The article gives a brief analysis of the place of a cryptocurrency in the system of objects of civil law rights. According to the results of the study, the authors conclude that it is incorrect to equate legal regimes of the cryptocurrency with the legal regime of virtual objects. The authors consider it promising to regulate legal features of the distributed ledger and register objects of civil law rights in the distributed ledger. A cryptocurrency is a means of payment that has no independent value. Thus, the mechanism of performance of obligations needs special elaboration. It is also noted that in the legal regulation of any social relations an essential role is assigned to the mechanisms and guarantees of restoration of violated rights and legitimate interests. To this end, the cryptocurrency regulation is inextricably linked with the institution of civil liability. The cryptocurrency combines the features of many civil law rights, but does not fully correspond to any of them. The assignment of the cryptocurrency to other property is possible within the framework of the current legislation without creating new objects of civil law rights, which can lead to conflicts and disputes concerning their legal regime.
The principles of contract law have shown continued resilience in light of constant technological developments, including the mainstream adoption of the Internet. The ability to absorb technological change may be attributable to the broad manner of their formulation. For example, the foundational proposition that ‘legal intention can be expressed in any manner’ has enabled the nearly seamless acceptance of online contracting. If intention can be manifested by a nod or a handshake, it can also take the form of a click or a swipe. Similarly, the requirement of consideration can be met not only by peppercorns or money, but also by one’s permission to share personal information in return for the provision of online content and services. While the Internet hardly creates academic excitement anymore, a number of internet- related technologies may pose a challenge to the principles of contract law and may, finally, test their flexibility. Purportedly, blockchain-based smart contracts, which are often defined as the encoding of legal terms in self-executing computer code, enable not only the automation of performance but also the delegation of enforcement to immutable code. The theory is that if both performance and enforcement are entrusted to impartial machines, breach becomes impossible. Smart contracts are also premised on the ability to translate contractual obligations into algorithms – a process aimed at the elimination of ambiguity and enhancement of legal certainty. Abstracting from technological minutiae, we must inquire whether, or to what extent, such ‘operations’ are desirable or legally permissible. The challenges of automation are further aggravated by advancements in artificial intelligence. The accompanying problems exceed those inherent in the possibility of inadvertent orders, unforeseen transactions or computer errors. We are forced to inquire whether such technological phenomena as algorithmic trading, machine learning or autonomous agents affect the existence of intention and, on a broader level, raise problems concerning the validity and enforceability of any resulting contract – if only due to the unprecedented transactional imbalances introduced by them. An additional set of difficulties concerns ubiquitous computing, loosely defined as the user-facing technologies involving the Internet-of-Things (‘IoT’). Smart objects and self-checkout terminals blur the division between online and offline environments and force a revision of our understanding of ‘online contracting.’ When the Internet spills over our computer screens and when we encounter requests for consent and contractual terms in contexts that have traditionally been non-commercial, it becomes difficult to rely on such basic principles as the objective theory of contract or on the presumption that in commercial contexts the parties intend to be legally bound. The point is not to question the continued applicability of such principles or presumptions but to illustrate the difficulty in their application. In sum, my chapter explores the legal implications of the said technologies and, while abstaining from unnecessary futurism, presents a realistic picture of their legal relevance. Particular attention is devoted to the overreaching question whether the principles of contract law, in their traditional formulation, are capable of accommodating (or withstanding ?) technological change. While it is difficult to predict technological trajectories and future legal developments, it is possible to extrapolate from existing trends and anticipate certain theoretical bottlenecks created by technological change.
Automation is taking hold in different aspects of business across every industry and every sector. Consistent with this trend, the notion of embedding automation into legally binding contracts is also gaining momentum. COVID-19 is fuelling digital transformation and has highlighted frustrations with static contracts that sit disconnected from digital processes and systems. As automated ‘smart contracts’ become more common, lawyers have been grappling with how to preserve the legal integrity of the contract whilst harnessing the benefits of automation and digital connectivity. Automation of contract performance is a field lacking in standard definitions. This paper proposes a framework to assist discussion and development of legally enforceable automation of contract performance and explores high level features of contracts along the spectrum of contract automation by proposing an initial model for the levels of automation (and digitalisation). This model draws analogies with the SAE International J3016 “Levels of Automation” widely adopted for autonomous vehicles.
