10. Intellectual Property, Digital Art, and Emerging Economies

Intellectual Property; Patents and Copyright; Trade Secrets and National Security; Blockchain and Cryptocurrency; Digital Art and Generative-AI

The digital era has fundamentally transformed how we create, share, and profit from intellectual works. At the heart of this transformation are the concepts of intellectual property – copyrights, patents, and trade secrets – which were originally established to balance the interests of creators, inventors, and the broader public. These legal protections were ethically motivated: they aimed to reward creativity and innovation, ensuring that inventors and artists could benefit from their labor while ultimately enriching society as a whole. By granting temporary monopolies, societies hoped to incentivize the production of new knowledge, art, and technology, while eventually returning these works to the public domain for communal benefit.

However, as technology has evolved, so too have the ethical challenges surrounding ownership and control of ideas. Today, questions arise about the fairness and validity of these systems – especially when the legal owner of a creative work is not the original creator. For example, when a music label owns the rights to a song rather than the artist who composed and performed it, or when companies hold patents and trade secrets developed by employees, it prompts us to reconsider the original ethical justification for these protections. Are these arrangements still serving the public good, or have they shifted too far in favor of corporate interests? Do current laws adequately recognize the contributions of individual creators, or do they perpetuate power imbalances in the digital economy?

As you explore this chapter, consider:

• Who truly benefits from intellectual property laws in a digital, globalized world?
• Should the rights of creators be prioritized over those of corporations, or vice versa?
• How do emerging technologies like blockchain and generative AI challenge or reinforce traditional notions of ownership and authorship?
• What ethical responsibilities do companies have to the individuals whose innovations they profit from?

These questions invite you to critically examine not only the legal structures that govern intellectual property, but also the underlying ethical principles that justify – or challenge – them in today’s rapidly changing technological landscape.

Intellectual property (IP) refers to creations of the mind – such as inventions, literary and artistic works, designs, symbols, names, and images used in commerce – that are legally protected from unauthorized use or reproduction. Unlike physical property such as real estate, vehicles, or consumable goods, intellectual property is intangible: it can be shared or copied without depriving the original owner of its use. For example, while only one person can drive a specific car or eat a particular loaf of bread at a time, an unlimited number of people could read the same digital book or listen to a song without exhausting the original asset.

The concept of ownership in intellectual property mirrors some aspects of tangible property – such as the ability to sell, license, or bequeath rights to others – but also differs in important ways. IP rights can be transferred, inherited, or assigned, much like physical property, allowing creators or owners to grant permission for use, sell their rights, or pass them on to heirs. However, the time-bound and territorial nature of most IP rights means that, unlike land or a house, these rights eventually expire and the protected works enter the public domain, becoming freely available to all.

There are also clear legal and ethical boundaries regarding what can be owned. For instance, ideas themselves, natural phenomena, and mathematical formulas are generally not subject to ownership, though their specific expressions or applications might be. This creates gray areas – such as disputes over genetic information, traditional knowledge, or the line between inspiration and infringement – where the boundaries of ownership are continually negotiated. The evolving landscape of IP law reflects ongoing debates about how best to balance private rights with public benefit in an era where intangible assets are increasingly valuable.

Patents and copyright are two foundational forms of intellectual property protection, each with a long and evolving history rooted in the desire to encourage creativity and innovation. The earliest known patent-like rights date back to Ancient Greece. In medieval Europe, the concept matured: the Republic of Venice’s 1474 Patent Statute is considered the first codified patent system, granting inventors exclusive rights to new devices for a limited time to encourage disclosure and public benefit. Similarly, early copyright law emerged in England with the 1710 Statute of Anne, which shifted the focus from publisher monopolies to author rights, aiming to promote learning and the progress of knowledge by granting authors exclusive rights for a limited period.

In the United States, these traditions were enshrined in the Constitution, empowering Congress to grant authors and inventors exclusive rights “for limited times” to promote the progress of science and useful arts. The first federal copyright law, enacted in 1790, protected books, maps, and charts for 14 years, renewable for another 14 years if the author was still alive. Today, U.S. patents generally last 20 years from the filing date and cannot be renewed, though certain extensions are possible in specific cases (such as pharmaceuticals). Copyright protection for works created after January 1, 1978, typically endures for the life of the author plus 70 years. For works made for hire, anonymous, or pseudonymous works, the term is 95 years from publication or 120 years from creation, whichever is shorter. Copyrights cannot be “renewed” in the traditional sense, but older works under previous laws sometimes allowed for renewal terms.

The rapid pace of technological change raises important questions about whether these traditional time frames remain appropriate. In fields like software and digital technology, products and inventions can become obsolete within a few years, long before the expiration of a 20-year patent or multi-decade copyright. Shortening the protection period for rapidly evolving technologies could accelerate their entry into the public domain, fostering greater innovation and competition. For example, a system could be envisioned where software patents expire after 5–10 years, or where digital works have a reduced copyright term. This would allow society to benefit from shared knowledge and creative works more quickly, while still providing inventors and creators with a period of exclusive benefit. Such reforms would need to carefully balance the incentives for innovation with the broader public interest in access and progress.

