(By Lv Xuanxuan)
Digital collectibles (artworks) that emerged over the past year or so are a hot topic in culture and art. As one example, an artist uploads a digital file of painting, audio, video or creative works in other forms onto a third party platform, creates a file copy on the digital book of a block chain as “NFT” and backs it up with encrypted currency. As another example, a performance organizer sells tickets with characters in a play (art images) on a third party platform. Digital collectibles (artworks) come from “NFT” applications. “NFT” technology is used to record ownership of artworks or collectibles and other assets. “NFT” is the abbreviation of “Non-Fungible Tokens” which according to Collins English Dictionary means a digital certificate registered in a block chain and is usually translated into Chinese as “non-homogenous tokens”.
This article focuses on digital collectibles (artworks) relating to live performance and deals with relevant legal issues from three aspects of criminal law application, civil right protection and copyright and related right protection.
I. What is a play’s digital derivatives
We will analyze a play’s digital derivatives and attempt to define their extentions based on the legal meaning of a play.
(I) Digital derivatives
Digital derivatives are contained in data and displayed as (two or three dimensional) images and may be a type of online virtual property. In a recent case regarding infringement of the right of communication through information network between Qice Company and a technology company heard by Hangzhou Internet Court, the court decided the value of the NFT work of “Tiger Being Vaccinated” from the aspect of protecting the copyright owner’s right of communication through information network, which could be seen as a judicial comment on the nature of property in digital artworks. In the Instructions on Legal Services and Support for the Improvement of the Socialist Market Economy Mechanism in the New Age, the Supreme People’s Court notes that “protection of new interests such as digital currency, online virtual property, data should be strengthened”. In Article 127 of Civil Code, data and online virtual property should be protected according to relevant legal provisions, if any. We believe that without a complete set of legal provisions in existing laws, judicial opinions on online virtual property related cases are a helpful guide for approaches to protecting data and online virtual property.
(II) Online virtual property
The legal nature of online virtual property should be decided by respecting the civil entity’s right to act at their own will and freedom to make contracts. In the Ms. Yu v Guangzhou Huaduo Network case, the court defined the parties’ rights and obligations based on the contract between the internet users and the internet service provider without directly answering disputed questions about the nature and transaction rules of online virtual property, etc.. Online virtual property must rely on a specific internet platform run by a particular operator, forming a contractual relationship between internet users and the internet platform. Therefore, online virtual property can be defined under the contract between users and the internet platform. For example, in the user manual of the website NFTCN, “digital derivatives” include prints with artist’s autograph or of a limited edition specifically for collection and appreciation, stationery, daily necessities, clothes or accessories printed with an artist’s representative works, and collectible virtual or tangible items combined with artist elements, etc. The completion of registration on the website means that the user accepts the above provisions and the website and the user agree on what digital derivatives are. Therefore, we believe that digital derivatives relating to live performance can be defined on the basis of the agreement with the online platform and the legal meaning of a “play”.
(III) A play’s digital derivatives
In general, live performance is an exercise of the right to perform a “play”, a type of works under Article 3.2 of the Copyright Law. Subject to rechtsschein theorie, the ambit of copyright in a play should be defined according to what the audience can feel. In the copyright dispute regarding the movie Nezha: Birth of the Demon Child where approaches to protecting the “whole play” in copyright law were clarified, it was decided that the “work performed on the stage” should be protected in the same way as the play and the play was not limited to scripts. Based on this, we define “a play’s digital derivatives” as online virtual commodities that contain specific elements of a play performance and are displayed and stored in the form of data, usually with exchange value and price.
II. Criminal law application
“A play’s digital derivatives” are produced by relying on “NFT” or other internet platform’s block chain technology, different in nature from and related to “virtual property”. “A play’s digital derivatives” are just emerging and currently cannot be found in any published criminal verdict. Let’s now discuss them together with and as part of online virtual property.
Bitcoins, an early type of virtual currency, are a specific type of virtual commodities in nature, are not in the same legal status as currency and cannot and should not be circulated or used as currency on the market. Token issuance and financing is essentially an illegal act of public financing without permission and could be found as illegal and criminal activities such as illegal issuance and sale of tokens, illegal issuance of securities, illegal fund raising, financial fraud, pyramid sale, etc. Tokens or “virtual currency” used in token issuance and financing are not officially issued, are not legal and mandatory tender as currency, do not have the same legal status as currency and cannot and should not be circulated or used as currency on the market. Virtual currency are not in the same legal status as currency and cannot and should not be circulated or used as currency on the market. Obviously, judicial opinions on “virtual currency” are negative. Any online virtual currency and digital derivatives that are expected to legally exist should be distinguished from “virtual currency” and exist in the same way as online virtual currency permitted by law. Therefore, we would like to discuss criminal law application to “virtual currency” or “virtual property” related crimes with the expectation to give helpful advice on criminal protection and compliance of “a play’s digital derivatives”.
