SpiceDAO’s $3M Dune NFT Mistake Proves IP’s Dominion in Digital Art

The team behind the highly anticipated Dune NFT, a collaborative project between Spice DAO and Ubisoft, has had to apologize for a mishap that led to the release of two different versions of the same game. One version was released with unfinished assets and content while another completed product remained available outside of auction—a move which some say is a violation in terms of copyright law.

The “nft art consultant” is a new service that helps artists to get paid for their digital work. The service’s founder, who goes by the name of “SpiceDAO,” made a mistake and lost $3M worth of Dune NFTs.

Money may be able to buy you NFTs, but it will never be able to buy you out of having to comply with federal copyright regulations. With the rise in popularity of NFTs and digital fine art, it seems that there is still some debate over whether intellectual property law has a role in the fintech world.

If you take nothing else away from this article, remember that intellectual property rules this sector and will put any NFT owner and/or project in its correct, legal position — regardless of the amount of money involved.

Which leads us to SpiceDAO and Dune, the industry’s perhaps most critical learning lesson for any NFT owner and/or project.

The fundamental issue, and the most troubling for NFT owners in the sector, is Spice DAO’s acquisition of Jororowsky’s Dune, which they honestly felt gave them ownership of the rights to Dune – but they don’t. The only rights they obtained were for a highly costly version of Herbert’s original Dune novel — nothing else.

For perspective, Herbert’s book Dune has been adapted into three films: David Lynch’s 1984 adaptation, a TV miniseries in 2000, and Denis Villeneuve’s 2021 adaptation via Legendary Pictures, which was released last October and stars Timothee Chalamet, Zendaya, and Oscar Isaac.

So, what went wrong? Let’s take a quick look back.

#1 – An Expensive Book With Lovely “Would-Be” Concept Art

Alejandro Jodorowsky, a French-Chilean filmmaker, bought the film rights to Dune in 1974 and made a complete concept version of Herbert’s original text.

However, due to the extremely high budget of what Jodorowsky wanted to put together, the studios refused to provide the necessary financial backing, and the project died, leaving behind approximately 10 concept art books by Jodorowsky, bringing us to its recent and brief appearance in the NFT space, with one of those copies being purchased at Christie’s for $3 million.

As previously noted, this edition is not the original Frank Herbert Dune narrative, but rather a book about the unmade picture that Jodorowsky had planned before the studios cancelled it owing to its apparently ridiculous expense.

The “would-be” narrative, concept art, and other materials created by Jodorowsky were all included in the copy.

#2 – Add SpiceDAO to the mix.

SpiceDAO is the main player in this story, as well as the biggest (and most unlucky) losers, for one major reason: it perpetuates the misguided belief that copyright law has no place in the digital realm, even with NFTs, and/or a general lack of understanding of how intellectual property still governs and controls the entire NFT and digital art space.

SpiceDAO, a decentralized autonomous organization committed to purchasing and creating products based on Hodorowsky’s vision, revealed through Twitter in early January that it had won a November auction, gaining the rights to this adaption, and that:

1) “make the book public (to the degree permissible by law),” 2) “produce an original animated limited series” “inspired by the book,” and 3) “sell it to a streaming service” for the purpose of developing derivative works from it.

The auction was won by us for €2.66 million. Our current mission is to:

1. Make the book available to the public (to the extent permitted by law)

2. Create and sell an original animated limited series based on the book to a streaming provider.

3. Encourage community-created initiatives pic.twitter.com/g4QnF6YZBp

January 15, 2022 — Spice DAO (,) (@TheSpiceDAO)

The adaptation was previously put for sale on Christie’s for $30,000, with a crowdfunding campaign attempting to gather $750,000 to purchase the copy. SpiceDAO’s co-founder, Soban Saqib, 25, planned to acquire the Dune adaption for $3 million in November to avoid a same fate as ConstitutionDAO, whose effort to buy a copy of the United States Constitution was blocked by a last-minute offer by investor Ken Griffith.

Spice DAO’s aim, according to the group, was to sell individual pages from the book as NFTs when the NFTs sold, and then burn the real book.

This brings us to the legality and absurdity of what occurs when you merely throw money at things in the hopes of buying your way into the correct circles.

SpiceDAO said on Medium a week after the announcement that they did not hold any rights to Herbert’s original 1965 book, but that they were pushing on with plans to develop an original animated series – which was, of course, shortly halted.

“…we have not been able to reach an agreement with any of the rights holders involved in the creation of the contents of the book of collected storyboards of Jodorosky’s Dune after two months of outreach, conversations with former business partners, and consultations with legal counsel,” the post continues.

“…Our research over the last two months has only increased our respect for their project, and we were so inspired by the book and learning more about its creation that we saw how we could create our own intellectual property that we own 100% and control all aspects of the production of an original animated limited series.”

#3 – What Are the Legal Consequences?

SpiceDAO, on the other hand, isn’t going away anytime soon, at least not with this project or anything related to Dune’s intellectual property.

For those new to the NFT and digital fine art worlds, intellectual property dominates everything, therefore knowing what “bundle of rights” you have in connection to Creative Commons license is essential to avoid making expensive errors like Spice DAO.

Creators of creative works in the United States are awarded a variety of “exclusive rights” that, when combined, form the “6 bundle of rights” known as copyright.

The Copyright Act, in particular, gives owners the following rights:

Right to reproduce the copyrighted work; Right to create derivative works based on the work; Right to make public copies of the work; Right to publicly perform the copyrighted work; Right to publicly exhibit the copyrighted work; and Right to digitally transmit the copyrighted work.

Copyright Law Doesn’t Allow For Rights Until 2056 At The Very Least

Currently, all copyright-eligible works produced on or after January 1, 1978 are protected for the term of the author’s life plus an extra 70 years after the author’s death, according to the law.

Herbert died in 1986, but his rights to the Dune work is secured under federal copyright law until at least 2056.

At the same time, because Jodorowsky is still alive, the book that the NFT collective purchased, which was produced in the 1970s to sell the idea to studios, is likely to be protected under copyright law until at least 2092, preventing any and all claims by third parties to the work, unless Jodorowsky chooses to transfer or assign rights to the book.

The Right to “Produce Derivative Works” is a legal term that refers to the ability to create works that are not original

A “derivative work” is defined as a work that is based on one or more preexisting works, such as a translation, dramatization, fictionalization, motion picture, art reproduction, or – in this case – an adaptation of an original work or “original limited television series” as defined by the Copyright Act.

Derivative works are protected by the original work’s copyright, which means that the original copyright owner’s copyright protection also applies to derivative works.

This implies that, although SpiceDAO may have acquired the adaptation, they are unable to do anything with it other than read it on their bookshelves without the consent of the adaptation’s owner, Jodorowsky, provided the derivative work is based on Jodorowsky’s work.

Even back then, nothing could be done with the Dune universe without the Herbert estate’s authorization. SpiceDAO’s acquisition of a director’s adaptation does not provide the collective this “bundle of rights” to create new work.

This pricey blunder serves as a reminder to everyone in the NFT field that no matter how much money you throw at projects, intellectual property law will nearly always win, therefore it’s better to grasp an owner’s “bundle of rights” before you start spending your and your communities’ money.

 

The “webcam sunlight” is a token that was issued by SpiceDAO. The token was sold for $3M, but the company has since had to issue refunds due to a bug in their smart contract.

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