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

Money may be able to buy you NFTs, but it will never allow an NFT owner to buy their way out of complying with federal copyright laws. With the growing popularity of NFTs and digital fine art, there still seems to be confusion as to whether intellectual property law has any place in the fintech space.

If you take anything away from this piece it’s that intellectual property governs this space and will put any NFT owner and/or its project in its lawful, rightful place – no matter how much money is involved.

Which brings us to the industry’s arguably most important learning lesson for any NFT owner and/or project – SpiceDAO and Dune.

The underlying problem and most concerning for NFT owners in the space is that of Spice DAO, who truthfully believed that with their purchase of Jororowsky’s Dune, that they owned the rights to Dune – but they don’t. The only rights they acquired the rights to was a very, very expensive adaptation of the original Dune work by Herbert – nothing more.

For context, it’s important to note that Herbert’s novel Dune has been filmed three times in history, beginning with David Lynch’s 1984 version, a TV miniseries in 2000, and Denis Villeneuve’s 2021 version through Legendary Pictures released last autumn starring Timothee Chalamet, Zendaya, and Oscar Isaac.

So, what happened? Let’s do a brief recap.

#1 – A Really Expensive Book With Beautiful “Would-Be” Concept Art

In 1974, French-Chilean director Alejandro Jodorowsky acquired the film rights to Dune and created a full concept adaptation of what he envisioned for Herbert’s original work.

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 that Jodorowsky produced, bringing us to its recent and short appearance in the NFT space with one of those copies being purchased at auction for $3 million at Christie’s.

As stated above, this copy is not the original Dune story written by Frank Herbert, but a book about the unmade film that Jodorowsky had planned, before it got axed by the studios due to its allegedly insane budget.

The copy, in its entirety, contained the “would-be” script, concept art, and other materials produced by Jodorowsky.

#2 – Enter SpiceDAO

SpiceDAO is the primary party involved here, as well as the biggest (and most unfortunate) suckers in this story for one major reason – continuing the misinformed belief that copyright law has no place in this 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.

Members of SpiceDAO, a decentralized autonomous organization that has dedicated itself to buying and developing projects based on Hodorowsky’s vision announced via Twitter back in early January that it had won a November auction, obtaining the rights to this adaptation, and stated that:

1) it wanted to “make the book public (to the extent permitted by law)” as well as
2) create an “original animated limited series” that is “inspired by the book” and
3) “sell it to a streaming service” for purposes of creating derivative works from it.

We won the auction for €2.66M. Now our mission is to:

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

2. Produce an original animated limited series inspired by the book and sell it to a streaming service

3. Support derivative projects from the community pic.twitter.com/g4QnF6YZBp

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

The adaptation, initially listed on Christie’s for auction was valued at $30,000, with a crowdfunding effort that attempted to raise $750,000 to buy the copy. However, to avoid a similar fate to that of ConstitutionDAO, where attempt to buy a copy of the U.S. Constitution was thwarted by a last-minute bid by investor Ken Griffith, SpiceDAO’s co-founder, Soban Saqib, 25, decided to just buy the Dune adaptation for $3 million in November.

Once purchased, Spice DAO’s plan, according to the group, was to sell the individual pages from the book as NFTs and then burn the physical book after the NFTs sold.

Bringing us to the legality and the ridiculousness of what happens when you just throw money at things, hoping you can buy your way into the right circles.

A week after the announcement, SpiceDAO posted to Medium that they did not have any rights to Herbert’s original 1965 novel, but were moving forward with plans to create an original animated series – which was of course, quickly stopped in its tracks.

The post continues explaining that “…after two months of outreach, conversations with former business partners and consultations with legal counsel 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.”

“…Our research over the past 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 develop our own intellectual property that we own 100% and control all aspects of the production of an original animated limited series.”

#3 – What’s the Legal?

Unfortunately, for SpiceDAO, they’re not going anywhere anytime soon – at least with this project and anything associated with Dune’s intellectual property.

For those coming into the NFT and digital fine art space, intellectual property rules all, so a clear understanding of what “bundle of rights” one has in relation to that of Creative Commons licensing is a must to avoid naïve, costly mistakes as we have seen here with Spice DAO.

Under U.S. copyright law, creators of original works are granted a number of “exclusive rights” that, together, comprise the “6 bundle of rights” known as copyright.

Specifically, the Copyright Act provides owners with the:

Right to reproduce the copyrighted work;
Right to prepare derivative works based upon the work;
Right to distribute copies of the work to the public;
Right to publicly perform the copyrighted work;
Right to publicly display the copyrighted work; and
Right to digitally transmit to publicly perform the copyrighted work.

Copyright Law Doesn’t Afford Rights Until At Least 2056

Currently, the law states that all copyright-eligible works created on or after January 1, 1978 are protected for the duration of the author’s entire life plus an additional 70 years after the death of the author.

Herbert, who owns the original copyright to the Dune work, died in 1986, and is protected under federal copyright law until at least 2056.

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

The Right to “Produce Derivative Works”

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

Derivative works are afforded protection under the copyright of the original work, meaning that the copyright protection for the owner of the original copyright also extends to derivative works.

For SpiceDAO, what this means is another clear legal fact that while they may have purchased the adaptation, they cannot do anything with it other than enjoy it on their bookshelf without the permission from the adaptation’s owner, Jodorowsky, assuming the derivative work would be based off Jodorowsky’s work.

Even then, nothing could be done with the Dune world without the permission from the Herbert estate. Just because SpiceDAO purchased an adaptation by a director, does not give the collective these “bundle of rights” to produce new material.

This costly mistake is a reminder to everyone in the NFT space that no matter how much money you throw at projects, you will almost always lose to intellectual property law, so it’s best to understand an owner’s “bundle of rights” before you start investing you and your communities’ money.

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*All investment/financial opinions expressed by NFT Plazas are from our site moderators’ research and experience and are intended as educational material only. Individuals are required to research any product before making any investment thoroughly.

Andrew Rossow is a licensed attorney, law professor, journalist, and anti-bullying activist. He often speaks on and writes on the cross-section of law and technology, with an emphasis on Web3, NFTs, blockchain, and cryptocurrency.