The object of the present work is to provide a legal analysis of the formation of legally binding agreements through blockchain-based smart contracts. Smart contracts are computer codes that are capable of running automatically upon the occurrence of specific conditions and according to pre-specified functions. These codes can be stored and processed on a blockchain and any change is recorded in the blockchain. The expression “smart legal contract” refers to the use of smart contracts in the contractual domain to perform already existing contracts or to express legally binding agreements in the form of lines of computer code. Regarding the latter, researchers question whether blockchain-based smart contracts can be considered legally binding contracts. The study aims at putting in correlation contract requirements with blockchain- \nbased smart contracts. The scope of the analysis is to verify how to interpret the rules on contract formation to make blockchain-based smart contracts fit into contract law.
Property law has traditionally relied on tangible boundaries to delineate legal thinghood and to inform the bounds of in rem rights and duties. Unfortunately, property doctrines have fossilized around tangibility, causing fragmentation in the legal treatment of digital assets. In the United States, for example, cryptocurrencies and non-fungible tokens (NFTs) may simultaneously be classified as commodities, securities, currencies, assets, or not property at all, depending on the jurisdiction, domain, or specific asset in question. This fragmented system of overlapping legal treatments increases the information cost of using digital assets, decreases efficiency, and ultimately hinders future innovation.\nIn this Article, I propose a unified and tech-neutral approach to legal thinghood, providing a theoretically coherent and robust way to increase property law’s resilience in adapting to future technologies. Specifically, I deconstruct the conceptual purpose of tangibility in traditional doctrines of legal thinghood, uncovering its role as a technology (i.e., a tool) in property law to delineate rights. From this insight, I derive a coherent doctrinal test for distinguishing between digital assets that fulfill all conceptual requisites to be legal things and assets that do not. By doing so, I conclude that the traditional ontological categories of property law, such as choses in possession, are sufficiently robust to incorporate new and evolving digital assets. This tech-neutral approach paves the way toward an elegant and efficient legal treatment of digital assets and digital resource management in the twenty-first century.
Licensing is one of the essential means of exploiting the monetary value of a musical work, and yet it is an area fraught with many issues and transactional costs which make it a difficult process for individuals and organizations. Many issues in music licensing arise from the legal complexity (e.g., national and international copyright law), business complexity (authentication, tracking, accounting, etc.), value web complexity (transparency of relationships among stakeholders), and technical complexity (e.g., establishing a global repertoire database for music, sufficient metadata standards) of working with music. Then, in addition to these issues, there are specific transactional costs (identification, negotiation, monitoring, and enforcement) associated with the licensing process. To mitigate the complexity and transactional costs associated with music and the licensing process, researchers and technologists have been investigating how new technologies and design models from the Web3 space, such as blockchain, linked data and Ricardian Contracts, can automate processes to reduce complexity, speed up payments, improve tracking, and provide other benefits in the music industry. In our report, we make our own attempt to reduce the complexity and transactional costs in the licensing process by developing an automated music license. In doing so, we first conducted a literature review scoping the intersection of music complexity and Web3 technologies to provide background and context to automating music licensing. Then we developed the Practical Tokenized Drafting (PTD) method, a set of core principles and practices for drafting Ricardian Contracts that interact with Web3 technologies (RC-Web3 Templates), and the Tokenized Music License (TML), an RC-Web3 Template standard form for music licensing on the OpenLaw platform. Both the PTD and TML can be adapted to meet the needs of music industry stakeholders and provide guidance to legal practitioners in drafting RC-Web3 Templates.
Elena B. Zavyalova, Ekaterina I. Shumskaia, Alexandra I. Shumskaia
Introduction. Smart contracts have become demanded agreements in the modern market with the development of crypto-currency due to their ability to provide and guarantee enforcement. To date they are performed automatically using blockchain technology. Smart contracts are the subject of debate in many countries, primarily because issues have arisen in their legal enactment in the field of regulation of digital assets and the legal recognition of blockchain technology itself, which determined the purpose of this scientific research. For the purpose of a deeper understanding of the essence of this type of agreements, a historical method has been applied in the work on the features of the formation of smart contracts. To identify key differences, a formal legal and comparative analysis of smart contracts with classical contracts in electronic form was carried out. The areas of application of smart contracts in the world and in Russia, such as banking, healthcare, insurance and public services, were also studied. Materials and methods. The methodological basis of the study was made up of the following general scientific and special methods of cognition of legal phenomena and processes, including systemic, historical, formal legal, comparative and analytical approaches. Results. An assessment is made of such contracts from the point of view of the existing civil law of the Russian Federation and further directions for study and development are proposed, including the improvement of the regulatory and institutional environment to maintain legal certainty. Discussion and conclusion. The existing legal regulation does not prohibit the use of smart contracts in the business practices of companies and individuals. But the simplicity of the transaction implementation algorithm built on the blockchain still requires some legal support.
