BLOCKCHAIN TECHNOLOGY AS A TOOL AGAINST INFRINGEMENT OF COPYRIGHTED PHOTOGRAPHY WORKS Analysis under Turkish Copyright Law

Deren DÖNGEL

BLOCKCHAIN TECHNOLOGY AS A TOOL AGAINST INFRINGEMENT OF COPYRIGHTED PHOTOGRAPHY WORKS Analysis under Turkish Copyright Law

Master’s Thesis Tilburg School of Law Tilburg University

AUTHOR: Deren Döngel SNR: 2027259

ANR: 352243 PROGRAM: International Business Law LL.M THESIS SUPERVISOR: Tommaso Crepax

DATE: June 6, 2019

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Table of Contents

1 INTRODUCTION ...... 4 1.1. Background ...... 4 1.2. Research Questions ...... 5 1.3. Significance ...... 6 1.4. Methodology ...... 7 1.4.1 Literature Review ...... 8 1.5. Outline ...... 10 2 DEFINING BLOCKCHAIN TECHNOLOGY ...... 12 2.1. What is Blockchain and How Does It Work? ...... 12 2.1.1 Transmission of request: ...... 13 2.1.2 Verification by the Nodes: ...... 13 2.1.3 Creation of the Block: ...... 14 2.1.4 Linkage to the Chain: ...... 14 2.2. Features of Blockchain Technology ...... 15 2.2.1 Distributed Database: ...... 15 2.2.2 Transparency: ...... 16 2.2.3 Immutability: ...... 16 2.3. Defining Smart Contracts ...... 17 3 BLOCKCHAIN TECHNOLOGY AS A TOOL AGAINST INFRINGEMENTS OF COPYRIGHTED PHOTOGRAPHY WORKS ...... 18 3.1. Copyright Infringements and Other Copyright-Related Problems in Photography Industry ...... 18 3.1.1 Infringement of Copyrighted Photography Works: Piracy, Theft and Unlicensed Usage...... 18 3.1.2 Other Copyright-Related Problems Triggering Copyright Infringement and Blockchain Technology as a Prevention Tool ...... 21 i. Copyright Registration ...... 22 ii. Content Distribution Network and Digital Rights Management ...... 26

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iii. Licensing ...... 30 4 BLOCKCHAIN TECHNOLOGY AND TURKISH COPYRIGHT LAW 34 4.1. Current Legal Situation under Turkish Copyright Law ...... 34 4.1.1 Main Sources of Turkish Copyright Law ...... 34 i. Turkish Codes and Regulations ...... 34 ii. International Texts and Treaties ...... 36 4.1.2 European Union Directives on Intellectual Property Rights ...... 37 4.1.3 Current Situation of Blockchain Technology under Turkish Copyright Law 37 i. Blockchain Technology and Copyright Registration ...... 38 ii. Blockchain Smart Contracts and Copyright Licensing ...... 38 iii. Cryptocurrencies in Copyright Licensing Payments ...... 40 4.2. Implementing the Blockchain Technology: Tech-Friendly Turkish Copyright Law ...... 41 4.2.1 Making General Regulations with regard to Blockchain Technology ...... 41 4.2.2 Amending Regulations and/or Codes ...... 42 4.2.3 Making Blockchain Technology Specific Regulations and Modifying Blockchain Technology ...... 43 5 CONCLUSION ...... 45 6 BIBLIOGRAPHY ...... 49

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1 INTRODUCTION

1.1. Background

Due to the era of the Internet and digitalization, many copyrighted works, such as songs, literature works and photographs are easily reached and used. On the one hand, it is good for the content creators because they can reach many more people and have the chance to share their works. However, on the other hand, because of the fact that such copyrighted works are this easily accessible, lots of people replicate, use and/or share such works by violating the copyright owners’ exclusive rights. This brings up to the problem of piracy, theft, in general, the copyright infringements. It is very hard not only for photographers but also for many other content creators to track whether their work is replicated or used without their permission. Blockchain technology, due to its very nature, may be the solution to this major problem in copyright law.

It is already possible to observe some examples of usage of blockchain technology in the field of copyright law. Eastman Kodak Company (“Kodak”) is a technology company having its headquarters in the United States of America and conducting business around the world. Despite conducting business in other areas, Kodak is mostly known for its role in photography and it has announced its intention for a blockchain technology based digital solution for the problem of infringement of copyrights on pictures. Kodak has announced that they will collaborate with WENN Digital to launch an image rights management platform that uses blockchain technology, namely KODAKOne. With this platform, it is aimed to create an encrypted, digital ledger of rights ownership for photographers. Such photographers can register their new and archived works and they will have the chance to license such photographs within this platform.1 KODAKOne platform also promises to continually crawl through the Internet, collect information on the usage of a photograph and check if there is a valid license.2 Through this web crawling, KODAKOne enables the monitoring and protection of the intellectual property rights of the images that are registered in this very platform. If an unlicensed usage is detected consequently to the web crawling, KODAKOne immediately contacts with the unlicensed user for him/her to make the required

1 Kodak (2018) Kodak and Wenn Digital Partner to Launch Major Blockchain Initiative and Cryptocurrency. https://www.kodak.com/TR/tr/corp/press_center/kodak_and_wenn_digital_partner_to_launch_major_blockchain_ini tiative_and_cryptocurrency/default.htm 2 Kodak (2019) KodakOne Image Managements Platform, available at https://kodakone.com/

4 payment or KODAKOne removes the photo from the website. This feature, which is enabled through blockchain and artificial intelligence distinguishes KODAKOne from the traditional photography platforms such as Flickr. Both professional and amateur photographers can create accounts and upload their photos to Flickr. However, Flickr offers much less than blockchain based KODAKOne in terms of copyright protection. Unlike KODAKOne, Flickr does not provide web- crawling service as a copyright infringement prevention method. Photographers are responsible to track their copyrighted works on their own. In the event that a photographer notices his/her copyright is infringed, such photographer should file and send a copyright infringement form to Flickr and should wait for Flickr’s response. If found appropriate, Flickr promises to remove such image3; however, it does not offer to provide a post-licensing process to reward photographers whose right has been infringed. On the other hand, Kodak offers a solution to this very rewarding problem by using the blockchain technology. Kodak wishes to create its own cryptocurrency, KODAKCoin. By creating KODAKCoin, Kodak aims to make the payment process faster and create a secured platform. The usage of such a photo centered cryptocurrency will indeed have advantages for the participating photographers. The photographers will not only be able to receive the respective payments faster, but also they will be able to preserve their controls over their intellectual property rights on this secured platform.

1.2. Research Questions

The underlying hypothesis for this Master’s Thesis is that blockchain technology could be a useful tool in solving the problem of copyright infringements in photography industry. Turkey is a country also struggling with copyright infringements in photography industry. It is not member to European Union; therefore, EU law is not a part of Turkish legal system. Turkey; however, has law and law packages for the harmonization with the European Union. Besides, blockchain technology is relatively a new topic in Turkey and its features have very recently started to be discovered.

The main research question is “What solutions can blockchain technology offer against infringements of copyrighted photography works under Turkish Copyright Law?”.

In order to discuss this subject, it is required to examine the current legal situation in Turkey. For the purposes of this Master’s Thesis, I will examine the legislations on copyright law in Turkey.

3 https://help.flickr.com/en_us/copyright-and-intellectual-property-policy-Hy9DcImP7

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While examining the current legal situation in Turkey, I will discuss and seek to address whether there are any limitations and/or prohibitions on the application of blockchain technology to the field of copyright law. Some legislations on copyright law within the European Union will also be covered in order to discuss whether they can be used as models to make the Turkish copyright law more technology friendly enabling the application of blockchain technology. Countries and zones that fall out of this scope will not be covered. The following sub-questions will be answered in this Master’s thesis:

 What is Blockchain Technology?  What are the general functions of Blockchain Technology?  Can blockchain technology be a tool in solving copyright infringements in photography industry?  What are the main problems triggering copyright infringements?  Which functions of blockchain technology offer solution to such problems and the problem of copyright infringements?  What is the current legal situation in Turkey with respect to copyright law?  What are the main sources of Turkish copyright law?  Is blockchain technology applicable under Turkish copyright law? Are there any limitations and/or preventions for the application of this technology?  What does Turkish copyright law need in order to enable the application of blockchain technology?

1.3. Significance

The aim of this Master’s Thesis is to indicate the solutions offered by the blockchain technology against the infringement of copyrighted photographs and to discuss whether the blockchain technology is applicable under Turkish copyright laws. For this purpose, this paper will seek to interpret Turkish copyright regulations and legislation vis-a-vis the implementation of blockchain technology. There is a gap in the existing literature in this respect. There are some research papers and articles on blockchain technology and copyright law; nevertheless, such research papers and articles do not make industry-specific analysis and do provide general information. This Master’s Thesis will contribute to the body of existing literature by providing detailed information on

6 blockchain technology, its solutions against the copyright infringements partaking in the photography industry, and its application under Turkish copyright law.

1.4. Methodology

This Master’s Thesis examines the role of blockchain technology in solving the problem of infringement of copyrighted photography works and its application under Turkish copyright law. My main hypothesis in this Master’s Thesis is that copyright infringements in photography industry can be prevented in a more convenient manner through the application of blockchain technology. Investigation of the research question required detailed analysis of various legal documents, which are not based on statistical or numerical data. In order to investigate the research question and employ reasoning for the hypothesis, qualitative method and doctrinal legal research method is applied in this Master’s Thesis. The relevant existing theory and information is found in secondary sources of official publications, research papers and some blogs. To find relevant literature, mainly 3 different databases were used; namely, Google Scholar, SSRN and Research Gate. The dates of the sources were taken into consideration especially while selecting relevant literature regarding blockchain technology, in order to access up-to-date knowledge and information. No literature on blockchain technology, that is written before year 2008 is selected. While conducting the literature search, several keywords and keyword groups such as the following have been used: blockchain, blockchain technology, application of blockchain to copyright law, blockchain and copyright law, blockchain and copyright infringements, smart licensing, copyright registration, Turkish copyright law, blockchain in Turkey. As a consequence of this research, related literature was selected.

Regarding general features of blockchain technology and smart contracts; (i) Akgiray (2018), (ii) Wright & De Filippi (2015), (iii) Iansiti & Karim (2017), (iv) Werbach & Cornell (2017), (v) D’Aliessi (2016), (vi) Rocis (2016), (vii) Nakomoto (2008) and (viii) Kalra, Goel, Dhawan & Sharma (2018) were the main selected secondary sources because they provide definitions, detailed explanations and solid information on the technology. Once the analysis of the general functions of blockchain technology is completed; mainly (i) La Diega & Stacey (2018), (ii) Savelyev (2017), (iii) Tresise, Goldenfein & Hunter (2018), (iv) Bodo, Gervais & Quintais (2018), (v) Finck & Moscon (2018), (vi) Guido Noto & James (2019) and (vii) Gürkaynak, Yilmaz, Yesilaltay & Bengi (2018) have been selected in order to investigate the solutions offered by the blockchain technology. These sources were appropriate and helpful in addressing the research question, since

7 they provide solid information and strong opinions on blockchain technology and its application to copyright law.

In order to assess the applicability of blockchain technology under Turkish copyright law, primary sources of (i) Turkish Code on Intellectual and Artistic Works numbered 5846, (ii) Turkish Code of Obligations numbered 6098, (iii) Regulation on the Recording and Registration of Intellectual and Artistic Works, (iv) Electronic Signature Law numbered 5070, (v) Regulation on Distance Contracts, (vi) Code on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions and (vii) International Agreements have been selected. Besides, (viii) European Parliament Resolution of 3 October 2018 on Distributed Ledger Technologies and Blockchain, and (ix) French PACTE Law (Loi PACTE) have been analyzed in order to be suggested as model regulations for Turkish copyright law so that it becomes more blockchain-friendly.

1.4.1 Literature Review

The following selected 8 literatures mainly examine the basic features of blockchain and demonstrate the advantages and drawbacks of blockchain technology’s application.

