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How CC0 can help — or hurt — NFT projects

NFT

www.theblock.co 11 September 2022 09:15, UTC
  
Reading time: ~6 m

Creative commons (CC0) licensing is, yet again, in the spotlight in crypto. Following Nouns, Goblintown and Cryptodickbutts, Moonbirds became the latest blue-chip NFT project to place its work in the public domain – albeit, with some controversy.

Kevin Rose, co-founder of the organization that created Moonbirds and its sister project Oddities, published a Tweet thread on Aug. 4, 2022 stating that the two projects would remove their copyright. Anyone could freely build upon and monetize their intellectual property.

The decision sparked outrage from Moonbirds and Oddities holders who purchased these assets thinking they had the sole the ability to monetize the art associated with their NFT. Overnight, without consulting Moonbird or Oddities owners, anyone would have that privilege. Some intellectual property lawyers event called it a “bait and switch.”

Beneath the controversial action of Rose and his creative team was a bet: that CC0 is ultimately the best type of copyright to have for Moonbirds and Oddities. Why else would they make the decision without notifying the holders?

CC0 is a type of creative tool that dedicates a work to the public domain, meaning a creator gives up all copyright and lets others freely distribute, build upon and commercialize their work.

Removing copyright allows projects to expand their brands through derivative use that doesn’t need permission from or attribution to the original founding team.

Some copyright lawyers say that CC0 can weaken an NFT project’s brand by forgoing the right to take down harmful derivatives and removing the value of scarcity from owning an NFT from that project.

The case for copyright

So, why would a project opt to use copyright? Some of the most valuable NFT projects, such as Yuga Labs’ Bored Ape Yacht Club and Larva Labs’ CryptoPunks, have created — and defended — their own copyright terms.

Copyright essentially allows individuals to have a monopoly over their creation for a certain period, says intellectual property lawyer Jeremy Goldman, a partner in the litigation group at Frankfurt Kurnit Klein and Selz. Depending on the type of copyright license a creator adopts for their work, others may use that creator’s work for commercial and derivative use with or without attribution — but the intellectual property itself belongs to the original creator.

When a creator copyrights their work, they are saying to consumers, “if you want if you like what I've created, and you want to use it and want to enjoy it, I am the only one who can give you permission to do that,” Goldman adds. By copyrighting their work, creators can seek legal action against those who they deem tread on their intellectual property.

Both Yuga Labs and Larva Labs have sought legal action against derivatives that bore too close a likeness to their projects.

Copyright is designed to help creators monetize their work by having the exclusive right to sell their intellectual property and deter theft explains Sohaib Mohammad, an intellectual copyright lawyer in Toronto. Larva Labs even went as far as to limit the amount of money a CryptoPunk holder can make off their NFT to $100,000, The Block previously reported.

However, the very nature of NFTs and blockchain adds a complicating layer to copyright. There is a “critical” difference between the NFT and the art associated with that NFT, Goldman says. Once an NFT is minted, “it’s out in the wild,” he adds. Yuga Labs or any other NFT team “has absolutely no right or ability or power to do anything about the non-fungible token itself once it's been transferred out of their smart contract.”

The final decisions about the art, or music or video associated with an NFT for that matter, is ultimately left up to the original creators, Goldman says.

“When you buy the NFT, you're getting some additional layer of [ownership] rights, but you're not getting the intellectual property rights in the art. That's why there's some confusion. Those intellectual property rights are entirely controlled by the artists,” Goldman adds.

Due to this complication of asset ownership and copyright, some NFT projects have decided to forgo copyrighting their work altogether by adopting CC0.

Ground CC0

If copyright adds barriers to a work, then, CC0 “works like the upside-down world of copyright,” Goldman says.

A project with CC0 is straightforward. Unlike with the early days of Larva Labs, which had unclear copyright rules, the rules of CC0 allows anyone to do whatever they want with the intellectual property of the work without the creator’s permission.

CC0 removes the commercialization and use limits of a work as well, which is the reason why the founders of NounsDAO decided to adopt it. The Nounders, as the founding team of the project is called, wanted anyone to be able to freely reproduce or create derivative work that points back to Nouns. It’s like how citations ultimately strengthen an academic paper, Nouns co-founder Punk 4156 previously told The Block.

However, the unlimited reproducibility that comes with CC0 is not without risk. Racist, sexist, xenophobic or other harmful elements that can weaken a public domain project’s brand, says Omar Abdallah, attorney at Rose Law Group. If that’s the case, there’s not much legal recourse the project’s team can take. As was the case with Nouns, the potential for harmful derivative works was a risk they were willing to take.

So when it comes to adding CC0 to an NFT project, “I think it [CC0] can weaken the brand. I think you can also strengthen the brands, it really depends,” says Omar Abdallah.

While CC0 is a relatively newer trend in NFT projects than copyright, current data shows that CC0 has lower trade volume and transactions levels than copyrighted ones. The top project copyrighted project, Bored Ape Yacht Club, has three times the sales volume as the top project CC0 project Moonbirds. 

There is no one-size-fits-all copyright license for NFT projects, Mohammad says. The type of copyright a project does or does not adopt should be based on whether the project founders want holders to maintain commercial rights or whether they want the overall brand’s recognition to flourish through freely made derivative work.

While CC0 and copyright have their uses for NFT projects, there’s a grey area that’s often missed in these conversations, says Florida-based intellectual property lawyer Daniel Barsky.

“People forget there's a there's a concept of ‘fair use’ in copyright law,” he says. “There's always been the ability to fairly use copyrighted works for a variety of purposes, right parody. It's not like it's always been the situation where if there's a copyright on a piece of IP, it's going to be forever walled off.”


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