On the internet, nobody knows you’re a renter.

The important differences between copyright, licensing agreements, and property titles.

Bitmark allows property titles to be assigned to digital content and data. The ownership and history of these titles, which we call “bitmarks” are recorded in the blockchain. We aim to extend traditional property rights into the digital environment.

The Bitmark property system will provide a foundational legal and economic framework to allow digital works to be bought, sold, borrowed, passed down, rented, loaned, and more. Before we can do all of these things with our digital assets, we first must make property titles clean. Empowering individuals to own their digital lives will help transform the digital environment into an even more valuable economy for both companies and individuals.

A few important definitions:

  • Copyright — Exclusive rights granting the owner of an original literary, musical, or artistic work to distribute and use.
  • License Agreement — Authorization, for a specified time or territory, from the owner to use their asset. Often to grant use of copyright.
  • Property Title — Legal instrument claiming ownership of an asset. The title functions as bundle of property rights that can be transferred.

In the physical world, individuals have freedom because property rights are clear.

The ways we use things in the physical realm, whether we have ownership of them or not, are usually quite clear. For example, when you buy a book you can write in its margins, give it to your friend, take 10 years to read it, or even throw it away. When you borrow a book from the library, because you do not own it, you’re expected to return it within the library’s conditions (on time, no writing in it, not damaged, etc). What we can and cannot do with things in the physical world is clear because there is a framework of standardized property rights, rules, and infrastructure that make it clear.

Another way to look at this is that property rights enable freedom. Titles make property rights transferrable from one owner to another. (That has economic and social value which we will explain later in this post.) Even though you don’t have a property title for that book you bought, it is still considered property and you are legally acknowledge as the owner of that book. Specifically your book is a form of personal property. Possession of personal property is the most simple indication of title. If there is suspicion about someone’s ownership of the item, a proof of legal acquisition, such as a bill of sale or purchase receipt, could be necessary for an ownership transfer. But in nearly all cases of personal property, transfer of possession to a good faith purchaser will convey title, no document is required.

Environments without ownership rules and rights for individuals are chaos, an anarchistic state in which there is no protection, no longevity, no security or sustainability for one’s assets and belongings. There is no better example of this than the digital world.

In our digital lives, copyright has taken away our freedom.

Software first became valuable about 40 years ago. Those in power instituted a system of licensing instead of property titles.

Why did licensing become the standard? That requires a brief history lesson.

Originally, computer programs were not protected by copyrights because they were not considered fixed, tangible works. Object code was distinguished from source code. (Object code is instructions for machines — source codes are for humans.) Object code was viewed as a utilitarian good, produced from source code rather than as a creative work in and of itself.

The U.S. Copyright Office attempted to classify computer programs by drawing an analogy: the blueprints of a bridge and the resulting bridge, compared to the source code of a program and the resulting executable object code:

It was this very analogy that caused the Copyright Office to issue copyright certificates for object code under its Rule of Doubt.

In 1974, the newly established U.S. Commission on New Technological Uses of Copyrighted Works (CONTU) decided that computer programs, to the extent that they embody an author’s original creation, are proper subject matter of copyright.

Then in 1980, the U.S. Congress added the definition of computer program to existing copyright laws in order to allow the owner of the program to make another copy or adaptation for use on a computer. This legislation, plus court decisions such as Apple v. Franklin, clarified that the Copyright Act gave computer programs the copyright status of literary works. To simplify: Congress said compiling code is like writing War and Peace.

As a result, software companies began to claim that they did not sell their products but rather “licensed” them to customers. Why? Because this enabled them to avoid the transfer of property rights to the end-user via the first-sale doctrine. These software license agreements are now called end-user license agreements (EULAs).

The stuff you think you own in the digital world, isn’t actually yours.

It’s hard to overstate just how bad individuals have it.

For example, when you “buy” digital goods from the App Store, or when you “buy” books via Kindle, you’re not a owner. Apple and Kindle granted you a license to use their asset. This license is non-transferrable and revocable. This means that you can’t sell it on secondary markets or even give it away. And you’re beholden to their terms in using these assets, which they reserve the rights to change at anytime. In short, you thought you were buying but in fact you are renting. Licensing digital assets for use is as different from establishing digital property rights, as renting real estate is from owning buildings.

How can there be property rights on the internet for businesses but not individuals?

Individual humans create a lot of value by living their lives online — taking photos, sharing ideas and opinions, uploading personal financial and health information, and buying and storing things like music and movies.

In theory, individuals should capture at least some of the value they create. This afterall is the point of property systems, to reward those that create value with proper legal protection and ownership over their creations and inventions. Yet on the internet, property rights are actively discouraged.

Copyright law cannot empower individuals in their digital lives because the foundation of the internet was built on licensing. There are two distinct problems caused by adopting copyright as the dominant property type structure on the internet. First, most personal data cannot be copyrighted for the simple fact that it’s not a creative work; applying the rules that we use for creative works wouldn’t easily apply to (say) search history. Second, if you create digital work or information within these digital platforms, by their terms of service, they reserve the rights to make or sell future copies and even create derivative works from your asset. The ability to make derivative works is an immensely valuable exclusive right reserved for the copyright owner! (This is why, for example, Disney lobbies so hard to extend copyright terms.)

Within the current digital environment individuals are renters — seldom owners — regulated to renting rules. Big companies aim to build network growth for themselves by locking down your personal data and assets. They do everything in their legal power to reserve as many rights and control points as possible over your data. Big companies make money by tapping into the enormous amount of “free” information created by individual internet users, bundling it together and selling it to the highest bidder.

Most governments are not helping, either. Rules around how data can be owned, shared, and used are rare to nonexistent. And because of this, individuals are losing out.

When individuals own property, immense value is unlocked for everyone.

Data is the “oil” powering the digital economy. Data is the next major asset class. How much value can be unlocked for the world at large if individuals had property rights over data? That is unknown. But history can give us an idea:

The ability to privately own land gave birth to the agricultural revolution. This, we call real property. We know well how the rules of real property work: we can buy a home, rent it out, and bestow our valuable property to our heirs when the time comes.

When individuals forced the democratization of the ownership of ideas and inventions, after a brief period of time, the industrial revolution emerged. The legal framework of Intellectual property unlocked immense value for individuals and businesses alike by creating an entirely new economy.

Now, with data, we are in a dark age; individuals have no property rights. We have lost our freedom to benefit from the most important economy the world has ever seen. The Bitmark system was created to provide a legal and economic framework for digital property.

Digital property will level the playing field for who can achieve success online — creating new avenues for wealth, prosperity, and achievement on the Internet that are not currently possible for the vast majority of people.

The movement to restore freedom in our digital lives has already begun. Last month, we partnered with IFTTT to release a simple tool for digital estate planning. Subscribe to our newsletter and we will keep you updated about our progress transforming the internet into a new system built on individual freedom and empowerment.

By Bitmark Inc. on August 11, 2017.