In the report developed by Akgiray (2018), basic concepts about blockchain technology has been introduced. The author stated that in many industries, blockchain models are already currently being developed and tested. By stating so, he has put an emphasis on the effects of blockchain on the finance industry. He examined the regulatory sphere and expressed that emergence of blockchain has already started to be evaluated and acted upon. However, the author puts a reservation on this issue by stating that due to its very own nature and requirement of enough technological knowledge, it will be a challenging issue for the regulators. Similar to Akgiray (2018), the article written by Wright and De Filippi (2015) has described the basic features of blockchain technology and examined its regulatory reflection. The authors argue that the widespread deployment of blockchain technology will, with their own words, lead to “expansion of a new subset of law” which they have termed as “Lex Cryptographia”.

As the next step, there is the subject of application of blockchain technology to the issues regarding copyright law. The article written by La Diega and Stacey (2018) provides assessment of the disruptive potential of blockchain technology on the legal sphere of intellectual property, particularly upon copyrights. La Diega and Stacey (2018) provided the advantages of this

8 distributed ledger technology and expressed their belief that this technology can contribute to the resolution of some of the problems of copyright law. By stating so, they emphasized 2 (two) major problems that are copyright registration and copyright infringement: First, blockchain can allow a copyright registration that is (i) tamper and censorship resistant, and also (ii) user and privacy friendly. Such form of registration will make the copyright registration process easier and desirable. Second, from a music industry perspective, blockchain can allow creation of global music database that is constantly updated so that finding and awarding the copyright owners will be easier. Such application will be beneficial against the copyright infringements. In the article of Savelyev (2017), the author provides advantages of blockchain application to copyright law. He addressed the features of blockchain enabling transparency in copyright ownership issues, mitigating risks of piracy on the Internet by providing more control over the digital copy of the work and by creating a market for digital content. Savelyev (2017) examined this subject from the licensing perspective and addressed the advantages of smart contracts and making payments by cryptocurrencies. Different from La Diega and Stacey (2018), Savelyev (2017) examined the challenges of the application of blockchain technology in depth. Some of these challenges are; the issue whether the copyrighted content should be stored on blockchain or off-chain, the requirement of adjusting the legal status of online intermediaries and finding the midpoint between the nature of copyright law and that of blockchain, which is immutable. Tresise, Goldenfein and Hunter (2018) have also addressed how copyright law will be affected by blockchain technology. By doing so, Tresise et al. (2018) emphasized 5 major areas of copyright law, which are very likely to be affected. These areas cover (i) the copyright registration process, (ii) licensing, (iii) digital rights management systems, (iv) exclusion of organizations for collective management, and (v) orphan works. They stated that blockchain will have a very important impact on the copyright systems’ development and their final statement supports the hypothesis asserted in this Master’s Thesis. In this Master’s Thesis, their approach towards copyright registrations, licensing and digital rights management will be supported by providing solutions thereto via blockchain technology and it will be explained how these problems are linked to the problem of copyright infringement. It will be explained how copyright infringement can be reduced and be overcome through solving these major problems. This paper will also further their findings within Turkish jurisdiction in terms of copyright law. Similarly, Bodo, Gervais and Quintais (2018) analyzed blockchain technology from the perspective of copyright law and concluded that blockchain technology may have significant effects on the

9 copyrighted works in the digital world. To continue, Finck and Moscon (2018) examined the contributions of blockchain technology to the copyright law by considering its challenges. The authors handle copyright law’s administration and enforcement from the perspective of blockchain technology, blockchain based smart contracts and computer coding. The authors provided information on the Digital Rights Management (“DRM”), which is basically defined as the soft and hardware defining, protecting and managing the rules for the access and usage of digital content such as texts, sounds and/or videos. Then, the authors made comparisons between DRM and blockchain technology in relation to the nature of copyright law. They discussed whether blockchain technology can be the new DRM. Finck and Moscon (2018) concluded that blockchain technology is not totally the new DRM; however, it will improve and develop the current situation.

Lastly, there is the topic of improving Turkish copyright law in a sense that it is more technology friendly and ready for the application of blockchain technology. The paper written by Gürkaynak, Yilmaz, Yesilaltay and Bengi (2018) discusses the potential legal status of blockchain and states that it does not have a legal definition yet. However, the paper does not provide suggestions for creating the legal ground for blockchain technology’s application to Turkish copyright law. Due to the fact that blockchain technology’s application to Turkish copyright law is a relatively new subject, the literature falls short in terms of whether the application of blockchain technology to the copyright laws of Turkey is possible and how the copyright laws of Turkey can be improved.

1.5. Outline

The chapters of this Master’s Thesis are as follows. In Chapter 2, blockchain technology will be discussed. The first section will give basic information on blockchain technology and its working principle. Then, the chapter will continue with the sections covering general functions of the blockchain technology and blockchain smart contracts so that an overall insight on this distributed ledger technology can be provided.

Chapter 3 will start by introducing blockchain technology as a tool in solving to the problem of copyright infringements in photography industry. Firstly, copyright infringements in photography industry will be briefly explained and exemplified. Then, the chapter will continue by other major problems triggering copyright infringements; namely (i) copyright registration, (ii) content

10 distribution and digital rights management and (iii) licensing. Solutions offered by blockchain technology against such problems will be covered in this section.

Moving forward to Chapter 4, this chapter will seek to answer the question whether blockchain technology is applicable under the copyright laws of Turkey. Firstly, the current legal situation under Turkish copyright law will be explained. This section will cover the main sources of Turkish copyright law and current situation of blockchain technology under such legislations. It will be assessed whether there are any limitations and/or preventions on the application of blockchain technology in the field of copyright law. Then, the chapter will be concluded by providing solutions for improving Turkish copyright law vis-à-vis the blockchain technology. European Parliament Resolution on Distributed Ledger Technologies and Blockchain and French PACTE Law will be referred to as models that can be adapted to Turkish copyright law by Turkish law-makers.

The Master’s Thesis will be concluded with the conclusion part under Chapter 5. This chapter will cover and summarize the general findings of this research.

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2 DEFINING BLOCKCHAIN TECNOLOGY

We are in the era of digitalization. The distributed ledger technology, which is more commonly known as the blockchain technology, has a crucial role in such digitalization. Blockchain has gained a lot of popularity and today, it is seen as the most life-changing innovation since the creation of the Internet by some authors.4 Blockchain technology is the core technology underlying cryptocurrencies such as Bitcoin, Etherium, Ripple and many more5 and Bitcoin was the cryptocurrency that initially led blockchain to gain popularity. Even though the blockchain technology gained its popularity after Bitcoin, today many people and companies are aware that is very likely for this technology to lead to reforms in many industries. In fact, it has already been started to be studied all over the world and alter the traditional business models of many companies. According to the seventh Technology Industry Innovation Survey (2018-2019) held by KPMG, one of the audit firms that is within the big four, 48% of the C-level executives believe that blockchain will change the traditional business models, where 31% remain neutral. With the better understanding of the technology, the neutral C-level executives may decide changing their traditional business models as well. As per the same survey, 41% (forty-one percent) of the respondents stated that blockchain technology is very likely to be implemented to their companies.6

2.1. What is Blockchain and How Does It Work?

There is not a commonly agreed definition for blockchain in the literature and multiple definitions are provided although having differences in details.7 In general, blockchain technology can be defined as a sort of Distributed Ledger Technology (“DLT”), which is a “distributed, shared and encrypted” database that stores information in an irreversible and incorruptible manner.8

4 Akgiray, V. (2018). Blockchain Technology and Corporate Governance – Technology, Markets, Regulation and Corporate Governance, OECD Directorate for Financial and Enterprise Affairs Corporate Governance Committee, p.3, available at http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/CA/CG/RD(2018)1/REV1&docLang uage=En 5 Tresise, A., Goldenfein J., & Hunter D. (2018). What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.1, available at https://ssrn.com/abstract=3227381 6 Survey available at https://assets.kpmg/content/dam/kpmg/us/pdf/2019/02/blockchain-tech-survey-2019- infographic.pdf 7 Aşan, H., & Avunduk H. (2018). Blockchain Teknolojisi ve İsletme Uygulamalari: Genel Bir Degerlendirme, Dokuz Eylül Universitesi İktisadi ve İdari Bilimler Fakültesi Dergisi 33, 369-384, p.373, available at https://iibfdergi.deu.edu.tr/index.php/cilt1-sayi1/article/view/746/pdf 8 Wright, A., & De Filippi, P. (2015). Decetralized Blockchain Technology and the Rise of Lex Cryptographia, p.2, available at https://ssrn.com/abstract=2580664

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Blockchain is a peer-to-peer (P2P) network, in which transactions are confirmed and ownerships are transferred by the computers in the network in a decentralized manner.9 In the most basic form, blockchain can be defined as a shared database of information. Any form of information can be recorded on a blockchain such as a transaction, transfer of money and ownership of digital assets. Once the recorded information (e.g. a transaction) is confirmed by the computers in the network, the record is bundled with other records into the block and then the blocks are added to the chain.10 The record is distributed across the users within the network and once it is shared, it cannot be deleted. Blockchain technology is tamper-evident.11 This means that besides being non-deletable, it is impossible to change the records in the ledger without being noticed by the other users. All changes made in the records are visible. In order to understand the blockchain technology, it will be useful to understand the way how the process works. Without using technical terms, the steps of a standard blockchain process can be explained as follows:

2.1.1 Transmission of request:

One of the users make a request for a transaction. This request is broadcasted to the related users within the P2P network.12 The details of the transaction and digital signatures of the parties are also included.

2.1.2 Verification by the Nodes:

Once the transaction is transmitted, the related users in the P2P network should verify the transaction by achieving a consensus thereon. The related users/computers within the network are called “nodes”. Nodes control the details of the transaction to make sure that it is a valid transaction.13

9 Akgiray, V. (2018). Blockchain Technology and Corporate Governance – Technology, Markets, Regulation and Corporate Governance, OECD Directorate for Financial and Enterprise Affairs Corporate Governance Committee, p.6, available at http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/CA/CG/RD(2018)1/REV1&docLang uage=En 10 Kakavand, H., De Sevres, N. & Chilton, B. (2017). An Analysis of Regulation and Technology related to Distributed Ledger Technologies, p.4, and p.8 available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2849251 11 Ibid, p.4 and p.6. 12 Crosby, M., Nachiappan, Pattanayak, P., Verma, S., & Kalyanaraman, V. (2015). Blockchain Technology – Beyond Bitcoin, Sutardja Center for Entrepreneurship & Technology Technical Report, p. 6, available at https://scet.berkeley.edu/wp-content/uploads/BlockchainPaper.pdf 13 Ibid, p.7 and p.8.

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2.1.3 Creation of the Block:

The transaction, which is verified and accepted by the Nodes are then bundled with the other related transactions and build a new block.

2.1.4 Linkage to the Chain:

In order to be linked to the chain, the node should solve a complex mathematical problem. So, the block that is to be linked to the chain should have the answer (i.e. a number, to be precise) to this very complex problem. The node solving the problem first, has the right to add the block to the chain. This process is achieved through a complex mixture of mathematical functions such as private/public key cryptography and hashing.14

Hashing is a concept where data as input is taken and some algorithms applied thereon. After this process, an output is generated. This output data is called the “hash”. Regardless of the size of the input data, the hash is always of the same size. For instance, the hash of an input data of an encyclopedia is of the same number of bits with that of a letter. The hash of the block is the linkage to the previous block in the chain.15 In other words, the hash of the added block also contains the hash of the previous block as a reference. Therefore, each block following one another will have the hash of the previous block.16 Thanks to this, the chain will be created. The chain will be more secure as more blocks are added thereto.

