What if your intellectual property rights were hard-coded into your digital assets?
The rise in popularity, use case, and mainstream momentum of non-fungible tokens (‘NFTs’) has seen a range of licences emerge granting NFT owners the ability to commercialise their digital assets. The topic of intellectual property rights for NFTs is a recently contentious topic with end-users largely unaware of how they can interact, sell, distribute or otherwise remix their on-chain JPEGS.
To establish an industry standard and reduce legal friction, Andreessen Horowitz’s crypto arm, A16Z, has recently released a series of NFT licences, coined ‘Can’t Be Evil Licences’. In a similar vein to Creative Commons, which recently celebrated its 20th anniversary, and some NFT projects have adopted, the set of free licences have been prepared with legal input and are NFT specific.
The licences serve three primary goals:
- To help NFT creators protect (or release) their intellectual property (IP) rights.
- To grant NFT holders a baseline of rights that are irrevocable, enforceable, and easy to understand.
- To help creators, holders, and their communities unleash the creative and economic potential of their projects with a clear understanding of the IP framework in which they can work.
By transparently codifying the rights of the NFT creators, buyers, and sellers, the licences exemplify the web 3.0 paradigm that, through code, we can trust – it ‘Can’t Be Evil.’ Deployed on the blockchain via smart contracts, six separate licences are available, each granting different sets of rights and varying degrees of permissions. These are IP rights embedded via smart contracts directly into the NFTs, so the licences prevent creators from misleading buyers and swapping out a licence for a restrictive one in the future. This is a novel application but clear use case for smart contracts.
The six licences are as follows:
- Exclusive Commercial Rights with No Creator Retention – Full and exclusive commercial rights granted, with no hate speech termination. The creator does not retain any exploitation rights.
- Non-Exclusive Commercial Rights – Full and non-exclusive commercial rights granted, with no hate speech termination. Creator retains exploitation rights.
- Non-Exclusive Commercial Rights with Creator Retention & Hate Speech – Full and non-exclusive commercial rights granted, with hate speech termination. Creator retains exploitation rights. A sublicense right is also included in relation to the art so the holder can create derivative work. The sublicence terminates upon the sale of the original NFT.
- Personal Licence – Personal rights are granted for the use, enjoyment, and sale of the NFT. No hate speech termination.
- Personal Licence with Hate Speech Termination – Personal rights granted for use, enjoyment, and sale of the NFT. With hate speech termination.
- CC0 – All copyrights are waived under the terms of CC0 1.0 Universal developed by Creative Commons. Affords maximum usage rights for the NFT holders; questionable whether this licence undermines the value of the NFT.
Granting NFT holders baseline rights that are potentially irrevocable, enforceable, and easy to understand whilst helping creators and their communities unleash the economic potential of their projects, is a welcome addition to the largely confusing intellectual property rights in the NFT space. Beyond NFTs, the deployment of IP rights via smart contracts opens a broader discussion on smart legal contracts. Whereas smart contracts are self-executing computing processes, smart legal contracts take the concept further, being legally enforceable agreements that contain clauses that are able to be supplemented via code to enable automation of activities in such contracts.
NFT licensing and copyright implications in Australia
The Copyright Act 1968 (Cth) is Australia’s primary legislation dealing with copyright and the rights that accrue to a copyright holder. Copyright protection is automatically conferred on an author as soon as the work is derived into a material form. Generally, save an express assignment of copyright, the owner of the copyright is the author of the work. Whilst the ‘Can’t Be Evil’ licences are untested in Australia, it appears likely that where the NFT is published in Australia and the creator was an Australian citizen or resident at the time of creation, no copyright would pass upon sale of the NFT; instead the holder of the NFT would enjoy a personal right to use, display and sell the NFT associated with the art.
As such, whilst the ‘Can’t be Evil’ NFT licensing scheme provide a range of intellectual property rights, within Australia, it is unlikely they extend to copyright.