Roc-A-Fella Records (RAF) is suing Damon Dash for allegedly planning to sell the copyright of Jay-Z’s debut album Reasonable Doubt at an NFT auction on June 23. Roc-A-Fella claims Dash minted the copyright as an NFT on the SuperFarm online marketplace without the rights to it and is looking to sell it as fast as possible following the cancellation of the June 23 auction.
Rappers Jay-Z and producer Dash each own one-third of RAF, with American music producer Kareen Burke owning the balance of the private company. According to RAF’s legal complaint, Dash’s position as a minority shareholder does not grant him any rights to sell a company asset. Legally a company is an entirely separate entity, and a shareholder can usually only claim a share of assets if the company is dissolved. Even then, only after all the company’s debts have been repaid. And RAF is very much a going concern.
NFT platform SuperFarm announced the auction of the copyright to the album through a partnership with Dash, mentioning that the winner would be entitled to future revenue associated with the asset.
According to the lawsuit SuperFarm announced the NFT sale, saying, “Selling the copyright to Jay-Z’s Reasonable Doubt as an NFT is a groundbreaking landmark—both for the crypto space and the broader music industry. The newly minted NFT will prove ownership of the album’s copyright, transferring the rights to all future revenue generated by the album from Damon Dash to the auction winner. The whole process will occur on-chain thanks to the magic of the Ethereum blockchain and SuperFarm’s innovative blockchain technology.”
Meanwhile, today on SuperFarm’s Telegram group, a post from the administrator stated the auction was pulled “since Jay is suing Dame right now”.
RAF’s attorneys requested the cancellation of the auction, but Dash is allegedly uncooperative on hading over any minted NFTs to RAF.
The music record company is looking to prohibit Dash from selling any interests in Reasonable Doubt, awarding RAF damages, and declaring that RAF owns all rights to the album through the lawsuit.
According to TMZ, Dash claims that Jay-Z wants to buy his RAF shareholding, but Dash says the offer was too little.
Meanwhile, the allegations highlight major legal concerns in the emerging market for NFTs regarding intellectual property and the sale of content that the NFT issuer does not own. NFTs have a built-in audit trail that enables concerned parties to confirm the ownership history of the digital asset. However, there is no means to confirm through blockchain that the original issuer had rights to the asset backing the NFT in the first place. For example, in March, DC Comics warned its artists that DC Comics owns the rights to their work after one of its artists made $1.85 million selling Wonder Woman NFTs.
Another prominent legal concern with digital assets is whether or not to classify them as securities.