14 Crosby, M., Nachiappan, Pattanayak, P., Verma, S., & Kalyanaraman, V. (2015). Blockchain Technology – Beyond Bitcoin, Sutardja Center for Entrepreneurship & Technology Technical Report, p. 10, available at https://scet.berkeley.edu/wp-content/uploads/BlockchainPaper.pdf 15 D’Aliessi, Michele. (2016). Explaining Blockchain Technology in Simple Words, Medium, available at https://medium.com/s/story/how-does-the-blockchain-work-98c8cd01d2ae 16 Wright, A., & De Filippi, P. (2015). Decetralized Blockchain Technology and the Rise of Lex Cryptographia, p.7, available at https://ssrn.com/abstract=2580664

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2.2. Features of Blockchain Technology

The blockchain technology has started to be applied in many different industries due to its unique features. Such features distinguish the blockchain technology from the technologies that have been previously used. The most important characteristics of blockchain technology are as follows17:

2.2.1 Distributed Database:

As explained above, blockchain technology is a distributed database. The database is shared with all users within the network and they all have access to this entire database. The information within this database is therefore not controlled by a single central authority.18 Due to this characteristic, blockchain technology is decentralized. This has many advantages. With blockchain technology, not only a special user but all users within the network have access to the stored information. Thanks to the P2P nature of the blockchain technology, they have the chance to interact with another user without using an intermediary.19 This situation is just the opposite for the centralized networks. In a system where the information is stored in a centralized manner, one should interact with this central authority in order to obtain the information. Due to this centralized nature, the central authority has the ability to censor20 and besides, the stored information can be lost much easier. Therefore, the whole system is much risker. For instance, the central database may be easily targeted by hackers or the system of the central database may break down.21 Both of these cases may result in the loss of stored information. On the other hand, decentralized characteristic of blockchain technology eliminates this risk to a great extent. This will bring us to other important characteristics below.

17 Rosic, A. (2016). What is Blockchain Technology? A Step-by-Step Guide for Beginners, available at https://blockgeeks.com/guides/what-is-blockchain-technology/#Blockchain_Explained 18 Iansiti, M. & Karim R. L. (2017). "The Truth about Blockchain." Harvard Business Review 95, no. 1 (January– February 2017): 118–127, available at https://hbr.org/2017/01/the-truth-about-blockchain 19 Aşan, H., & Avunduk H. (2018). Blockchain Teknolojisi ve İsletme Uygulamalari: Genel Bir Degerlendirme, Dokuz Eylül Universitesi İktisadi ve İdari Bilimler Fakültesi Dergisi 33, 369-384, p.374, available at https://iibfdergi.deu.edu.tr/index.php/cilt1-sayi1/article/view/746/pdf 20 Crosby, M., Nachiappan, Pattanayak, P., Verma, S., & Kalyanaraman, V. (2015). Blockchain Technology – Beyond Bitcoin, Sutardja Center for Entrepreneurship & Technology Technical Report, p. 9, available at https://scet.berkeley.edu/wp-content/uploads/BlockchainPaper.pdf 21 Rosic, A. (2016). What is Blockchain Technology? A Step-by-Step Guide for Beginners, available at https://blockgeeks.com/guides/what-is-blockchain-technology/#Blockchain_Explained

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2.2.2 Transparency:

All verified transactions together with their values can be seen by any person having access to the system22. This enables a much greater transparency than a system, where the transactions are recorded and kept by a central authority. Moreover, the blockchain system protects privacy as well while enabling this level of transparency. Each node in the network has a complex alphanumeric address, which consists of more than 30 (thirty) characters. Each user is identified by these addresses. It is on the users’ discretion not to disclose their identities or to prove it to the other users. Transactions take place between these addresses .23

2.2.3 Immutability:

As explained under Section 2.1.4, each block has a unique code that is called hash. Each block’s hash contains the hash of the previous block and through this way, the blocks are linked. The blockchain technology acquires the characteristic of being immutable thanks to this hash function. As a characteristic of blockchain technology, immutability means that the records cannot be changed once a transaction is entered in the blockchain database. Any change in the input will lead to a change in the hash of that block.24 The altered block will have a new hash. Due to the fact that the latter block contains the hash of the previous block, the hash of the tampered block will no longer match with the hash of the latter block. This means that the blocks are no longer chained. With the change in the hash and the broken chain, the other users within the network will be able to understand that some data in that particular block is tampered with. One could only alter the records without being detected by keeping the blocks chained to each other. This means that if one made a change in a block, he had to change the hashes of each block following the altered block until the end of the chain. It is not impossible to alter the records; however, it is obviously not practical.25 In theory, we may say that a person having very strong computational abilities can achieve this. However, computation of the hashes of each and every following block before the

22 Iansiti, M. & Karim R. L. (2017) "The Truth about Blockchain." Harvard Business Review 95, no. 1 (January– February 2017): 118–127, available at https://hbr.org/2017/01/the-truth-about-blockchain 23 Iansiti, M. & Karim R. L. (2017). "The Truth about Blockchain." Harvard Business Review 95, no. 1 (January– February 2017): 118–127, available at https://hbr.org/2017/01/the-truth-about-blockchain 24 Savelyev, I. A. (2017). Copyright in the Blockchain Era: Promises and Challenges, p.10, available at https://ssrn.com/abstract=3075246 25Nakomoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System, available at https://bitcoin.org/bitcoin.pdf

16 other users is very impractical. Therefore, it is true to say that the blockchain technology is immutable and the chains including more blocks is even more immutable and secured.

2.3. Defining Smart Contracts

“Smart contracts are self-executing digital transactions using decentralized cryptographic mechanisms for enforcement”.26 In simple words, smart contracts are agreements and their executions are automated. Smart contracts do not need to represent legal contracts, however, they can use computer codes to represent legal contracts.27 This code transforms legal text into an executable program.28 The automatic enforcement function differentiates smart contracts than regular electronic agreements and it is generally achieved through the code run by a computer. As soon as the computer detects that the requisites have been fulfilled, it automatically executes the computable contract. Since the smart contracts are backed up by blockchain technology, they are immutable. It is not possible to make changes after the smart contract is executed29, unless there is no self-destruction option. Self-destruction option grants the owner of the contract the ability to destroy the contract and remove it from the blockchain. When the smart contract is self-destructed, the balance is re-sent to the other party of the transaction.30 The main objectives of a smart contract are to execute and fulfill the contractual terms (e.g. payment, confidentiality, lien) and to minimize the role of trusted intermediaries.31 Besides, Bitcoin or other types of cryptocurrencies can be used in smart contracts, which is of the ability to simplify and accelerate the money transfers and tractions to be made on blockchain based platforms. Smart contracts can; therefore, promote authoritative and automated copyright licensing systems.32 Moreover, they can play a role in solving the problem of copyright infringements.

26 Werbach, K. & Cornell, N. (2017). Contracts Ex Machina, 67 Duke Law Journal 313, in abstract and p.108, available at https://ssrn.com/abstract=2936294 27 Tresise, A., Goldenfein, J., & Hunter, D. (2018). What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.3, available at https://ssrn.com/abstract=3227381 28 Raskin, M. (2017). The Law and Legality of Smart Contracts (September 22, 2016). 1 Georgetown Law Technology Review 304, p.313 and p.321, available at https://ssrn.com/abstract=2959166 29 Werbach, K., & Cornell, N. (2017). Contracts Ex Machina, 67 Duke Law Journal 313, p. 119, available at https://ssrn.com/abstract=2936294 30 Kalra, S., Goel, S., Dhawan, M. & Sharma S.,(2018) ZEUS: Analyzing Safety of Smart Contracts, p.4, available at http://pages.cpsc.ucalgary.ca/~joel.reardon/blockchain/readings/ndss2018_09-1_Kalra_paper.pdf 31 Werbach, K., & Cornell, N. (2017). Contracts Ex Machina, 67 Duke Law Journal 313, p.118, available at https://ssrn.com/abstract=2936294 32 Tresise, A., Goldenfein, J., & Hunter, D. (2018).What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.3, available at https://ssrn.com/abstract=3227381

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3 BLOCKCHAIN TECHNOLOGY AS A TOOL AGAINST INFRINGEMENTS OF COPYRIGHTED PHOTOGRAPHY WORKS

Copyright is a form of intellectual property law33 and it has 2 (two) important features for the artists: It (i) enables the artists to make money and profit from their works, and (ii) creates a protection mechanism against infringements. Therefore, copyright under intellectual property law plays a great role for content creators. However, there are many problems with regard to copyright infringements and the methods used under current traditional system fall short in preventing them.

3.1. Copyright Infringements and Other Copyright-Related Problems in Photography Industry

3.1.1 Infringement of Copyrighted Photography Works: Piracy, Theft and Unlicensed Usage

Copyright protection is essential for an enhanced creative world. Content creators are provided recognition and the opportunity to make money from their works through copyrights. This gives an incentive to and encourage the content creators to produce more and keep contributing to the world of art and creativity. Content creators would confidently publicize their works and would not worry about piracy, unlicensed usage or theft in a system, which offers strong copyright protection. Ultimately, this would increase the number of creative works, the accessibility to and enjoyment of such works, which in general enhance and contribute to the culture.34

However, the current situation is different from this ideal scenario. Piracy and generally, infringement of rights are the biggest problems affecting photography, visual arts, music and film industries. There are different types of copyright infringements and the nature of the copyright infringement varies from industry to industry.35 According to a study held by European Union

33 Field, T. G. (2012). Fundamentals of Intellectual Property: Cases & Materials, p. xxiii, available at https://ssrn.com/abstract=1172142 34 https://www.eucopyright.com/en/why-protect-copyright 35 Luo, H. & Mortimer, H. J. (2016). Copyright Infringement in the Market for Digital Images, American Economic Review, American Asscociation 106(5), 140-145, p.1, available at https://pdfs.semanticscholar.org/9d49/240d70521c5225c38f853dfb2705298d65e6.pdf

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Intellectual Property Office in 2014, 5.2% of the revenue lost by the recorded music industry is due to piracy. Direct sales lost by the sector because of piracy was €170 million in 2014. Besides the direct loss of sales in the recorded music industry, the study indicates that other sectors of the EU economy, including creative arts, are also affected. The direct and indirect effect of lost sales because of piracy was reported as €336 million.36 European Intellectual Property Office and Organization for Economic Co-operation and Development held a broader empirical analysis of the infringement of intellectual property, including information on global trade in counterfeit and pirated products in 2018.37 For the visual arts and photography industries on the other hand, the copyright infringements mostly hinge on rights of use and theft. Too many photographs are taken and made digitally available every day and it is very easy for the internet users to use such photos without obtaining the permission of the photographer. Photos and images are great tools for illustration; therefore, many people and companies are using them for their personal or business uses. Notwithstanding, the vast majority of the photos and images shared on the web are used without a license. In such unlicensed usage circumstances, disputes may arise between the copyright holders and unauthorized users. However, tracking unlicensed usages and pursuing lawsuits for royalties require money and time. Therefore, the cost and time-intensive nature of such procedure is not helping the photographers protecting their copyrights. Moreover, this is the scenario when the copyright holders are able to pursue infringement lawsuits against the unauthorized users. Many photographers are not even aware that their works are being illegally used.

