Introduction
For thirty years, comparative private international law specialists have been trying to find a uniform solution to the questions of jurisdiction and applicable law in the presence of a contractual or tort situation generated in a digital environment. Most States have adopted a solution in line with their legal culture, which means that disparities persist. Nevertheless, there is no terra nullius: the state authorities (legislators and judges) have thwarted the inclinations of libertarian beliefs defending an a-national Internet but also obliterating institutions.
Issues of jurisdiction and applicable law rebirth in digital environments developed using protocols specific to distributed ledger technologies (DLT), including blockchain. Hence the following question: how to determine the competent court in the event of an infringement of an intellectual property right perpetrated within the framework of a DLT? The difficulty arises from the distributed or decentralized nature of the intangible asset constituting the infringement since, given its nature, the latter is endowed with ubiquity. In other words, the infringing crypto-asset is everywhere at once, which is equivalent to nowhere in private international law. The traditional rules of conflict of jurisdictions offer several solutions.
1. Dispute resolution clauses
Thus, the choice of court clause, when it complies with the applicable law, must be respected by the judge called upon to implement it. However, it is unlikely that the owner of the intellectual property right and the infringer will agree on a competent court. At the very least, one could imagine clauses conferring jurisdiction in contracts between, on the one hand, the infringer and, on the other hand, an intermediary platform (for example, a platform linking sellers and buyers of NFT or decentralized domain names such as Opensea, Rarible or Polygon). However, the clause would be unenforceable against the plaintiff in such a case.
2. Forum rei and the question of the identification of the defendant
In the absence of a dispute settlement clause, the solution in principle common to many legal systems consecrates the court of the defendant’s domicile or usual place of residence. However, within a DLT-based architecture, the localization of the forum rei is problematized by two obstacles. First, by definition, decentralization leads to a plurality of possible forums. One solution could be to focus on the public key (or a resulting address) used to commit the wrongful act. However, in the current state of technology and the legislation in force, it seems that the localization of the public key would not necessarily help to identify the infringer infallibly. Furthermore and secondly, the location and the identification of the defendant are interdependent. Within an architecture based on a DLT, the guarantee of anonymity seems to be set up as a dogma. Web2 facilitates anonymity and creates a feeling of impunity, but justice has the power to order intermediaries to disclose necessary information allowing the identification and conviction of perpetrators of cyber crimes or cyber torts. In contrast, the cryptosphere is built on a peer-to-peer system, meaning users can do without intermediaries. In addition, in the cryptosphere, anonymity and impunity seem guaranteed, at least in the current state of technology and legislation. In other words, everything is done to limit the possibilities of identifying and locating actors, including the perpetrators of cyber crimes and cyber torts. However, the cryptosphere is not devoid of intermediaries. Indeed, some companies provide decentralized domain name creation services, while others facilitate the creation and exchange of “crypto assets” such as NFTs and decentralized domain names. In the presence of such an intermediary, assuming that the latter can be prosecuted in this capacity – which is not excluded – the competent court could therefore be that of the intermediary’s registered office.
3. The court in whose jurisdiction the causal event occurred
In some legal systems, the court in whose jurisdiction the causal event occurred is competent to rule on all of the damage suffered, constituting a substantial advantage in multi-location damage cases. Indeed, this solution allows the victim of infringement to seize a single judge who, within the framework of a single legal procedure, will rule on the entirety of the damage suffered, that is to say, wherever the intellectual property right is effectively and validly protected. In the hypothesis of a cryptoasset infringing an intellectual property right, the causal event refers to the creation (minting) of the concerned intangible good, which coincides with the registration of the data, most often on the interplanetary file system (InterPlanetary File System or IPFS). IPFS is a peer-to-peer protocol that has the principle of simultaneously distributing copies of a file in several nodes located in machines probably located in different states. Such circumstances do not make it possible to locate the triggering event with certainty. The identification of the court of the place of the causal event, therefore, seems compromised.
Nevertheless, one can wonder whether, in certain cases, the IP address could not be used to identify/geolocate the author of the infringing content. This hypothesis is possible when the disputed cryptoasset was created using a platform (for example, Opensea provides this service). However, it should be borne in mind that the IP address in question could have been rented, making things even more complex.
4. The court in whose jurisdiction the damage was suffered
In several legal systems, two theories are opposed. First, the theory of accessibility allows the court to consider itself competent simply because the disputed content is accessible within its jurisdiction. Conversely, the “focus theory” designates the court whose jurisdiction the author of the disputed content intentionally targets the public. The method of determining the target audience is that of a set of indications such as the domain name, the currency, or the language of the disputed content. For example, the French draft code of private international law enshrines the theory of accessibility (Article 105, specific to intellectual property issues, refers to the general principle consecrated in article 93: justice.gouv.fr). However, there is a corollary to this principle: the competent court can only hear the portion of the damage caused within the scope of its jurisdiction. To obtain total compensation for the damage suffered in all the territories in which the concerned intellectual property right is protected, the victim of the infringement has two options. The first would be to sue the defendant before the court of the place of the causal event. However, as we have mentioned earlier, the localization of the causal event seems, if not illusory, at the very least, complex. For lack of anything better, the second option would be tantamount to sue the infringer before each court in whose jurisdiction the infringement of the intellectual property right is found, which would raise a serious problem of access to justice. The holder of the intellectual property right would have no choice but to engage in forum shopping to assess his chances of compensation and to seize only the court which would grant him the most significant compensation.
Conclusion
DLTs exacerbate the complexity of jurisdictional issues in the digital environment. The key seems to be in identifying the perpetrators of wrongful acts committed in the cryptosphere. Admittedly, the right to anonymity is a pillar of distributed ledger technologies. However, as fundamental as it is, the right to anonymity is not absolute. Of course, the question goes far beyond issues related to intellectual property. Web1 and Web2 actors have been forced to identify the perpetrators of cyber torts and cyber crimes. It is argued here and there that the cryptosphere would be devoid of intermediaries. This is not entirely true, especially considering the already large ecosystem on which the crypto economy is based. In the absence of being able to identify the author of an infringement and in the impossibility of locating his domicile or his usual place of residence, it could be envisaged to involve these intermediaries.
This article was first published in News From There, our Web3 Brand Protection Newsletter, Issue, February 2023.
