disputes in Digital Environments”, Kleros, available: https://ipfs.kleros.io/ipfs/QmVpts6ZXSFYTQkUCWxJKJv75F3GhaehLAoJuJEpzWkLRh Accessed 21 September 2023
[9] https://kleros.io/ accessed 21 September 2023
[10] https://www.blockdata.tech/products/aragon-court accessed 21 September 2023
[11] Kwan, Alan & Yang, S. & Zhang, Angela. (2020). Decentralized Governance on Two-Sided Platforms: Crowdsourcing, Learning, and Debiasing. SSRN Electronic Journal. 10.2139/ssrn.3758359.
[12] An example of such random process can be found in Kleros. See Federico Ast, “Kleros, a Protocol for a Decentralized Justice System: Building a Judicial System for the Internet Age”: https://medium.com/@federicoast/kleros-a-decentralized-justice-protocol-for-the-internet-38d596a6300d accessed 21 September 2023
[13] Janet K. Martinez, Designing Online Dispute Resolution, 2020 J. Disp. Resol. () Available at: https://scholarship.law.missouri.edu/jdr/vol2020/iss1/10
[14] Sims, Alexandra, Decentralised Autonomous Organisations: Governance, Dispute Resolution and Regulation (May 31, 2021). Available at SSRN: https://ssrn.com/abstract=3971228 or http://dx.doi.org/10.2139/ssrn.3971228
[15] (70) DIRECTIVE (EU) 2019/790 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
of 17 April 2019 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC
[16] Paolo Archila, “Kleros and Copyright Disputes in Digital Environments”, Kleros, available: https://ipfs.kleros.io/ipfs/QmVpts6ZXSFYTQkUCWxJKJv75F3GhaehLAoJuJEpzWkLRh Accessed 21 September 2023
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