Signing up to a social media platform is generally free of charge and allow the platform users to upload and share their photos with so many people. Therefore, many photographers prefer having such a social media account. However, keeping track of the users is very difficult for the copyright holders in the era of Internet and social media38, and intensive usage of social media platforms

36 EUIPO, The Economic Cost of IPR Infringement in the Recorded Music Industry, available at https://euipo.europa.eu/tunnel-web/secure/webdav/guest/document_library/observatory/resources/research-and- studies/ip_infringement/study7/Music_industry_en.pdf 37 EUIPO Observatory and OECD, Trade in Counterfeit and Pirated Goods – Mapping the Economic Impact, available at https://euipo.europa.eu/tunnel- web/secure/webdav/guest/document_library/observatory/documents/Mapping_the_Economic_Impact_study/Mappin g_the_Economic_Impact_en.pdf 38 Guido Noto, L. D. & James, S. (2019). Can Permissionless Blockchains be Regulated and Resolve Some of the Problems of Copyright Law?, in Massimo Ragnedda and Giuseppe Destefanis, Blockchain and Blockchain and Web 3.0: Social, Economic, and Technological Challenge (Routledge 2019), p.15, available at https://ssrn.com/abstract=3296888

19 makes identifying the unauthorized users even harder. Signing up to a social media site may lead to further copyright infringements, since most social media platforms oblige the copyright holders to grant a royalty-free license. For instance, Pinterest is a social media site allowing its users to upload photos.39 Pinterest’s terms of service state that the copyright holder will continue holding the copyright on the uploaded photos; however, by signing up to Pinterest and agreeing the terms, the copyright holders agree to grant Pinterest and its users “a non-exclusive, royalty-free, transferable, sub-licensable, worldwide license to use, store, display, reproduce, save, modify, create derivative works, perform, and distribute his/her User Content on Pinterest solely for the purposes of operating, developing, providing, and using Pinterest”.40 Therefore; once a copyright holder signs up to Pinterest, he/she gives Pinterest to use the posted copyrighted photograph on its site without making any payment in return for this use. Besides, other members of Pinterest are granted with the right to use, save and modify the photograph as well. One of these members can save the photograph then post it on another social media platform. Another person seeing this photo can save it, modify it and post it on another social media platform and this may continue onwards. This would make it even harder for the copyright holders to track the usage of their photographs. The end-users would reasonably expect that the copyright holders could not take legal action, since they could not track the unauthorized usage of the photograph and would be encouraged to use the photographs illegally.41

Blockchain technology, through its decentralized and immutable nature, can offer alternative solutions to the photographers and be a tool in preventing the copyright infringements taking place in the photography industry. A blockchain based platform could allow the professional photographers to register their photos to this very platform and provide proof for their ownerships. Due to the fact that the blockchain technology has an immutable nature, these proofs of ownership could not be revoked after being registered. The blockchain technology could be strengthened by artificial intelligence and provide a “web-crawling” system, which searches thousands of web pages around the world and collects information on the usage of the photograph. This would allow

39 Pinterest is a social media platform allowing users to upload and share photos and images related to goods, services, fashion, recipes, travel and so many other topics. The platform allows browsing images and photos that have been posted by other users. 40 https://policy.pinterest.com/en/terms-of-service 41 Guido Noto, L. D. & James, S. (2019). Can Permissionless Blockchains be Regulated and Resolve Some of the Problems of Copyright Law?, in Massimo Ragnedda and Giuseppe Destefanis, Blockchain and Blockchain and Web 3.0: Social, Economic, and Technological Challenge (Routledge 2019), p.16, available at https://ssrn.com/abstract=3296888

20 to have a control mechanism to identify the unlicensed usages. Besides, these platforms could provide a very strong rights management system thanks to the blockchain smart contracts. Copyright holders would have the chance to manage their rights on the photos freely. They would manage the licensing process with full authority and control, whilst keeping whole royalty payments to themselves. Apart from web-crawling and strong rights management system, the blockchain technology enables these platforms to create their own cryptocurrencies. Making the royalty payments and payments for other transactions to be made on the platform in cryptocurrencies would accelerate the payment processes and cut the charges made by the middle- men. Such platforms could create a blockchain-based accounting and payment system, which saves all information associated with accounting and payment on the blockchain. 42

Through these functions, blockchain technology and blockchain smart contracts are promising a better photography industry. The photography industry could be invulnerable against the copyright infringements and could become much fruitful and stronger.

3.1.2 Other Copyright-Related Problems Triggering Copyright Infringement and Blockchain Technology as a Prevention Tool

Blockchain technology is very likely to affect the legal sphere of intellectual property43, especially copyright through its distinctive features. In order to examine the advantages offered by blockchain technology to the photography industry, it is better to indicate some of the major problems of copyright law, which trigger copyright infringements. The features of blockchain technology explained under Section 2.2 can offer solutions to these copyright-related major problems with regard to copyright registration, digital rights management and licensing. It would be beneficial to explain how these problems trigger copyright infringements and determine how blockchain technology can be used as a tool against the copyright infringements especially the ones taking place in the photography industry.

42 Kodak (2019) KodakOne Image Managements Platform, available at https://www.kodakone.com/ 43 Guido Noto, L. D. & James, S. (2019). Can Permissionless Blockchains be Regulated and Resolve Some of the Problems of Copyright Law?, in Massimo Ragnedda and Giuseppe Destefanis, Blockchain and Blockchain and Web 3.0: Social, Economic, and Technological Challenge (Routledge 2019), p.17, available at https://ssrn.com/abstract=3296888

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i. Copyright Registration

Copyright is an exclusive right that is automatically and immediately assigned to the creator with the creation of the work. To put it into words in relation to the photography industry, a photographer automatically acquires the copyright to that particular photo right at the moment he/she takes the photo; unless the photo is taken for somebody else under a legal arrangement (e.g. employment). The characteristic of automatic entitlement to copyright originates from the Berne Convention, which is a multilateral treaty and undersigned by all member states to the European Union as well as Turkey.44 The Convention provides that the creators can use and exercise the copyright and related rights on their works without being subject to any formality.45 According to the language of the Convention, formalities include copyright registrations. This means that a creator can claim protection for his/her work in member states without the requirement of a registration.46 Many people are not even aware that photographs are copyrighted; therefore, it has been common for many long years to attach a copyright notice (in the form of © with the year of creation of the work or with the statement of “all rights reserved”) to the work in order to inform that the work is copyrighted and to deter people from infringing copyrights.47 However, attachment of such a copyright notice to the work unfortunately do not have a deterrent effect in practice, especially when the photograph is distributed online. Another person may use a copyrighted work without getting the permission of the copyright owner. In such cases, the copyright owner has the right to take legal action, go to court or seek other remedies. It is important to express that even if there is no copyright notice attached to the photograph, the copyright holder can still seek judicial intervention. This attachment is not a pre-requisite for taking legal action. The person using the copyrighted photograph without authorization can be found liable in the event of a copyright infringement, despite believing he/she was not infringing and being in good faith. In such litigation processes; however, the copyright owner has to prove that he is rightfully the true copyright owner. Registration of copyright becomes very important in this part. Registration certificate including the date and time of creation can be served as an evidence of ownership to the court. There are different

44 Berne Convention for the Protection of Literary and Artistic Works 45 See Berne Convention, Article 5(2) 46 Dombkowski, C. (2013). Simultaneous Internet Publication and the Berne Convention, 29(4) Santa Clara High Tech. Law Journal 643, p. 647, available at https://digitalcommons.law.scu.edu/cgi/viewcontent.cgi?article=1571&context=chtlj 47 Gibson, J. (2005). Once and Future Copyright, Notre Dame Review, Vol. 81, 168-242, p.207

22 options for voluntary registration system in some member states. Such options include deposit with a notary public, IP offices (e.g. Benelux Office of Intellectual Property in the Hague), various public and private institutions, online registration or individual measures such as adding a note or sending himself/herself an e-mail, or sending and receiving a self-addressed letter containing the work by registered mail.48 However of course, none of these methods are free of charge. The private and public institutions including notaries public and the online registration companies require payments. Many of the online registration companies demand a monthly subscription fee, or at least a one-time fee for subscription and opening of an account. The creators, who want to have an evidential-document for their own work, have to make a payment for this. Besides not being free of charge, the options other than registering with the online registration companies are time consuming. These issues are burden for the creators and may discourage them from registering their copyrighted works. In the end, they are very likely to have troubles in proving their true copyright ownerships in the event of a litigation. Moreover, the Berne Convention is binding upon all undersigned states, yet the member states can regulate the intellectual property rules under their national laws. This causes registration requirements vary among different countries. This makes the copyright registration an inefficient protection method against copyright infringements, since the Internet enables unauthorized usage regardless of the borders of the countries and goes much beyond. In other words, the copyright infringements in the Internet world has a multi-jurisdictional nature.49 In this respect, the traditional copyright registration methods fall short as a protection mechanism. This is the situation especially for the photography industry, when it is considered that the illegal downloading and using of copyrighted photographs are mostly executed through the internet.

Blockchain can be a tool in preventing the problem of copyright infringements by improving the copyright registration system. Blockchain based registration systems would allow creation of a system that is public, easily accessible and international by going beyond the borders of countries. A blockchain based registration system would not be complicated and based on a proof of work model. The copyright holders of the digital works can add their works, including the details of the

48 EU Intellectual Property Office, Consumers’ Frequently Asked Questions on Copyright, Summary Report, https://euipo.europa.eu/tunnel- web/secure/webdav/guest/document_library/observatory/documents/div/FAQs%20on%20Copyright,%20Summary% 20Report%20January%202017.pdf 49 Tresise, A., Goldenfein, J., & Hunter, D. (2018)., What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.4, available at https://ssrn.com/abstract=3227381

23 right holder and details directly in relation to the creation of work such as the time and place of existence of their work50 to the block. Blockchain technology can provide a time-stamped record of the copyrighted work’s conception, use and qualification requirements.51 In other words, the digital formatted copyrighted work can be timestamped and digitally fingerprinted. The content storage on blockchain is not fully developed yet and it has some problems, especially when the network consists of many users with increasing transactions amounts. The users of the system are also the nodes in the blockchain and the size of the data created would be very big, since each of the nodes need to store massive amounts of data.52 However, the current block sizes have limited capacity and this brings the question whether the works are going to be stored off-chain.53 This is a more technical question, which is not going to be discussed in depth in this paper; however, one issue should be kept in mind. Due to the limited capacity of the blocks, the work itself is not stored on the blockchain, but its fingerprint (i.e. hash). Thanks to the hashing, the fingerprint can be used as an evidence in litigation processes regarding copyright infringements. It is important to make a reservation here. As explained under Section 2.2.3, any change in the input will lead to a change in the hash. Therefore, there is still the risk that one can make a very small change (e.g. changing one pixel of the photograph), have a totally different hash and register almost the exact photograph in his/her own name. The blockchain system is not developed enough yet to identify such bad- faithful actions. However, many more people would likely to register their photographs due to blockchain registry system’s cost-effective and easy nature. Therefore, even if someone makes such a little change and register it on blockchain under a different hash, the copyright owner of the original photograph would already likely to be a registrant and gain a significant advantage. In such a situation, the original photograph’s copyright owner would have the chance to demonstrate that he/she has already registered the photo having exactly the same characteristics and this can be a strong indicator to the court that the second registrant has acted in bad-faith. When compared to traditional registration methods, many copyright owners are suffering from copyright

50 Tresise, A., Goldenfein, J., & Hunter, D. (2018). What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.5, available at https://ssrn.com/abstract=3227381 51 Finck, M. & Moscon, V. (2019). Copyright Laws on Blockchains: Between New Forms of Rights Administration and Digital Rights Managements 2.0, ICC International Review of Intellectual Property and Competition Law 50(1), 77-108, p.97, available at https://link.springer.com/content/pdf/10.1007%2Fs40319-018-00776-8.pdf 52 Gurkaynak, G., Yilmaz, İ., Yesilaltay, B., & Bengi, B. (2018). Intellectual Property Law and Practice in the Blockchain Realm, Computer Law & Security Review 34, 847-862, p.860, available at https://ssrn.com/abstract=3285287 53 Savelyev, I. A. (2017). Copyright in the Blockchain Era: Promises and Challenges, p.12, available at https://ssrn.com/abstract=3075246

24 infringements and cannot prove their true copyright ownerships due to lack of registration certificates. Blockchain can reduce the number of suffered copyright owners. It should always be considered that blockchain is in its infant stages now; however, in future it can be backed up with artificial intelligence and the platform can automatically identify the photographs that are suspiciously similar to another.

