NFT projects reconsider their licensing strategies

Non-fungible token (NFT) projects are reconsidering their licensing strategies as they develop their business models. A number of major NFT projects, such as Nouns, Goblin Town, Cryptoadz and MFERS, have adopted as their initial approach Creative Commons Zero - no rights reserved (CC0). CC0 is the declaration of abandonment of copyright developed by Creative Commons. Other NFT projects are opting instead for a commercial license.

In a new development, Kevin Rose and Proof Collective announced on August 4 that they were abandoning the copyrights in their well-known Moonbirds (and Oddities) NFT collections by using CC0. These collections had originally been licensed under a commercial license. Some community members have already complained that they have lost licensing deals because the copyright in the Moonbird images to which they had commercial rights are no longer protected by copyright.  

The adoption of CC0 has a number of significant risks because the enforceability of the abandonment is uncertain in many jurisdictions. Creative Commons noted these risks in its FAQ about CC0 and was sufficiently concerned about this issue such that they included a "backup license" in CC0. However, this license is quite limited compared to abandonment of copyright. For example, the license is not assignable and not sublicensable. For CC0 to be effective, the declaration would need to enforceable separately in all jurisdictions that have copyright laws– at least 150 jurisdictions. 

In contrast, Yuga Labs just published its license for CryptoPunks (Yuga Labs purchased the intellectual property rights in CryptoPunks in March of this year - for information on this purchase see our March 2022 issue). In contrast to Kevin Rose and Proof Collective, Yuga Labs chose a commercial license with some interesting provisions:

• the license is exclusive for the CryptoPunk artwork but clarifies that the license applies only to the “whole” image, not its components
• the license permits continued use of derivative works, with certain limitations, after termination of the license and
• includes a provision for Yuga Labs to amend the terms of the license by publishing a modification of the terms.

These developments indicate the range of business models possible in the NFT market.

Find out more about this evolving trend by contacting the author.