NFTs, or non-fungible tokens, are advertised as granting “ownership,” but a recent assessment indicates that many producers and purchasers are still unsure of what that actually entails. Only one of the top 25 NFT ventures examined by blockchain investment firm Galaxy Digital attempted to grant customers direct intellectual property rights to the underlying works of art, while several others offered unclear or ambiguous licenses despite recent efforts to organize the market.
The Galaxy research examines the terms of significant NFT initiatives, including Bored Ape Yacht Club (BAYC), VeeFriends, and World of Women from Gary Vaynerchuk, as well as the “metaverse” social media platforms Sandbox and Decentraland. It comes to the conclusion that many of its operators, including Yuga Labs, “appear to have deceived NFT customers” about the scope of their rights, and that “the great majority of NFTs confer zero intellectual property ownership of their underlying material.” By adopting the well-known Creative Commons license, some projects have attempted to avoid misunderstanding, but in doing so, some have untethered IP rights from the NFT, making it “difficult” for NFT holders to defend exclusive rights to the work.
The Verge earlier this year adopted the findings of a review by Cornell University and the Initiative for CryptoCurrencies and Contracts, which are echoed in this. Additionally, BAYC, one of the biggest and most well-known NFT series, is criticized in both evaluations for being extremely illogical. The BAYC conditions state that purchasers would “fully” own the underlying art for their token, yet they also give a license that explicitly contradicts this statement. (To put it simply, you wouldn’t require a permit to use the artwork if you genuinely owned it.) Galaxy has serious doubts about the assertion that well-known performers like Seth Green are truly depending on NFT terms of service.
However, Yuga Labs recently unveiled significantly revised terms of service for its CryptoPunks and Meebits series that outline what a more formalized NFT licensing model may include. Galaxy also praises the World of Women (WoW), the lone initiative in its assessment that makes an attempt to officially transfer copyright ownership of art using its NFTs. Galaxy deems WoW’s efforts “noble.” However, it claims that WoW is still unclear about how selling the NFT conveys ownership of any derivative works based on that copyright.
When the NFT’s original inventors retain the IP rights, they have the unilateral power to amend the conditions in ways that some NFT customers could find offensive. The Moonbirds project recently announced a change to the CC0 (or “no copyright reserved”) Creative Commons license after months of informing customers they “owned” their Moonbirds artwork. CC0 essentially indicates that anybody may use the artwork, not only the NFT holder; this is what is said to have derailed at least one Moonbirds owner’s upcoming licensing agreement with a company.
The improvement of NFT licensing is the main topic of Galaxy’s report. For fans of NFT who wish to license their purchases or create fan art using them, this could be useful. However, the way things right now suggest they’re not a particularly effective way to handle intellectual property rights, at least not without a lot of effort.