Apart from digital timestamping and fingerprinting, blockchain technology offers another major advantage. A blockchain-based registration system is capable of eliminating different de-facto registration applications among different countries and unifying such applications under one umbrella. Thanks to blockchain, an international registration system could be created. This means that when a user wants to use a copyrighted work, a photograph, he/she can easily and quickly check the availability of the photograph for use, as well as the photographer’s details and the origin of the photograph, regardless of the jurisdiction in which the photograph is taken.54 Moreover, permissionless blockchain does not have a single point of failure. This means that even if a couple of nodes failed, the network would still continue to function because the hashes of the photographs are kept by all nodes. For example, if a photographer deposits his/her photograph for registration and the government wants to take the photograph down for censorship purposes, this would not be practically possible.55 Even though the photograph itself is to be stored off-chain, the hash of the photograph would be stored on the blockchain and the photograph could still be accessible by the users. Therefore, a permissionless blockchain based copyright registry system would be resistant to censorship as well.

From the legal point of view, such a blockchain based voluntary registry system would not breach the Berne Convention while providing the advantages granted by the traditional copyright registration system in terms of evidence against copyright infringements in litigation processes. Besides, it would prevent the traditional system’s disadvantages associated with being costly, being

54 Tresise, A., Goldenfein, J., & Hunter, D. (2018). What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.6, available at https://ssrn.com/abstract=3227381 55 Guido Noto, L. D. & James, S. (2019). Can Permissionless Blockchains be Regulated and Resolve Some of the Problems of Copyright Law?, in Massimo Ragnedda and Giuseppe Destefanis, Blockchain and Blockchain and Web 3.0: Social, Economic, and Technological Challenge (Routledge 2019), p. 14, available at https://ssrn.com/abstract=3296888

25 vulnerable against censorship and falling short in providing a protection mechanism against copyright infringements.56

ii. Content Distribution Network and Digital Rights Management

Content distribution networks (“CDN”) are of great importance for intellectual property and artistic world, since such networks allow the users to access all kinds of works created. CDN refers to group of servers, which are geographically distributed and do work together in order to deliver the web content faster. In other words, CDN distributes the content of the web-page among a network of high-speed servers and it delivers the content from the server whose location is the closest to the user visiting the website. Therefore, one of the main functions of a CDN is to enable fast transfer of assets that are required for loading Internet content, including images.57

CDNs use digital rights management (“DRM”) systems in order to manage digital content rights of the users.58 DRM systems are technologies that are employed as protection mechanisms against infringements of copyrighted materials in digital form, which covers any digital asset including photos. DRM systems are generally varied and connected. They try to control the digital distribution chain from the copyright holder to the user in order to secure the copyrighted digital material. For this purpose, DRM systems mostly have an identifier and metadata that identifies the content, the provider, the terms to be accepted by the users for access to and usage of the respective digital material.59 It has many examples such as Netflix, Spotify, iTunes and EXIF.co. Although it is not as famous as Netflix or Spotify, EXIF.co is an example of a service provider using DRM to protect copyrights on photographs. It enables people to see the photographs but does not allow them to access, unlike the Internet server. It aims to prevent the photo to be downloaded, copied or shared. After the photographer uploads his/her photographs to EXIF.co, the server creates a copy of the central part of the photograph in a secondary file. Then, it replaces the copied part in the original photograph by a black caption indicating the text “EXIF.co/Name_of_photographer”.

56 Guido Noto, L. D. & James, S. (2019). Can Permissionless Blockchains be Regulated and Resolve Some of the Problems of Copyright Law?, in Massimo Ragnedda and Giuseppe Destefanis, Blockchain and Blockchain and Web 3.0: Social, Economic, and Technological Challenge (Routledge 2019), p. 15, available at https://ssrn.com/abstract=3296888 57 https://www.cloudflare.com/learning/cdn/what-is-a-cdn/ 58 Rinaldi, J. (2018). Peer to Peer Digital Rights Management Using Blockchain, University of the Pacific, Thesis, p.9, available at https://scholarlycommons.pacific.edu/cgi/viewcontent.cgi?article=4135&context=uop_etds 59 Tresise, A., Goldenfein, J., & Hunter D. (2018). What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.6, available at https://ssrn.com/abstract=3227381

26

EXIF.co gives its users a code, which is to be added on the html pages in order for the photograph to be displayed. Such code includes the identification of the photograph and a URL, where one can find the java script. The script runs on the browser and controls the web page’s domain name. Actually, the photographer may indicate a certain list of web pages, where his/her photos can be displayed. In such a case, there is no purpose to put the code in web pages other than the ones listed by the photographer, since the java script will break. The script displays the photograph with the caption, as well as the central part of the photograph over the black caption stating that the original photograph is restructured on the computer screen. An information button is also provided and it includes the metadata. When the web browser is left, the central part of the photograph ceases to be displayed. Therefore, this feature prevents the photographs to be copied by taking screenshots. However, this can be overcome by using taking a screenshot with a timer and reloading the web page during this time lapse. Then, one can copy the full photograph without the caption even though the resolution is not very good.60

Although DRM systems are, in theory, designed to assist the copyright owners in protecting their digital formatted works by preventing or allowing access thereto in specific circumstances set by the copyright holder,61 the situation in practice is different. DRM systems cannot fulfill such duties. Users believe that DRM systems are problematic and do not work properly as designed.62 First of all, they are costly and it requires time to develop and put into use.63 The amount to be paid varies according to the type of the service provider (e.g. Netflix is more expensive than EXIF.co); however, an amount has to be paid to most of these providers in order to benefit from the service they provide. Besides, as it can be seen in the EXIF.co example, the original photograph is altered. Although the photograph is eventually restructured, the current DRM system cannot prevent the infringement of the copyrighted photographs separately and need to perform actions such as creating a copy of the original photograph and replacing a part of the original photograph with a text. Secondly, DRM systems do have a single point of failure; therefore, they are volatile against

60 https://imatag.com/en/blog/2017/06/14/comparing-two-drm-photos-web-pixelrights-vs-exif-co/ 61 Bodo, B., Gervais, D., & Quintais, J. P. (2018) Blockchain and Smart Contracts: the missing link in copyright licensing?, International Journal of Law and Information Technology 26(4), 311-336, p.332, available at https://academic.oup.com/ijlit/article/26/4/311/5106727 62 Cory, D. (2017). DRM’s Dead Canary: How We Just Lost the Web, What We Learned from It, and What We Need to Do Next, Electronic Frontiers Association, available at https://www.eff.org/deeplinks/2017/10/drms-dead-canary- how-we-just-lost-web-what-we-learned-it-and-what-we-need-do-next 63 Tresise, A., Goldenfein, J., & Hunter, D. (2018). What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.7, available at https://ssrn.com/abstract=3227381

27 hostile actions64 and can be easily damaged and trespassed by a hackers65. In such a case, the user may not be able to access the digital asset despite paying the required amount and getting authorization. This is not desirable neither by the users nor by the copyright owners. If the systems keep being tampered with or breaking down frequently, this would discourage the users from subscribing to such platforms and lead them accessing the copyrighted digital assets through other methods.66 In the end, this would encourage infringement of copyrights on the digital assets instead of prevention thereof. In these respects, the DRMs fail to keep control of the digital assets and become vulnerable.67

Blockchain can be a tool in solving the problem of copyright infringements by improving the digital rights management system. First of all, with the help of blockchain technology, the operations of DRM systems can be decentralized both technologically and financially. As explained above, the system can technologically fail, when the single point of the system is hacked. However, decentralized feature of blockchain technology can make the system much stronger. In order for the whole system to technologically fail, each and every node participating in the system should shut down.68 With the technological decentralization, this would not seem possible in practice. Apart from the technological failure, the DRM system can become unprofitable or the service provider could cease doing business. This would lead the system to fail and not accessible by the users. However, through the financial decentralization the costs can be distributed among the peers operating the system and such a failure can be prevented.69 The decentralization offered by blockchain technology would make the digital rights management system much stronger against system failures or break downs and more secure.

Secondly, using blockchain technology based platforms instead of DRM based platforms would protect copyrighted works more and manage the rights thereon more effectively. Whilst ensuring

64 Rinaldi, J. (2018). Peer to Peer Digital Rights Management Using Blockchain, University of the Pacific, Thesis, p.10, available at https://scholarlycommons.pacific.edu/cgi/viewcontent.cgi?article=4135&context=uop_etds 65 Finck, M. & Moscon, V. (2019). Copyright Laws on Blockchains: Between New Forms of Rights Administration and Digital Rights Managements 2.0, ICC International Review of Intellectual Property and Competition Law 50(1), 77-108, p.96, available at https://link.springer.com/content/pdf/10.1007%2Fs40319-018-00776-8.pdf 66 Burk, L. D. (2005). Legal and Technical Standards in Digital Rights Management Technology, Minnesota Legal Studies Research Paper No. 05-16, p.555, available at https://ssrn.com/abstract=699384 67 Tresise, A., Goldenfein, J., & Hunter, D. (2018), What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.7, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=699384 68 Rinaldi, J. (2018). Peer to Peer Digital Rights Management Using Blockchain, University of the Pacific, Thesis, p.11, available at https://scholarlycommons.pacific.edu/cgi/viewcontent.cgi?article=4135&context=uop_etds 69 Ibid, p.11

28 that the digital asset is not duplicated, blockchain technology based platforms could enable a user to use the digital work without limitation and control. The digital work would not be held by the blockchain itself because of the size and because current processing abilities is not mature enough.70 Instead, a smart contract would be enabled. Such smart contract would contain the information on the rights and the authorizations of the digital work.71 As explained under Section 2.3, smart contracts can automatically perform the terms and authorizations that are coded. In terms of digital works, smart contracts can manage the use of works in digital format through cryptocurrency tokens (e.g. KodakCoin). Using cryptocurrencies in such allocation would make the relationship between the copyright holders and end-users much transparent, instantaneous and direct.72 This function would become even more important in terms of licensing that is to be explained under Section 3.3.3 below. Thanks to the smart contracts, the copyright holders would have the chance to keep track of the people accessing their works.73 Due to the encrypted nature of smart contracts, only the particular user’s key will be granted authorization for the usage of the copyrighted work. This means that people other than the authorized user could not access the work and the copyright holder would have confidence and certainty that his work is not being accessed without permission. Besides, the contracts are recorded on the distributed public ledger and they are immutable. This function granted by the blockchain technology would make the blockchain based systems much more reliable and secured.74

Lastly, a decentralized blockchain system for rights management would enable lower service fees. DRM systems are expensive and copyright holders should pay a certain amount to use such systems. However, copyright holders will save effort and cost with the usage of blockchain based systems, since they would no longer have to maintain the blockchain. When a user makes the

70 Finck, M. & Moscon, V. (2019). Copyright Laws on Blockchains: Between New Forms of Rights Administration and Digital Rights Managements 2.0, ICC International Review of Intellectual Property and Competition Law 50(1), 77-108, p.97, available at https://ssrn.com/abstract=3075246 71 Ibid. 72 Tresise, A., Goldenfein, J., & Hunter, D. (2018). What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.7, available at https://ssrn.com/abstract=3227381 73 Savelyev, I. A. (2017). Copyright in the Blockchain Era: Promises and Challenges, p.10, available at https://ssrn.com/abstract=3075246 74 Tresise, A., Goldenfein, J., & Hunter, D. (2018). What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.8, available at https://ssrn.com/abstract=3227381

29 required payment on website to get permission to use the digital work, the smart contract will automatically be enforced on the blockchain and the following actions will be automated.75

Despite being used for almost every business related and personal use; photographs are way less protected than other creative works (e.g. videos, music etc.). Even the DRM systems used in photography industry are not generally known or commonly used. Besides, the systems that are currently in use are falling short in protecting copyrighted photography works from infringements and play with the originality of the photograph. Thanks to the blockchain based platforms, copyrighted photography works can be protected by eliminating technical and security problems and by strengthening the control over the authorizations and uses.

