Smart Contracts, Smarter Rights

12.08.2024

IOTA Enhances IPR Management

TL;DR:

The IOTA Foundation has developed a solution prototype within the European Blockchain Pre-Commercial Procurement, funded by the European Commission, to streamline the management of intellectual property rights using distributed ledger technology and Smart Contracts for Media. The prototype solution’s IPR Marketplace platform simplifies securing rights, replacing traditional negotiations with automated, transparent digital contracts. This ensures fair, immediate compensation for rights holders and enhances transparency using Non-Fungible Tokens (NFTs).

“Stuck in the Middle With You” by Stealers Wheel in Reservoir Dogs (1992). “Gimme Shelter” by The Rolling Stones in The Departed (2006). “Sabotage” by Beastie Boys in Star Trek Beyond (2016). “Redbone” by Childish Gambino in Get Out (2017). Some of the most indelible moments in recent cinema are underscored by the perfect choice of pop song.

But behind these iconic moments lies a complicated web of intellectual property rights (IPR). When a film features a song, royalties are due to songwriters, performers, record labels, and music publishers, each with different agreements. Additionally, tracking the film’s distribution across various platforms and international markets complicates accurate royalty calculation and distribution. The manual effort required to monitor uses and enforce payments leads to delays and opacity, making it difficult for rights holders to verify fair compensation.

As part of its involvement in the European Commission-funded European Blockchain Pre-Commercial Procurement, the IOTA Foundation has developed a tool for synchronizing payments for intellectual property rights. Specifically, the tool involves managing rights and payments for the use of music in a film. In this blog post, we’ll explain how it works.

Scenario

Meet Samantha Sequel, an accomplished film producer known for her keen eye for storytelling and a penchant for the perfect musical score. Sam is deep into her latest project; however, a vital piece is missing—the perfect song to complement a pivotal scene that could make or break the film’s emotional impact.

This is where our story begins, in the bustling heart of the film industry, before venturing into the cutting-edge world of Intellectual Property Rights management using IOTA’s distributed ledger technology (DLT).

Raiders of the Lost Track: The Quest Begins

Sam’s journey starts with a beautiful piece of music she heard on the radio, which she believes is the missing piece of her film’s emotional puzzle. The song, “Midnight Blue,” not only captures the essence of her film’s theme but promises to enhance the visual experience tenfold. But to secure the rights to use this song, Sam must navigate a complex landscape of stakeholders, including collective rights management organizations (CMOs), publishers, record labels, and the featured artist himself. Each holds a key to the puzzle Sam is desperate to solve.

Mission: Possible – The New Age of Intellectual Property Rights

To achieve her goal, Sam needs two synchronization licenses: one to integrate “Midnight Blue” with her film’s visuals, and one to use the specific recording she fell in love with. This leads her to a complex web of stakeholders: the Publisher who holds the publishing rights to “Midnight Blue”, the Record Label that owns the master recording, the featured artist, whose performance is captured in the song record, and a constellation of songwriters, artist management, and more.

Traditionally, securing such rights would involve lengthy negotiations, stacks of paperwork, and an agonizing wait for confirmations and agreements to be mailed back and forth – all handled by an expensive middleman. However, Sam’s production company has embraced a revolutionary platform: the IPR Marketplace platform. This platform, fueled by Smart Contract for Media (SCM) technology using IOTA Smart Contract Chains, offers a streamlined, transparent process where different participants interact and prepare new contracts. Here, contracts are not just agreements but dynamic digital entities that self-execute and self-enforce the terms agreed upon by Sam and the music rights holders

The Fast and the Curious: The Smart Contract Revolution

Negotiating terms and conditions in the digital age, Sam discovers, is vastly different. First, she opens her Digital Identity Wallet (powered by IOTA and aligned with EBSI standards) and from there logs into the IPR Marketplace platform. Sam then initiates the process by selecting a predefined contract template. She meticulously fills out the terms for both the synchronization license with the publisher and the master license with the record label.

Any adjustments are made in real time, viewed, and approved through digital platforms, minimizing misunderstandings and delays.

Sealing the Deal

Once the terms are set, Sam and the stakeholders digitally sign the contracts. The magic begins when these digital contracts are transformed into a machine-readable Smart Contract for Media (SCM), which uses the ISO/IEC 21000-23 standard and automatically manages payments and royalty distributions. All Sam needs to do is click on “Deploy Contract” in the IPR Marketplace platform, and the SCM – now holding all agreed terms – is deployed on the IOTA Smart Contract Chain, ensuring that the agreement is immutable and secure.

Sam’s use of the song triggers a cascade of automated royalty payments directly from her Web3 Wallet, like Metamask, to the SCM, which then delegates payment to a cascade of other smart contracts, first to the Music Publisher and Record Label and then to the songwriters and the featured artist via the SCM system. This immediate, transparent payment method ensures that all parties are compensated fairly and promptly.

Lights, Cameras, NFTs

Enhancing this already sophisticated system, each work of art (song, film, etc.) and right is encapsulated using Non-Fungible Tokens (NFTs), representing obligations like royalty payments and permissions like the right to publish or synchronize. These NFTs, containing unique URIs, point to detailed data stored securely off-chain in a private distributed storage using the InterPlanetary File System (IPFS), enhancing transparency and traceability. This aspect not only secures the rights for Sam but also immortalizes the contracts in a digital form that is easily accessible and verifiable.

As Sam’s film premieres to a rapt audience, the use of “Midnight Blue” with key scenes receives particular acclaim. Behind this success, the digital tools Sam employed have quietly revolutionized the way intellectual property is managed in the film industry. The use of NFTs to encapsulate rights, ensure traceability, and reduce disputes, is just the beginning. With every stakeholder – from songwriters to featured artists –receiving their due share through transparent, automated processes, the complicated rights management industry stands on the brink of a new, more efficient era.

A Fairer Future

In conclusion, integrating IOTA in the management of intellectual property rights offers a transformative approach to traditionally opaque practices. Looking ahead, IOTA is poised to expand these capabilities even further, with smart contracts not only managing but also automating payments triggered by real-world events, such as a song playing on the radio or being featured in a film. This advancement promises to revolutionize the way intellectual property rights are handled, making the process more dynamic and responsive to actual usage — a true harmony of technology and creativity. Watch this space for coverage of evolving use cases.

Download Our IPR Management Prototype Presentation

Following the success of our first market-ready Digital Product Passport, the recently- announced Eviden Digital Passport Solution, our Technology Adoption Team is spearheading a similar commercialization of the Intellectual Property Rights solution prototype within our ecosystem of partners. Reach out to to learn more about these opportunities.