Prosecutor's Office of Moscow Region, Madina M. Dolgieva
ПРОТИВОДЕЙСТВИЕ ЛЕГАЛИЗАЦИИ ПРЕСТУПНЫХ ДОХОДОВ ПРИ ИСПОЛЬЗОВАНИИ КРИПТОВАЛЮТЫРассматриваются рекомендации Группы по разработке финансовых мер борьбы с отмыванием денег и финансированием терроризма, которая с 2018 г. приступила к разработке обязательных правил регулирования криптовалютных бирж и обменников.На основе исследованных рекомендаций обосновывается вывод о необходимости включения в уголовный закон нормы об ответственности за неправомерный оборот криптовалюты, вследствие чего нормы
The present chapter will look at the possible application of smart contracts in the intellectual property arena in general, but it will specifically discuss mostly copyright solutions, although a few uses apply to different areas of protection. This presents a few challenges, at the time of writing many of the proposals that will be discussed have not yet been implemented, or are in a prototype level, and as such we may have to assume their viability based on nothing other than a few examples that have not been fully tested. Similarly, legal discussions about the blockchain and smart contracts tend to be surrounded by considerable hype, often fuelled by commercial interests, and it is often difficult to separate facts from sales pitches. This is why this work will try to take a more sceptical approach to the phenomenon.
The technology that makes smart contracts possible was developed with a view to enabling transactions to be made end-to-end without the intervention of third parties, intermediaries, adjudicators or courts. In this sense, it achieves in principle complete freedom of interaction. Whether this is the same thing as freedom of contract, however, remains to be seen. It is not yet clear, for example, which smart contracts will be legally enforceable, either because the parties do not want them to be, and/or because the courts do not recognise them as being so. What seems inevitable at this stage in the development of smart contract technology is that conventional contract law in its current form is unlikely to be the most effective way of adjudicating smart contract disputes. One reason for this is that securing performance will be far less of a problem under smart contracts than it is in relation to conventional contracts: the automated nature of the former means that actions are far more likely to be executed than those promised in the traditional way, albeit that their results might not accord with the parties’ expectations. Any issues are therefore far more likely to arise (or at least to be brought to a court’s attention) after a transaction has occurred. Automated execution means that parties are free to determine the contents of their agreements, and that machines will abide by those agreed instructions. The way in which smart contracts operate, therefore, means that any adjudication of them is likely to need to emphasise restorative rather than enforcement remedies. The extent to which the law chooses to do this will effectively determine how free smart technology users are to make legally recognised contracts.
This study investigates the role and functionality of special nucleotide sequences (DNA signatures) to detect the presence of an organism and to distinguish it from all others. After highlighting vulnerabilities of the prevalent DNA signature paradigm for the identification of agricultural genetically modified (GM) organisms it will be argued that these so-called signatures really are no signatures at all - when compared to the notion of traditional (handwritten) signatures and their generalizations in the modern (digital) world. It is suggested that a recent contamination event of an unauthorized GM Bacillus subtilis strain (Paracchini et al. (2017)) in Europe could have been - or the same way could be - the consequence of exploiting gaps of prevailing DNA signatures. Moreover, a recent study (Mueller (2019)) proposes that such DNA signatures may intentionally be exploited to support the counterfeiting or even weaponization of GM organisms (GMOs). These concerns mandate a re-conceptualization of how DNA signatures need to be realized. After identifying central issues of the new vulnerabilities and overlying them with practical challenges that bio-cyber hackers would be facing, recommendations are made how DNA signatures may be enhanced. To overcome the core problem of signature transferability in bioengineered mediums, it is necessary that the identifier needs to remain secret during the entire verification process. On the other hand, however, the goal of DNA signatures is to enable public verifiability, leading to a paradoxical dilemma. It is shown that this can be addressed with ideas that underlie special cryptographic signatures, in particular those of ‘zero-knowledge’ and ‘invisibility.’ This means more than mere signature hiding, but relies on a knowledge-based proof and differentiation of a secret (here, as assigned to specific clones) which can be realized without explicit demonstration of that secret. A reconceptualization of these principles can be used in form of a combined (digital and physical) method to establish confidentiality and prevent un-impersonation of the manufacturer. As a result, this helps mitigate the circulation of possibly hazardous GMO counterfeits and also addresses the situation whereby attackers try to blame producers for deliberately implanting illicit adulterations hidden within authorized GMOs.