Taking all explanations above into consideration, using blockchain technology based platforms instead of current traditional DRM systems could overcome many issues and eventually, could be used as a protection mechanism against the problem of copyright infringements. If such a blockchain based platform is created, this would encourage both the creators and the users to use such platforms. People could have the chance to reach photos and the copyright owners could track their works’ usage.76 They would have the chance to protect and manage their rights easily. By having the chance to protect and manage their copyrights and getting the reward they deserve in return, they would continue creating more works and contributing to the artistic world. This would help the intellectual world to develop and become better.

iii. Licensing

Copyright licensing is an essential subject under intellectual property law. Licensing enables copyright holders to give authorization for the use of their work and get financial reward in return. Many copyright holders’ purpose is to reach as many people as possible so that they can market their work, gain reputation and money. In order to do so, it is common for copyright holders to work with publishers. However, the relationship between the copyright holders and the publishers is not very simple. Both the copyright holder and the publisher desire to retain great control over

75 Tresise, A., Goldenfein, J., & Hunter, D. (2018). What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.8, available at https://ssrn.com/abstract=3227381 76 Guido Noto, L. D. & James, S. (2019). Can Permissionless Blockchains be Regulated and Resolve Some of the Problems of Copyright Law?, in Massimo Ragnedda and Giuseppe Destefanis, Blockchain and Blockchain and Web 3.0: Social, Economic, and Technological Challenge (Routledge 2019), p. 18, available at https://ssrn.com/abstract=3296888

30 the work and over the income generated from the work. Licensing of the work in return for payments, known as royalties, is the most common transaction made between the copyright holders and the publishers. By giving an example from literature industry, it is common for authors to be entitled to royalties on each copy of the book sold by the publisher.77 The situation is different for the photography industry. Marketing have changed due to the increased role of the Internet and social media.78 Many photographers have started to publish their photographs on their own by marketing them through the Internet and/or social media. Although providing convenience, self- publishing leads many problems. The upside of self-publishing is that the Internet has made the licensing process easier and removed the burden for photographers to find a publisher. There are various online stock content marketplaces, which are platforms enabling the copyright holders to license their work globally and get financial reward in return. However, such platforms do have disadvantages. These platforms play an intermediary role between the copyright holder and the user and most of them charge high commission fees on the photos that are sold.79 This leaves the copyright holders with smaller profits. The photographers using these platforms cannot freely determine the prices for their own works and they have less control on the licensing than the platforms do. Besides, these platforms require long time periods for the payments to be made to the photographers. This makes the whole licensing process very inefficient.80 Therefore; a photographer who does not want to pay commission fees and have greater control on the licensing process can try licensing the copyrighted photograph on his/her own. In order to reach audience and market his/her photograph, he/she can use photography platforms (e.g. Flickr) or social media sites such as Pinterest, Facebook or Instagram. However, as explained under Section 3.1.1., using social media may cause serious problems and lead to copyright infringements. Traditional

77 St. Laurent, A. (2008) Understanding Open Source and Free Software Licensing, Guide to Navigating Licensing Issues in Existing & New Software, p.4, available at https://www.oreilly.com/openbook/osfreesoft/book/ch01.pdf 78 Constantinides, E. (2014). Foundations of Social Media Marketing, Procedia – Social Behavioral Sciences 148, 40-57, p.41, available at https://reader.elsevier.com/reader/sd/pii/S1877042814039202?token=EEC3132560BB1427237DEADA1CB24678E 7781300D320CEC85BCC70882C1196E03585D1908ABBA5982D7D2D911DA07B9A 79 Savelyev, I. A. (2017). Copyright in the Blockchain Era: Promises and Challenges, p.5, available at https://ssrn.com/abstract=3075246 80 https://photochain.io/business_model.html

31 copyright licensing system is pricey, slow and do have many problems;81 however, blockchain technology can offer solutions to these problems.

Blockchain technology and blockchain smart contracts can change the traditional copyright licensing system through improving DRM systems and eliminating the above-mentioned problems. Application of blockchain smart contracts to the copyright system can strengthen licensing, since blockchain based platforms offer many advantages. Blockchain smart contracts allow the copyright holders to license their work directly to the users.82 This would allow a fast and fair remuneration for the copyright holders because of the fact that the blockchain smart contract enables the payment and remuneration to be made directly to the right holder, unlike the traditional licensing method using middle-men. This would remove the commission cuts made by the platforms (i.e. stock content marketplaces) and allow photographers to keep higher amounts from the payments.83

Blockchain based platforms could improve this whole payment process. Through blockchain based platforms, cryptocurrencies such as Ethereum can be used for payments. Apart from the currently available cryptocurrencies, they can build their own cryptocurrencies and use these to make transfers and payments on their blockchain based platforms. The usage of cryptocurrencies would significantly reduce the transaction costs and accelerate the payment process by enabling immediate and automated payments.

Smart contract arrangement can be established with the copyright holder and his/her user. When the purchase of digital formatted copyrighted work is complete, the information on purchase is encrypted into a hash being permanently kept on the blockchain and allowing automatic use. The smart contract would include terms that govern the license to use and the payment in exchange.84 Transactions would be very simple, since the information on the copyright holder would be recorded in the hash that has also recorded the information about the user, his/her purchase and the rights to use. After being determined, the details of the remuneration, the price, terms related to

81 Tresise, A., Goldenfein, J., & Hunter, D. (2018). What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.8, available at https://ssrn.com/abstract=3227381 82 Morabito, V. (2017). Business Innovation Through Blockchain, The B3 Perspective, Springer International Publishing AG, p. 105,available at http://blockchainstudies.org/files/Morabito.pdf 83 Tresise, A., Goldenfein, J., & Hunter, D. (2018). What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.9, available at https://ssrn.com/abstract=3227381 84 Ibid, p.9.

32 right to use (e.g. re-use or customization rights) can be easily enforced by using blockchain and smart contracts system.85

Blockchain smart contracts would provide the copyright holders a greater control over the copyrighted content86, a greater access to their licensing powers, lower costs that are related to statistics management, database maintenance and royalty payment distribution by enabling direct and immediate payment distribution from the user to the right holder.87 Whilst the right holders keep more money, the purchase price for the digital asset would be lower thanks to the reduction in such costs. Therefore, it would create a better situation not only for the copyright holders, but also for the buyers. Ultimately, this would encourage people to obtain licenses for the right to use and discourage copyright infringement.

85 Tresise, A., Goldenfein, J., & Hunter, D. (2018). What Blockchain Can and Can’t do for Copyright, 28 Australian Intellectual Property Journal 144, p.9, available at https://ssrn.com/abstract=3227381 86 Finck, M. & Moscon, V. (2019). Copyright Laws on Blockchains: Between New Forms of Rights Administration and Digital Rights Managements 2.0, ICC International Review of Intellectual Property and Competition Law 50(1), 77-108, p.102, available at https://ssrn.com/abstract=3075246 87 Shelkovnikov, A. (2016). “Blockchain Applications in the Media Industry”, Deloitte LPP, available at https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/Innovation/deloitte-uk-blockchain-app-in-media.pdf

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4 BLOCKCHAIN TECHNOLOGY AND TURKISH COPYRIGHT LAW

4.1. Current Legal Situation under Turkish Copyright Law

Copyright law has an important role under intellectual property laws of Turkey. It has sui generis characteristics; therefore, it requires particular importance and detailed regulations. Copyright law has a both subjective and an objective meaning. Copyright indicates the subjective right of the copyright holder on the work. On the other hand, by providing this subjective right, it gives the copyright holders the ability to protect their rights on the work against third parties. This is an objective right and secures copyright holders’ rights on their works. Besides, copyright is an absolute right and can be claimed against everyone.88

Turkish copyright law has extensive legislation. There are primary legislations (i.e. codes), secondary legislations (i.e. regulations and by-laws) and also international treaties regulating copyright law. Laws, international text and agreements regarding copyright law under Turkish Law are as follows:

4.1.1 Main Sources of Turkish Copyright Law

i. Turkish Codes and Regulations

 Turkish Code on Intellectual and Artistic Works numbered 584689

Intellectual and artistic works are defined under Turkish Code on Intellectual and Artistic Works numbered 5846 (“FSEK”). As per the article 1/B of FSEK, works are all kind of ideas and art products that are vested with their owners’ characteristic and can be considered as scientific and literary, musical, fine arts or cinematographic works. Article 4 explicitly indicates that photography works having aesthetic value fall under works of art. As explained under Section 3.1.2.a, Turkey is an undersigned country to the Berne Convention. Therefore, the creator of the work is entitled to the copyright with the creation of the work without a registration requirement. FSEK, by being

88 Bilge, O. & Bilge, M. T. (2008). Photographic Arts Federation of Turkey (TFSF), Fotograf ve Haklarimiz, p.12, available at https://www.tfsf.org.tr/indir/haklarimiz.pdf 89 See Turkish Code on Intellectual and Artistic Works numbered 5846, available at http://www.telifhaklari.gov.tr/resources/uploads/2015/10/26/Law%20on%20Intellectual%20and%20Artistic%20Wor ks%20No.5846.pdf

34 in line with the Berne Convention, provides a voluntary system for copyright registration, except for a certain group of intellectual and artistic works. The Ministry of Culture and of Culture and Tourism is set forth by FSEK as the official copyright registration authority.90

The main purpose of this Code is to determine and protect moral and economic rights of the creators of such works and to regulate the conditions for enjoyment of such rights. The Code sets forth the moral and economic rights of the creators in detail and indicates the sanctions to be applied in the event of illegal usages and infringements.

 Regulation on the Recording and Registration of Intellectual and Artistic Works91

As explained above, the Turkish Code on Intellectual and Artistic Works enforces a voluntary copyright registration system for the intellectual and artistic works, except for the works listed under article 5 of this regulation. The intellectual and artistic works that are identified under article 5 of this regulation are subject to compulsory registration. Such works are cinema works, music works and computer games. Therefore, photography works are subject to voluntary copyright registration. The regulation is issued as per article 13 of the Turkish Code on Intellectual and Artistic Works with the purpose of setting forth the principles and procedures of voluntary recording and registration of copyrighted intellectual and artistic works. The regulation sets forth the required documents to be submitted. As per the article 7 of the regulation, the creators shall submit an application form, a commitment letter which is provided under Annex-3 of the regulation and bank receipt indicating that the registration fee is paid. Following the complete submission of such documents, the intellectual and artistic work will be recorded and registered.

 Turkish Code of Obligations numbered 609892

Although Turkish Code of Obligations does not directly regulate copyright law, it includes articles on publishing contracts, the creators’ entitlement to remuneration, the payment of such remuneration, the termination of publishing contracts and the remuneration in such an event.

90 See Turkish Code on Intellectual and Artistic Works numbered 5846, Article 13, available at http://www.mevzuat.gov.tr/MevzuatMetin/1.3.5846.pdf 91 See Regulation on the Recording and Registration of Intellectual and Artistic Works, published in the Official Gazette dated May 17, 2006 and numbered 26171, available at http://www.mevzuat.gov.tr/Metin.Aspx?MevzuatKod=7.5.10313&MevzuatIliski=0&sourceXmlSearch=fikir 92 See Turkish Code of Obligations numbered 6098, available at http://www.mevzuat.gov.tr/MevzuatMetin/1.5.6098.pdf

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 Electronic Signature Law numbered 507093

The code regulates the principles regarding the legal and technical aspects and usage of electronic signatures. As per article 5 of this code, e-signatures bear the same consequences with signatures put by hand. Article 8 of the code regulates the electronic certificate service providers. As per this article, electronic certificate service providers are public institutions and organizations and natural or legal persons, who provide such services via electronic certificates, time-stamps and electronic signatures. The code then further sets forth the obligations of electronic certificate service providers and other issues with regards to electronic signature.

ii. International Texts and Treaties

Turkey is a party to many international agreements regulating intellectual property rights. The most important ones among these agreements are as follows:94

 The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)  Bern Convention for the Protection of Literary and Artistic Works  Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations  WIPO Copyright Treaty

 European Union Association Council Decision numbered 1/95 (the “Decision”)

Section IV of the Decision is regarding “Protection of Intellectual, Industrial and Commercial Properties”. In Article 31 under Sub-Section I of Section IV, the parties emphasize the importance of providing and enabling adequate and effective protection of intellectual, industrial and commercial rights. For this purpose, they undertake to fulfill the duties partaking under Annex-8.95 One of such duties for Tukey, as per Article 2 of Annex-8, is to develop the level of protection for the intellectual, industrial and commercial rights in order to reach and provide the equal level of

93 See Electronic Signature Law numbered 5070, available at http://www.mevzuat.gov.tr/MevzuatMetin/1.5.5070.pdf 94 Treaties are available at http://www.telifhaklari.gov.tr/Mevzuat-Uluslararasi-Sozlesmeler 95 See European Union Association Council Decision numbered 1/95, Article 31, available at http://www.mfa.gov.tr/1-95-sayili-ortaklik-konseyi-karari-gumruk-birligi-karari.tr.mfa

36 protection that is provided by the European Union through its then current legislations. Turkey shall take proper measures in order to ensure such rights are not infringed.96 This provision constitutes an undertaking for Turkey to follow and adapt the future developments within the EU regarding the intellectual property rights. Turkey shall adapt the developments within European Union regarding intellectual property rights to its domestic legislation.

