NFTs, or non-fungible tokens, are advertised as granting “ownership,” but a recent review indicates that many creators and purchasers are still unsure of what that 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, and several others offered unclear or ambiguous licences despite recent efforts to organise the market.
The Galaxy research examines the terms of significant NFT initiatives, including Bored Ape Yacht Club (BAYC), see friends, and World of Women from Gary Vaynerchuk, as well as the “metaverse” social media platforms Sandbox and Decentraland. It concludes that many of its operators, including Yuga Labs, “appear to have misled NFT purchasers” about the scope of their rights, and that “the vast majority of NFTs convey zero intellectual property ownership of their underlying content.” By adopting the well-known Creative Commons licence, some projects have attempted to avoid confusion, but in doing so, some have untethered IP rights from the NFT, making it “impossible” for NFT holders to defend exclusive rights to the art.
Additionally, BAYC, one of the biggest and most well-known NFT series, is criticised in both reviews for being extremely illogical.
The BAYC terms state that purchasers will own the underlying art for their token, yet they also give a licence that explicitly contradicts this statement. 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 formalised NFT licencing model may include. Galaxy also praises the World of Women (WoW), the lone initiative in its assessment that attempts to formally 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 licence after months of telling customers they “owned” their Moonbirds artwork. CC0 effectively 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 licencing agreement with a company.
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