(I) “Virtual currency” related crimes
As the key new technology, “virtual currency” is gradually becoming a new target of criminals. Illegal fund raising and fraud crimes in disguise of “cash speculation” frequently occur. On the other hand, virtual currency is difficult to regulate and control and more likely to be used in money laundering. In the criminal area, there are two different opinions on “virtual currency”. Some believe that “virtual currency” is electronic data, not property in criminal law, while others believe it is a special type of virtual products that can be deemed as property interests in criminal law. According to statistics based on judicial decisions available at present, 58.1% local courts found “virtual currency” as property and 41.9% found it as data.
A study of basic facts and difficulties of law application in virtual currency related cases handled by prosecution authorities in Shanghai shows four criminal governance approaches for virtual currency activities. More specifically, for people selling or issuing virtual currency to the general public as a registered user of a particular online platform, the second approach may be chosen to conduct criminal compliance investigation. This means names of crimes of investing in “virtual currency” may include illegal absorption of savings from the public, fund raising fraud, pyramid sale organization and leadership. For people who transfer “virtual currency” which they have bought as a registered user of a particular online platform, the third or fourth approach may be chosen to conduct criminal compliance inspection. This refers to crimes of using “virtual currency” for payment or bribery or in money laundering. For people infringing “virtual currency” directly, the first approach may be chosen to conduct compliance inspection. The names of this type of crimes may include theft, fraud and computer related crimes such as the crime of damaging a computer information system. In “virtual currency” related criminal cases where a property crime and the crime of damaging a computer information system compete with each other, the more severe punishment for the more serious crime should be given.
(II) Criminal law application to “virtual property” (A)
In the “Shanghai Huangpu People’s Procuratorate v Ms. Meng and Ms. He online theft” case published in 2006, the court found stealing virtual property in the online environment secretly as theft. Although virtual property was not clearly defined as a legal term at that time, “game property” exemplified by game equipment and tokens is usually protected by judicial authorities finding it as property in criminal law in following cases.
For instance, in the Ms. Yang and Ms. Li theft case, the court of appeal found that the word “virtual” in the virtual property did not mean its value or legal nature was not real, but was an opposite to tangible property. Article 92 of Criminal Law provides that all shares, stock, property and anything intangible legally owned by an individual are the citizen’s private possessions. This provision literally means anything assignable, measurable in value and manageable on an exclusive basis (including intangibles) by a citizen such as online game equipment and tokens can be deemed as the citizen’s private possessions and the subject of a property crime. The virtual property in that case should be a citizen’s private possessions that could be the subject of theft.
In the Ms. Cao’s fraud case, the court did not accept the advocate’s arguments for no value in the player’s equipment and cosmetics and found that it was reasonable to find illegal acquisition of others’ virtual property as property crime, and futher confirmed that people had known and frequently used the concept of intangible items and virtual property and defining virtual property as property in criminal law would not go beyond people’s expectation or violate the legality of conviction and sentencing.
Therefore, based on the above analysis of the first criminal governance approach for ”virtual currency” crimes, criminal acts that directly infringe “virtual property” should be treated as property crime. This rule is also applicable to “a play’s digital derivatives”.
(III) Criminal law application to “virtual property” (B)
There are judicial cases where “virtual property” were found as computer information system data in legal terms contemporarily. For instance, in the criminal case of Ms Zhu and Ms. Wang illegally acquiring computer information system data, the court found that items, ingots (a type of tokens for online gaming) and other virtual property in the online game were obviously different from property in general terms, and could not be calculated in a generally accepted way to determine their value, so they should be defined as computer information system data in legal terms. In addition, in the case of Ms. Hu damaging a computer information system, the court found that acts of getting access to the backstage system by cracking other person’s account password, changing the number of “gold coins” in the game system of the designated user by abusing the person’s power to change data in the backstage system and selling the game equipment obtained by subsequent actions to gain profits, disturbing the operation and balance of the whole game system, had all essential elements of the crime of damaging a computer information system. In the criminal case of Ms. Wang illegally obtaining data in and controlling a computer information system, the court found that similar criminal acts included selling online to gain profits the game equipment obtained by illegally accessing and entering other person’s game account.