4.1.2 European Union Directives on Intellectual Property Rights

 Council Directive 92/100/EEC of November 19, 1992 on Rental Right and Lending Right and on Certain Rights related to Copyright in the field of Intellectual Property97

The Directive has defined the rights to rent and lend both for the owners of the work and the related right holders thereon. It has also regulated the rights of the related right holders, the terms of use of such rights and exceptions.

 Directive 2001/29/EC of the European Parliament and of the Council of May 22, 2001 on the Harmonization of Certain Aspects of Copyright and Related Rights in the Information Society98

This Directive is one of the most important and extensive harmonization directives of European Union regarding the intellectual property rights. Through this Directive, both the owners of the works and the related right owners thereon are provided with the opportunity to be protected against the problems arising from the new technological developments. For instance, through this directive the right holders are offered the protection on the internet platforms.

4.1.3 Current Situation of Blockchain Technology under Turkish Copyright Law

Under the light of the above-mentioned legislations, situation of blockchain technology under Turkish copyright law can be examined. Turkish Code on Intellectual and Artistic Works and

96 See European Union Association Council Decision numbered 1/95, Annex-8 Article 2, available at http://www.mfa.gov.tr/1-95-sayili-ortaklik-konseyi-karari-gumruk-birligi-karari.tr.mfa 97 See Council Directive 92/100/EEC of November 19, 1992 on Rental Right and Lending Right and on Certain Rights related to Copyright in the field of Intellectual Property, available at https://eur-lex.europa.eu/legal- content/EN/TXT/PDF/?uri=CELEX:31992L0100&from=EN 98 See Directive 2001/29/EC of the European Parliament and of the Council of May 22, 2001 on the Harmonization of Certain Aspects of Copyright and Related Rights in the Information Society, available at https://eur- lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32001L0029&from=EN

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Turkish Code of Obligations do not prohibit application of this technology; however, they do not have articles explicitly enabling its application either. Some major problems triggering copyright infringements have been discussed under section 3.1.2. and offered solution through blockchain and blockchain smart contracts. In order to be more specific, the Turkish codes and regulations relevant to copyright registration, copyright licensing and royalty payments will be examined vis- a-vis the application of blockchain technology, blockchain smart contracts and blockchain based cryptocurrencies.

i. Blockchain Technology and Copyright Registration

Regulation on the Recording and Registration of Intellectual and Artistic Works explicitly sets forth the procedure to be followed for the voluntary recording and registration of copyrighted intellectual and artistic works. The wording of the regulation is very certain. Therefore, the application of blockchain technology for the purpose of voluntary registration of an intellectual and artistic work seems not possible. Yet, it is possible to follow a different procedure in order to obtain a document/certificate indicating the existence of a work at a certain time. The Electronic Signature Law allows such an application. The law enables electronic certificates and time-stamps, which are equivalent to manually signed documents. This could allow a photography work to be marked with a qualified timestamp and blockchain timestamp, which would bear valid evidential value in litigation processes. Blockchain timestamping together with qualified timestamping can be used as a protection mechanism against copyright infringements under Turkish copyright law.

ii. Blockchain Smart Contracts and Copyright Licensing

Under Sections 3.1.2.b and 3.1.2.c, blockchain smart contracts are offered as tools in solving problems related to DRM systems and licensing processes, which are major problems leading copyright infringements. As stated hereinabove, smart contracts are not agreements just because they are referred as contracts. They are automatically enforced digital transactions. Because Turkish Code of Obligations regulates general terms on agreements and transactions, this code should be examined in order to determine the legal status of blockchain smart contracts. As per article 12 of the code, the validity of a contract is not subject to any form, unless otherwise stated by law. For the matters that do not require any specific form for contracts, Turkish courts may deem smart contracts as binding contracts. Moreover, it may be very appealing to have a verifiable

38 and immutable blockchain transaction records that can be used to demonstrate and prove the existence of such contracts.99

However, licensing copyrighted photography works through blockchain smart contracts may raise some legal concerns. When users start to license a photography work through smart contracts, this will bring up the issue of “distance contracts”. Regulation on Distance Contracts100 regulates the principles to be applied to the contracts that are concluded between sellers or providers and consumers without physical interaction, but through written means, visual means or on electronic environment for the delivery or provision of the service to the customer immediately or at a later date. As per article 4(1)(h) of the regulation, blockchain technology is regarded as a distance communication mean and smart contracts used for copyright licensing is regarded as distance contracts. Therefore, they are subject to this regulation.101 In order to protect the consumers, this regulation sets forth some obligations on the sellers/providers. Article 5 indicates that sellers/providers shall clearly inform the consumers prior to the establishment of the contract about many issues such as the qualifications of the product/service, the amount to be paid in return and withdrawal right and conditions to enjoy such right. In the event that the seller/provider does not fulfill this obligation, the contract will be null. Besides, article 9 of the regulation grants the consumer a right to withdraw from the contract within 14 days without any reason and without any penalty. This issue raises a concern regarding the application of smart contracts. Due to the immutable nature of the underlying blockchain technology, the consumer will not have the chance to withdraw from the contract once the smart contract is executed. This immutable nature of the smart contracts prevents its application under Turkish law for copyright licensing.

99 Gurkaynak, G., Yilmaz, İ., Yesilaltay, B., & Bengi, B. (2018). Intellectual Property Law and Practice in the Blockchain Realm, Computer Law & Security Review 34, 847-862, p.853, available at https://ssrn.com/abstract=3285287 100 See Regulation on Distance Contracts, published in the Official Gazetted dated November 27, 2014 and numbered 29188, available at http://www.mevzuat.gov.tr/Metin.Aspx?MevzuatKod=7.5.20237&MevzuatIliski=0&sourceXmlSearch=mesafeli%2 0s%C3%B6zle%C5%9Fme 101 Gurkaynak, G., Yilmaz, İ., Yesilaltay, B., & Bengi, B. (2018). Intellectual Property Law and Practice in the Blockchain Realm, Computer Law & Security Review 34, 847-862, p.858, available at https://ssrn.com/abstract=3285287

39 iii. Cryptocurrencies in Copyright Licensing Payments

Under Section 3.1.2.c, cryptocurrencies are offered for a more accelerated and transparent payment system in copyright licensing that is executed on blockchain based platforms. There are many countries, which have already regulated cryptocurrencies and started to use them as payment methods. The fields of application of cryptocurrencies in Turkey have also started to increase and diversify among different industries such as real estate, restaurants and education. Akbank, a Turkish bank, has started to use blockchain technology to make international money transfers. However, such attempts do not go beyond being individual attempts due to lack of regulations.102 There are no codes or regulations on cryptocurrencies under Turkish law, other than a press release made by the Turkish Banking Regulation and Supervision Agency (“BRSA”). The purpose of the press release was to inform people about the possible losses that may arise due to the usage of bitcoins.103 In order to determine the legal status of cryptocurrencies, the Code on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions numbered 6493104 should be examined. The code sets forth the definition of electronic money. As per article 3(ç), electronic money is monetary value, which is (i) issued in return for the fund accepted by the institution issuing electronic money, (ii) electronically kept, (iii) used for the execution of payment transactions set forth under this code and (iv) used by natural and legal persons other than the electronic money issuing institution as payment method. Besides, institutions other than the ones that are allowed to issue electronic money within the scope of this code are prohibited to issue electronic money. Taking this definition into account, cryptocurrencies cannot be regarded as electronic money under Turkish law.105 To put into other words, a payment that is made using cryptocurrencies would not be made through a payment system that is legal under Turkish law. Such a payment would not fall under the scope of the control and supervision of BRSA106 and this

102 Dilek, S. (2018). Blockchain Technology and Bitcoin, Political, Economic and Social Research Foundation, Sayi: 231, p.16, available at https://setav.org/assets/uploads/2018/02/231.-Bitcoin.pdf 103 Özbaş M. Y. (2019). İsletme Ekonomi ve Yonetim Arastirmalari Dergisi 2 (1), 85-104, p.97, available at https://dergipark.org.tr/download/article-file/620428 104 See, Code on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions numbered 6493, available at http://www.mevzuat.gov.tr/MevzuatMetin/1.5.6493.pdf 105 Üzer, B. (2017). Sanal Para Birimleri TCMB Uzmanlık Yeterlilik Tezi, Ankara, p.103, available at https://www.tcmb.gov.tr/wps/wcm/connect/f4b2db90-7729-4d94-8202- 031e98972d0f/Sanal+Para+Birimleri.pdf?MOD=AJPERES&CACHEID=ROOTWORKSPACE-f4b2db90-7729- 4d94-8202-031e98972d0f-m3fBagn 106 Gurkaynak, G., Yilmaz, İ., Yesilaltay, B., & Bengi, B. (2018). Intellectual Property Law and Practice in the Blockchain Realm, Computer Law & Security Review 34, 847-862,, p.851, available at https://ssrn.com/abstract=3285287

40 code. This may cause problems for royalty payments, which are made in cryptocurrencies in return for copyright licensing and may be unfavorable by the copyright holders.

4.2. Implementing the Blockchain Technology: Tech-Friendly Turkish Copyright Law

Under the light of the above explanations, it can be concluded that blockchain technology is not wholly incompatible with Turkish copyright law. However, some incompliances may occur when blockchain smart contracts are used for copyright licensing and when the royalty payments are made in cryptocurrencies. In order to eliminate such discrepancies, blockchain technology should be modified and some Turkish copyright law regulations should be amended. Besides these, general regulations with regard to blockchain technology should be made.

4.2.1 Making General Regulations with regard to Blockchain Technology

The importance of blockchain technology has started to be realized by Turkish companies and also by Turkish governmental bodies. Some companies have started to make and accept payments in cryptocurrencies and some start-ups providing services through blockchain technology have started to be established. Turkey’s Minister of Commerce has stated that the Ministry of Commerce is working to implement a digitally transformed system, which will perform the export and import transactions through blockchain technology.107 Despite grabbing attention and being applied in practice, blockchain technology is not regulated under Turkish law. Neither Turkish copyright law, nor other fields of Turkish law include regulations regarding blockchain technology.

European Parliament passed a resolution on distributed ledger technologies in October, 2018.108 The resolution recognizes the disruptive potential of blockchain technology for many industries, including creative industries and copyright.109 It provides deeper information on the potential

107 Celebi, E. S. (2019). Turkey’s Ministry of Commerce to Utilize Blockchain Technology, The New Turkey, available at https://thenewturkey.org/turkeys-ministry-of-commerce-to-utilize-blockchain-technology 108 See European Parliament resolution of 3 October 2018 on distributed ledger Technologies and blockchains: Building trust with disintermediation (2017/2722(RSP)), available at http://www.europarl.europa.eu/doceo/document/TA-8-2018-0373_EN.pdf 109 Guido Noto, L. D. & James, S. (2019). Can Permissionless Blockchains be Regulated and Resolve Some of the Problems of Copyright Law?, in Massimo Ragnedda and Giuseppe Destefanis, Blockchain and Blockchain and Web 3.0: Social, Economic, and Technological Challenge (Routledge 2019), p. 1, available at https://ssrn.com/abstract=3296888

41 opportunities offered by the blockchain technology. As a first step, such a resolution or any other form of a legal document providing insight on blockchain technology is required under Turkish law. This would provide a definition for blockchain technology and incorporate “blockchain technology” as a term into Turkish law. This would inform people and enable them to engage in with blockchain technology more in different fields. After being incorporated and introduced, blockchain technology can be regulated in detail under codes and/or regulations on specific subjects. This would set forth the frameworks of the application of blockchain technology to specific fields of law.