Trade secrets are a powerful tool used by corporations to protect valuable information that gives them a competitive edge, such as formulas, algorithms, or business processes. Unlike patents or copyrights, which require public disclosure in exchange for legal protection, trade secrets are maintained through confidentiality and internal security measures. Famous examples include the Coca-Cola recipe and Google’s search algorithm, both of which remain undisclosed to the public and are closely guarded to maintain their economic value.

However, this secrecy can sometimes conflict with the public interest, especially when withheld information – such as pharmaceutical data or environmental impact data – could benefit society at large. Corporations may claim trade secret status not only to protect legitimate business interests but also to avoid scrutiny or regulation, raising ethical questions about where to draw the line between proprietary knowledge and the public’s right to know.

Similarly, governments often invoke “national security” as a reason to withhold information from the public, sometimes even when disclosure might serve the greater good. While there are legitimate reasons to keep certain details confidential – such as protecting citizens or critical infrastructure – the concept can be misused to obscure wrongdoing, prevent accountability, or stifle public debate. Both trade secrets and national security claims thus present a tension between the need for confidentiality and the ethical imperative for transparency. Striking the right balance is challenging: too much secrecy can erode trust and hinder oversight, while too much transparency can expose sensitive information to misuse or harm.These dilemmas prompt a range of critical ethical questions:

• Who gets to decide what qualifies as a trade secret or a matter of national security?
• What standards or rubrics are used to make these determinations, and are they consistent?
• How can these decisions be independently audited or reviewed to prevent abuse?
• Should there be time limits or periodic reviews for information classified as secret?
• Would greater transparency reduce the need for whistleblowers, or are some secrets always inevitable?
• How should the public interest be weighed against corporate or governmental interests in secrecy?
• What safeguards exist to ensure that claims of secrecy are not used to cover up misconduct or avoid accountability?
• Are there circumstances where the ethical imperative to disclose outweighs legal protections for secrecy?
• How can stakeholders – including employees, citizens, and regulators – challenge or appeal secrecy claims?
• What role should external watchdogs or independent panels play in overseeing decisions about secrecy?

These questions highlight the ongoing need for robust debate and oversight to ensure that trade secrets and national security claims serve the public interest rather than merely protecting private or institutional power.

Blockchain and Cryptocurrency

Blockchain technology has been promoted as a transformative solution for protecting digital assets by providing a decentralized, transparent, and tamper-resistant ledger. Unlike traditional databases, blockchain distributes records across a network of computers, making it extremely difficult to alter or erase past transactions. This architecture is seen as a major step forward in safeguarding traditional digital works – such as audio, video, and images – by ensuring clear, immutable records of ownership and provenance.

Likewise, the rise of Non-Fungible Tokens (NFTs) exemplifies this: NFTs are unique digital tokens on a blockchain that verify ownership and authenticity of digital items, ranging from digital art and music to virtual real estate and collectibles. For instance, an artist can mint an NFT representing a digital painting, which can then be bought, sold, or traded with its ownership history securely tracked on the blockchain. Similarly, cryptocurrencies like Bitcoin and Ethereum use blockchain to secure financial transactions, while also enabling new forms of digital property and decentralized finance.

Despite these advantages, blockchain-based asset protection is not without significant risks. One of the most critical vulnerabilities is the risk of permanent loss if a user loses access to their private wallet keys or passwords. Unlike traditional banking systems, there is no central authority to recover lost credentials, and it is estimated that up to 25% of all Bitcoin in circulation may be permanently inaccessible due to lost keys. This highlights the importance of robust key management and secure custody solutions, especially as digital assets become more valuable and widely adopted.

Additionally, while blockchain is currently considered highly secure, the advent of quantum computing poses a potential existential threat. Quantum computers, once they reach sufficient power – a milestone sometimes referred to as "Q-Day" – could theoretically break all of the cryptographic algorithms that underpin blockchain security, making it possible to forge transactions or steal assets. While estimates for Q-Day vary, some experts believe it could occur within the next decade, prompting urgent research into quantum-resistant cryptography and other safeguards to ensure the long-term viability of blockchain-based protections. As a result, while blockchain and related technologies offer powerful tools for digital asset protection and new models of ownership, they also introduce new categories of risk and uncertainty that must be carefully managed as the technology and its threats continue to evolve.

Figure 14: Picture of Dog using ChatGPT generated by Pixlr

Digital Art and Generative-AI

The digital revolution has dramatically expanded the possibilities for both creating and copying art, while also blurring the boundaries between original works, forgeries, and homages. In traditional terms, a forgery is an unauthorized imitation of an existing work, intended to deceive by passing off as the original. In the digital realm, the distinction between a forgery and a simple digital copy becomes less clear, as digital files can be reproduced perfectly and infinitely. Meanwhile, an homage refers to a new work that deliberately references or emulates the style of a particular artist, often as a form of respect or creative exploration rather than deception. The challenge lies in distinguishing between these categories, especially as generative AI tools can now produce images, music, or text that closely mimic the style of well-known creators.

