Commercializing NFTs – generating value from digital assets and intellectual property rights | Smart & Biggar

by AryanArtnews
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This is Part 3 of an IP update series that explores the evolving prospects of the Internet, digital media and e-commerce.

Part 1: “NFT: The Encounter of Art and Cryptography-Traditional Copyright Issues in a Tokenized World”
Part 2: “Branding in the Metaverse-How Brand Owners Find Growth in the Virtual Domain”

Overview

2021 was a big year for non-fungible tokens (NFTs) and brought great commercial value. The creator behind Cryptopunks, an NFT project with over $ 2 billion in trading volume1, Signed an agency agreement with a leading Hollywood talent agency to pursue a variety of commercial projects. Buyer of Bored Ape Yacht Club (BAYC) NFT. Includes music producer Timbaland, distribution label Universal Music Group, and consumer product company Arizona Iced Tea.2All NFTs purchased for marketing and merchandising efforts are used commercially.Adidas has also released a video about its collaboration with BAYC to start pushing to the Metaverse.3..

The ability of NFT buyers and creators to leverage and commercialize NFTs depends on ownership of intellectual property (IP) rights and / or access to commercial rights to manage the underlying digital assets. To do. Depending on the particular project, there may be restrictions on how buyers can commercialize NFT assets, such as revenue restrictions, rights restrictions on derivative works, and requirements to pay royalties to NFT creators. .. This article outlines the different approaches to intellectual property rights adopted by popular NFT projects and the resulting commercial rights and benefits offered to buyers and creators.

License commercial rights to buyers while retaining the creator’s intellectual property rights

Some NFT projects have NFT licensesFourOriginally created for CryptoKitties NFTs, it is intended to define the rights of both the purchaser and creator of the NFT. Under the NFT license, NFT buyers “have limited rights to use, copy, or display the underlying art of the NFT for commercial purposes. [their] My productGenerates a total income of up to $ 100,000 each year. The creator of the NFT retains ownership of all legal rights to the underlying art, including all intellectual property rights. NFT licenses have been adopted by several prominent NFT projects such as CryptoPunks.Five And Meebits6..

Forgotten Runes Wizard’s Cult NFT project to balance the needs of NFT creators, buyers, and the broader fan community.7 We take a more unique approach to licensing Wizard-themed NFTs. Buyers of these NFTs will obtain a non-exclusive, royalty-free commercial license for the underlying art with revenues of up to $ 5 million per organization, followed by a 20% comprehensive royalty. Non-exclusive licenses also allow creators to take advantage of the intellectual property rights that govern art.Individuals who are neither creators nor buyers can also use the underlying art of Wizard NFT under a Creative Commons non-profit license.8An open source license popular with online creators.

Transfer of commercial and intellectual property rights to the purchaser

The creators behind the BAYC collection have taken an approach aimed at providing unlimited commercial rights to NFT buyers, with NFT ownership mediated “fully by smart contracts”. According to the Terms of Service, “Purchasing an NFT will completely own the underlying boring monkey, art.”9.. In addition, Buyer obtains an unlimited worldwide license to create derivative works based on the underlying art, without capping the revenue that Buyer can generate or earn. ..

However, buyers note that ownership is entirely mediated by smart contracts, which do not contain any specific provisions that talk about ownership of the intellectual property rights that govern NFT art. is needed.Ten.. This means from a copyright point of view that the copyright may not be immediately granted to the owner at the time of purchase of BAYCNFT because the transfer of copyright has not been carried out. A written transfer is required to complete the copyright transfer. From a trademark perspective, the purchaser generally does not receive the trademark right, as the trademark right only arises when the trademark is used or registered in the course of a commercial transaction. Instead, the buyer obtains permission to pursue trademark rights in the NFT, but the buyer is responsible for assessing the availability of the goods or services that Mark intends to offer and pursuing protection.

Women’s World NFT Project11 11 Going one step further than BAYC, we transfer all rights, title, and interests in the intellectual property underlying art to the purchaser. This project is specifically for trademark rights by allowing buyers to use the terms “World of Women”, “WOW”, or “WoW” when using the underlying art for non-commercial purposes only. It is working. Upon resale of these NFTs, all rights must be transferred to subsequent buyers. The original author is entitled to compensation at the time of resale according to the fees determined by the NFT Marketplace.12..

Public Domain Intellectual Property Rights-Creative Commons License

In stark contrast to the NFT project above, some creators chose to take a completely open source approach by adopting Creative Commons.13 A license dedicated to the public domain of the underlying copyright. An example is the CrypToadz project. The website of this project says, “As much as possible under the law. [the creator] Disclaimed all copyrights and related rights or neighboring rights of CrypToadz [the creator]..14

Similarly, the Nouns NFT project, which aims to auction “one noun, every day, forever,” states that “noun artwork is in the public domain.” However, the project rewards the team behind the project by dedicating each of the tenth noun NFTs created during the first five years of the project to be shared among the founding members.15..

Conclusion – NFT creators and buyers should pay close attention to all commercial and intellectual property rights.

NFT creators need to carefully consider appropriate intellectual property strategies and approaches to control how the underlying intellectual property rights of the project are transferred to buyers and the general public. there is. Creators who want to maintain control of the project’s intellectual property rights adopt the traditional licensing model, creators who want to provide unlimited commercial rights to the community assign these rights, and projects without a commercial focus get a Creative Commons license. Can be adopted.

For companies and brands seeking to purchase NFT for commercial use and marketing programs, the intellectual property and commercial rights acquired at the time of NFT purchase depend on the intellectual property and licensing approach adopted by the author. It should be noted that. Buyers should carefully consider the terms of use, licenses, and smart contracts that govern NFT projects. Buyers also want to provide a valid transfer of copyright when executing smart contracts and to clear and protect the basic trademark rights required for the commercial use of NFTs as a brand or marketing tool. , You need to seek competent legal advice.

References

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