4.2.2 Amending Regulations and/or Codes

Some regulations under Turkish copyright law require amendments in order to become more technology friendly. As explained above, “Regulation on the Recording and Registration of Intellectual and Artistic Works” sets forth the procedure to be followed and the documents to be submitted in voluntary copyright registration system. The regulation enables the copyright holders to make online registration applications on the web page of Directorate General of Copyright. However, the registration process is completed only after the registration applicant either hands in the necessary documents in person or send them via mail to Directorate General of Copyright. Such a system is outdated and does not encourage copyright holders to register their works. As a first step, such a requirement should be amended in a way enabling the whole registration procedure to be completed online.

With regard to cryptocurrencies, the “Code on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions” has been examined above. The code provides the definition of electric money, which does not include cryptocurrencies. Cryptocurrencies still do not have a legal status under Turkish law, despite being used in practice. Therefore, a regulation providing definition, legal status and framework for cryptocurrencies, initial coin offerings and related applications is essential. European Union does not have a unified cryptocurrency regulation yet. However, some EU member states have started to take action and make regulations. France is one of the countries, who has recently passed a law on this very subject. The PACTE Law (Loi PACTE) has been passed by the French National Assembly in April, 2019. The Law establishes a legal framework for digital asset service providers and initial coin offerings. With the PACTE Law digital asset providers may be licensed and placed under the supervision of Financial Markets

42

Authority of France (“AMF”). Besides, the law provides an optional visa regime for initial coin offerings. The investors submit their information documents to AMF and if certain requirements are met, AMF issues the visa.110 Overall, PACTE law draws the legal framework for cryptocurrencies and initial coin offerings and provides a better protection for investors. This regulatory framework can be taken as a role model and adopted into Turkish law.

For the copyright licensing agreements through blockchain smart contracts, the technology falls short in providing the withdrawal right generating from the Regulation on Distance Contracts, since the immutable nature of blockchain technology does not allow to make changes on the transactions once they are entered in the database. The Regulation on Distance Contracts is adopted from EU Directive on the Protection of Consumers in respect of Distance Contracts numbered 97/7/EC111; therefore, EU legislations cannot be used as role model for this issue. Withdrawal right is of a great importance for the consumer protection; thus, this right cannot be revoked. The Regulation can be amended in a way allowing the usage of smart contracts in copyright licensing agreements, if only the blockchain smart contract is vested with a self-destruct option. If the self-destruct option is coded in the smart contracts for copyright licensing agreements, the user may call the self-destruct operation when he/she wants to enjoy the withdrawal right. This would stop the execution of the smart contract and transfer the balance back to the user.112

4.2.3 Making Blockchain Technology Specific Regulations and Modifying Blockchain Technology

Some features of blockchain technology need some modifications to be even more compatible with Turkish copyright law and be more secure. An amendment to the Regulation on Distance Contracts, which only entails the application of smart contracts with self-destruct option for executing copyright licensing agreements through blockchain smart contracts can solve the incompatibility with Turkish law. This can be the solution in short term and paves the way for the application of

110 Autorite Des Marches Financiers (2019). Towards a New Regime for Crypto-assets in France, available at https://www.amf-france.org/en_US/Reglementation/Dossiers-thematiques/Fintech/Vers-un-nouveau-regime-pour- les-crypto-actifs-en-France 111 Gurkaynak, G., Yilmaz, İ., Yesilaltay, B., & Bengi, B. (2018). Intellectual Property Law and Practice in the Blockchain Realm, Computer Law & Security Review 34, 847-862, p.858, available at https://ssrn.com/abstract=3285287 112 Kalra, S., Goel, S., Dhawan, M., & Sharma, S. (2018) ZEUS: Analyzing Safety of Smart Contracts, p.4, available at http://pages.cpsc.ucalgary.ca/~joel.reardon/blockchain/readings/ndss2018_09-1_Kalra_paper.pdf

43 blockchain smart contracts in this particular field of Turkish copyright law. However, it is very important that the self-destruct call should be preceded by having a check that no one other than the owner of the contract is allowed to destroy it. If this check is not made and the self-destruct option is used for the contract, this would allow people in bad faith to destroy the contract and receive the money.113 This would create security and trust concerns, unless such checks are made properly. In order to avoid such a risk, the ideal scenario for blockchain smart contracts is therefore, to have an option to change and/or remove the transactions in the blockchain that are to be used in copyright licensing agreements. In other words, blockchain technology and blockchain smart contracts should be modified to Turkish law in this regard. However, this should be achieved without harming the immutable nature of blockchain technology114 to maintain its unique functions. Such modification requires further development of blockchain technology and blockchain smart contracts, which are both still evolving. Such a development may take time; therefore, a two-phase method should be followed. As the first step, the Regulation on Distance Contracts should be amended as explained under Section 4.2.2. Then, the blockchain smart contracts should be modified after the blockchain technology is developed enough to enable the records to be changed and/or deleted while still remaining as a trustworthy database. When this is achieved, there will no longer be need for an amendment only allowing the usage of blockchain smart contracts with self-destruct option. All blockchain smart contracts will be convenient, since they will pave the way for usage of withdrawal right and fully compatible with Turkish copyright law.

113 Kalra, S., Goel, S., Dhawan, M., & Sharma, S. (2018) ZEUS: Analyzing Safety of Smart Contracts, p.4, available at http://pages.cpsc.ucalgary.ca/~joel.reardon/blockchain/readings/ndss2018_09-1_Kalra_paper.pdf 114 Gurkaynak, G., Yilmaz, İ., Yesilaltay, B., & Bengi, B. (2018). Intellectual Property Law and Practice in the Blockchain Realm, Computer Law & Security Review 34, 847-862, p.858, available at https://ssrn.com/abstract=3285287

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5 CONCLUSION

Due to the era of digitalization, copyrighted contents are mostly distributed digitally through online platforms, instead of being physically distributed. Despite bringing advantages for content creators such as the opportunity to reach much broader user range, the digitalization has also brought problems. The most important problem brought by digitalization is infringement of copyrighted works. Photography works are one of the least protected works among other intellectual and artistic works; therefore, digitalization seriously harmed photography industry in terms of copyright infringements. Blockchain technology is very promising in providing solutions against infringements of copyrighted photography works. The problems relating to copyright registration, copyright management through digital rights management and copyright licensing led to increasing cases of copyright infringements, which blockchain technology has the potential to minimize.

Turkish copyright law, as signing states to the Berne Convention, sets forth a voluntary registration system for intellectual and artistic works as a rule. The current voluntary registration system in Turkey is time consuming and not cost-effective. Such drawbacks discourage many copyright holders from registering their works. Besides, the current registration method is subject to supervision of a central authority, which is similar in many other countries. Therefore, the photography works that are to be registered are prone to censorship. Blockchain technology thanks to its immutable and decentralized nature and its hashing system, can help solving such problems and help creating a beyond-borders, easy and cost-effective, censorship-resistant registration system. Such a blockchain-based registration platform encourages copyright holders to register their works, enables them to prove their ownerships easily in the course of copyright infringement litigation processes and contribute more to the artistic world.

Digital rights management is technologies controlling access to and usage of copyrighted digital contents in order to provide protection mechanism against copyright infringements. As for the digital rights management, current technologies fall short in providing protection against copyright infringements. Traditional digital rights management platforms are not only expensive, but also easily hackable since they have a single point of failure. This could easily lead to systemic breakdowns. In such cases, digital contents would not be accessible even when the required payment had already been done by the user, with limited chances to get the money back. Such a situation discourages users from accessing the digital content by getting authorization through these

45 platforms and prompts them to unauthorized usage (e.g. by illegal downloading). The decentralized nature of blockchain technology allows each and every node in the chain to store the hash of the digital content. Therefore, the system will no longer have a single point of failure. Apart from enabling a much stronger rights management system, blockchain smart contracts will make the system more secure and reliable. Photographers in the digitalized world are unable to trace the usages of their photography works; however, blockchain smart contracts will grant authorization only to specific users thanks to encryption. This will grant the photographers that their photographs are not accessed without authorization.

Licensing of the copyrighted photography works is of a great importance, since the copyright holders get financially rewarded for their works in return for granting license. However, current copyright licensing has many problems. The online stock content marketplaces play an intermediary role between the photographers and the users. They charge high commission fees on the photographs, leaving the copyright holders with lower rewards. Besides, the photographers do not have full control on the licensing process of their own photographs. Blockchain technology offers direct licensing through smart contracts. The copyright holders can license their digitally formatted photographs directly to the users without commission cuts and with full control on the whole process. Moreover, blockchain based platforms offer usage of cryptocurrencies. Such cryptocurrencies can be used for the royalty payments on the blockchain based platforms and enable faster payment processes. Since royalty payments can be made directly on blockchain based platforms in cryptocurrencies, there will be no need for intermediaries such as banks and the commissions made by banks will also be eliminated. Ultimately, blockchain technology can help creating a much better licensing process, which enables fair and transparent royalty payments to the copyright holders.

By providing solutions to such major problems, blockchain technology can be a tool against infringement of copyrighted photography works in general. However, blockchain technology presents a few features whose legality is questionable under Turkish copyright law. In fact, some regulations seem not to clear the way for blockchain application. Blockchain technology has not been regulated not only in Turkish copyright law, but also in any other field of Turkish law. Therefore, this thesis suggests that the technology be introduced and incorporated into Turkish law through a legal document. The European Parliament resolution on distributed ledger technologies

46 and blockchain can be taken as a role model for this purpose, because the resolution recognizes the disruptive potential of blockchain technology for various industries and provide deep insight. Many codes and regulations in different fields of Turkish law is desired to be harmonized with EU law; therefore, taking this European Parliament resolution as a role model would be beneficial for this purpose as well. Moreover, a legal arrangement should be made on blockchain cryptocurrencies. Despite being used in practice, blockchain cryptocurrencies do not have a legal status under Turkish law yet. France has recently passed a law setting forth the legal framework for digital asset service providers and initial coin offerings. This law can be taken as role model and be adapted to Turkish law, because the law is an indicative and instructive legislation. Besides, not many other European Union member states have such a law and it is possible for European Union to adapt a regulatory framework for cryptocurrencies that is similar to that of France. In such case, Turkey would again have a legislation that is harmonized with the European Union.

Lastly, making license agreements for copyrighted photographs through blockchain smart contracts falls within the scope of the Regulation on Distance Contracts under Turkish law, which grants a withdrawal right to the users. The nature of the usage of such right is not compatible with the immutable nature of the blockchain technology. In order to be compatible with Turkish law in terms of licensing agreements through smart contracts, blockchain technology should be modified. Such modification should be in a way allowing blockchain smart contracts to be altered and/or removed after being executed, without harming the immutable nature of the blockchain technology in general. This modification requires development of the technology. Until the technology is developed to enable blockchain smart contracts to acquire such a nature, copyright licensing agreements on blockchain based platforms could only be executed through the smart contracts having a self-destruction option. Such blockchain smart contracts would allow the usage of withdrawal right and may offer a short-term solution.

The features and advantages of blockchain technology are better understood day by day. It has already started to be applied in many industries, including the photography industry and copyright law. With better realization of the solutions offered by the blockchain technology, Turkish regulators will likely to show more efforts for including the technology in the legal framework. With better understanding, more adoption, application and development, the blockchain

47 technology will have the potential to restructure and develop Turkish copyright law by providing many solutions to copyright infringement.

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