This Article outlines a blockchain based system to solve the orphan works problem. Orphan works are works still ostensibly protected by copyright for which an author cannot be found. Orphan works represent a significant problem for the efficient dissemination of knowledge, since users cannot license the works, and as a result may choose not to use them. Our proposal uses a blockchain to register attempts to find the authors of orphan works, and otherwise to facilitate use of those works. There are three elements to our proposal. First, we propose a number of mechanisms, included automated systems, to perform a diligent search for a rights holder. Second, we propose a blockchain register where every search for a work’s owner can be recorded. Third, we propose a legal mechanism that delivers works into orphanhood, and affords a right to use those works after a search for a rights holder is deemed diligent. These changes would provide any user of an orphan work with an assurance that they were acting legally as long as they had consulted the register and/or performed a diligent search for the work’s owner. The Article demonstrates a range of complementary legal and technological architectures that, in various formations, can be deployed to address the orphan works problem. We show that these technological systems are useful for enhancement of the public domain more generally, through the existence of a growing registry of gray status works and clarified conditions for their use. The selection and design of any particular implementation is a choice for policy makers and technologists. Rather than specify how that choice should look, the goal here is to demonstrate the utility of the technology and to clarify and promote its role in reforming this vexed area of law.
The author examines the features of the use of smart contracts in transactions in virtual property, taking into account the fact that the smart contract is a way of fulfilling those obligations in which the transfer of property provision takes place in the virtual world with the help of appropriate technical means. It should be recognized that the list of virtual property is open, at the moment it includes, for example, cryptocurrency, domain names, «game property», virtual tokens. The question of the legal nature of objects related to virtual property is relevant: are they a new independent type of property requiring special legal regimes, or are they a form of known property rights? The paper also notes that smart contracts differ in both vulnerabilities in computer code and insufficiently effective legal regulation. Smart contract, in the opinion of the author, is a kind of written (electronic) form of a contract, the peculiarity of which is that the will of the subject is expressed by means of special technical means in the form of program code. In this case, the will to conclude the contract simultaneously means the will to its execution upon the occurrence of certain conditions of the contract circumstances. In conclusion, the author shows that the automation of performance of obligations in particular and the digitization of contract law in general should not create obstacles to the implementation of the fundamental principles of good faith and contractual justice, to assess the proportionality of the distribution of rights and obligations of the parties, the equivalence of their property.
Michael Fröwis, Thilo Gottschalk, Bernhard Haslhofer, Christian Rückert · 5 authors
Analyzing cryptocurrency payment flows has become a key forensic method in\nlaw enforcement and is nowadays used to investigate a wide spectrum of criminal\nactivities. However, despite its widespread adoption, the evidential value of\nobtained findings in court is still largely unclear. In this paper, we focus on\nthe key ingredients of modern cryptocurrency analytics techniques, which are\nclustering heuristics and attribution tags. We identify internationally\naccepted standards and rules for substantiating suspicions and providing\nevidence in court and project them onto current cryptocurrency forensics\npractices. By providing an empirical analysis of CoinJoin transactions, we\nillustrate possible sources of misinterpretation in algorithmic clustering\nheuristics. Eventually, we derive a set of legal key requirements and translate\nthem into a technical data sharing framework that fosters compliance with\nexisting legal and technical standards in the realm of cryptocurrency\nforensics. Integrating the proposed framework in modern cryptocurrency\nanalytics tools could allow more efficient and effective investigations, while\nsafeguarding the evidential value of the analysis and the fundamental rights of\naffected persons.\n