Pursuant to Section 1 and 2 of Article 285 and Section 1 and 2 of Article 286 of Criminal Law, for the crime of illegally intruding into a computer information system, a sentence of less than three years’ imprisonment or detainment should be given; for the crime of illegally obtaining data in and controlling a computer information system in extremely serious circumstances, a sentence of no less than three years’ and no more than seven years’ imprisonment should be given with a penalty; and for the crime of damaging a computer information system causing a very serious outcome, a sentence of over five years’ imprisonment should be given. Objectively, a criminal act may infringe two or more kinds of rights at the same time because of difference in law application to this act. This also shows difference in criminal law application between judicial practices. We expect “virtual property” to be defined in law more accurately in legal terms so that we can do further studies.
 “48000 items sold out in a second! More digital collectibles of the Dream of Red Mansions are to be unlocked” from the public account of Shanghai Dramatic Arts Center, April 12, 2022
 Collins Dictionary: https://www.collinsdictionary.com/zh/dictionary/english/nft
 “NFT work misuse of the animation IP at the original price of RMB 899, for which the transaction platform is ordered to pay RMB 4000 compensation, in an infringement case between NFTCN subject and the plaintiff” https://baijiahao.baidu.com/s?id=1730635504189012745&wfr=spider&for=pc, date of visit: 2022.04.22
 One of the ten typical cases connected with the internet published by the Supreme People’s Court (May 31, 2021)
 NFTCN platform service agreement (https://www.nftcn.com.cn/link/#/pages/index/userAgreement), date of visit:2022.04.21
 Case No.(2021)JMZ837: China Film Huateng claimed that it owned the copyright in the stage play work Five Dimension Memories and the film Nezha: Birth of the Demon Child infringed its right to adapt the work since the film was substantially the same as the dramatic work published online in characters, plots and other elements. The court of first instance rejected all the claims. The court of appeal allowed China Film Huateng to withdraw the appeal.
 Circular on Preventing Bitcoin Risks by the People’s Bank of China, the Ministry of Industry and Information, China Banking Regulatory Commission, etc. Document number: No.YF289, implementation date: 2013.12.03
 RMB as legal tender: The legal currency of the PRC is RMB. No group or individual shall refuse to accept payment of any public or private debts in RMB in the PRC.
 Announcement on Preventing Token Issuance and Financing Risks by the People’s Bank of China, the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the State Administration for Industry and Commerce, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission, implementation date: 2017.09.04
 Circular on Further Prevention and Handling of Virtual Currency Transaction and Speculation Risks, document number: YF 237, document date: 2021.9.15
 White Paper on Cyber Crime Prosecution 2011 by Prosecution Authority of Shanghai (with classic cases), publication date: 2022.01.06
 “Pay Close Attention to Virtual Currency! The Second Criminal Law Practice Forum Regarding Financial Risk Prevention and Elimination was held”, published on the website of public prosecution officials in Shanghai, 2021.07.14
 Case No.(2016)Y06XZ1152, one of the ten major internet cases in 2017 published by the High Court of Guangdong Province: Ms. Yang’s game equipment theft case heard by the Intermediate People’s Court of Foshan City. Three “skillful online thieves” stole on over 700 occasions. The stolen virtual property was worth RMB 143,000, involving game equipment or token “ingots” in registered “major accounts” of certain players of “World of Legend”, an online game launched by Shanghai SNDA Networking Ltd.
 Case No.(2018)Z0103XC180: The defendant Cao Yuan got acquainted with the victim Ms. Qian on the customer terminal of the game CS: GO in 2016. The defendant sold to the victim dozens of game equipment and cosmetics and made transactions with others on behalf of the victim. The victim totally spent more than RMB 750,000 on 78 items of the above equipment and cosmetics that he was cheated into buying.
 Case No.(2017)J0107XC96: The defendants Ms. Zhu and Ms. Wang misused their position of running the online game software “The Legend of Qin 2” in “”Beijing Changyou Times Digital Technology Ltd.” to illegally get manual control over the backstage system of the game “The Legend of Qin 2” through the GM account “zhujia” and the GM account “wangzheng” opened by using the system account “root” without the company’s permission to give the game players credits, game items, monthly cards and other game data to gain profits offline.
 Case No.(2017)H02XZ113
 Case No.(2017)J01XZ364