Technological advances in forgery detection – using AI, blockchain, and watermarking – have made it possible to analyze digital artworks for inconsistencies, provenance, and originality. Yet, even with sophisticated tools, it can be difficult to determine whether a digital piece is a genuine original, a direct copy, a forgery, or a legitimate homage, particularly when AI-generated works are involved. This ambiguity complicates questions of ownership: if an AI model is trained on thousands of works by a specific artist and then generates a new piece "in their style," who owns the result? Is it the person who provided the prompt, the creators of the AI tool, or the original artists whose work was used to train the model?

These complexities raise a host of ethical questions, especially when considering the perspectives of art creators, tool/platform providers, and those whose works are used as models:

• Is it ethical for AI tools to be trained on copyrighted works without the original creator’s consent?
• Should the person who provides a prompt to a generative-AI model be considered the creator or owner of the resulting artwork?
• What rights, if any, should the original artists have when their styles or works are used to train generative models?
• If a platform profits from AI-generated art, should it compensate the creators whose works were used as training data?
• How can we distinguish between homage and unauthorized imitation in the age of generative AI?
• Should digital forgeries be treated differently from physical forgeries in terms of legal and ethical consequences?
• Who is responsible if generative-AI art is used to deceive or defraud others?
• Can or should ownership of AI-generated art be transferred, inherited, or sold like traditional artworks?
• What mechanisms should exist for artists to opt in or out of having their works used as AI training data?
• How do we ensure that innovation and creative freedom are not stifled by overly restrictive ownership rules in digital and AI art?

These questions highlight the evolving landscape of digital art and generative AI, where traditional notions of authorship, authenticity, and ownership are being fundamentally reexamined.

Textbook Definitions – Intellectual Property, Digital Art, and Emerging Economies

• intellectual property – Creations of the mind, such as inventions, literary and artistic works, designs, symbols, names, and images, that are protected by law and can be owned, transferred, or licensed.
• copyrights – Legal rights granted to creators for their original literary, artistic, or musical works, allowing them to control reproduction, distribution, and adaptation of those works.
• patents – Exclusive rights granted for new inventions, processes, or designs, giving inventors control over the use and commercialization of their inventions for a limited period.
• trade secrets – Confidential business information, such as formulas, practices, or processes, that provide a competitive advantage and are protected by secrecy rather than public registration.
• temporary monopolies – Time-limited exclusive rights granted to creators or inventors to control the use of their intellectual property, intended to incentivize innovation before works enter the public domain.
• fairness – The ethical principle of treating all parties justly and equitably, especially in the distribution and enforcement of rights and benefits.
• power imbalances – Situations where one party holds significantly more influence or control over resources, decisions, or rights than others, often leading to ethical concerns.
• Intellectual property (IP) – A category of property that includes intangible creations of human intellect, such as inventions, works of art, and symbols, protected by law.
• inventions – Novel devices, methods, or processes resulting from creativity and ingenuity, often eligible for patent protection.
• literary works – Original written creations, such as books, poems, and articles, protected by copyright law.
• artistic works – Creative visual or performance pieces, including paintings, sculptures, music, and films, covered by copyright protection.
• transferred – The act of legally moving ownership or rights from one party to another, such as through sale or assignment.
• inherited – The process by which ownership or rights are passed down from one person to another, typically upon the original owner’s death.
• assigned – The legal transfer of rights or interests in intellectual property from one party to another, often through a formal agreement.
• grant permission – To authorize another party to use, reproduce, or otherwise exploit a work or invention under specified conditions.
• expire – To come to the end of a legally defined period of protection, after which exclusive rights are no longer enforceable.
• public domain – The status of a work or invention whose intellectual property rights have expired or never existed, making it freely available for public use.
• public interest – The welfare or well-being of the general public, often considered in legal and ethical decisions about access to information or resources.
• Blockchain – A decentralized, distributed digital ledger technology that records transactions securely and transparently across multiple computers.
• Non-Fungible Tokens (NFTs) – Unique digital tokens recorded on a blockchain that certify ownership and authenticity of a specific digital asset, such as art, music, or collectibles.
• quantum computing – A field of computing that uses quantum-mechanical phenomena, such as superposition and entanglement, to perform calculations far beyond the capabilities of classical computers.
• Q-Day – The anticipated future date when quantum computers will be powerful enough to break current cryptographic systems, potentially compromising blockchain security.
• cryptography – The practice and study of techniques for securing communication and information through encoding, ensuring confidentiality, integrity, and authenticity.
• forgery – The act of creating a false or unauthorized imitation of a work, typically with the intent to deceive others about its authenticity.
• digital copy – An exact reproduction of a digital file or work, which can be duplicated without loss of quality or originality.
• homage – A new work created in deliberate imitation or tribute to the style or influence of another artist, usually as a sign of respect rather than deception.
• ownership – The legal right to possess, use, control, and transfer a property or asset, including intellectual property.