ݺߣ

ݺߣShare a Scribd company logo

These are not the Apes you’re looking for: Why copyright and NFTs don’t work well together

•
•
Andres Guadamuz
Andres Guadamuz

Presented at the Workshop on copyright and NFTs/Blockchain/Smart contracts, City University, September 13, 2022.

1 of 25
T H E S E A R E N O T T H E A P E S Y O U ’ R E L O O K I N G F O R : W H Y C O P Y R I G H T A N D N F T S D O N ’ T W O R K W E L L T O G E T H E R D R A N D R E S G U A D A M U Z , U N I V E R S I T Y O F S U S S E X
A P O L O G I E S https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3905452
A N D A S T O RY…
“ W E H AV E W I T H U S S E V E R A L D E V E L O P E R S , A N D T O O F F E R S O M E B A L A N C E , A C O N S E R VAT I V E G U Y ” …
I C O M E A S A F R I E N D LY C R I T I C
M Y T H S A N D R E A L I T I E S
T O P P O P U L A R M Y T H S • NFTs protect the underlying asset. • NFTs can transfer rights over the underlying asset. • NFTs are linked cryptographically to the image/video/song. • NFTs are immutable. • NFTs are decentralised.
http://dx.doi.org/10.2139/ssrn.3928901
S O M E S TAT I S T I C S • "the average sale price of NFTs is lower than 15 dollars for 75% of the assets, and larger than 1594 dollars, for 1% of the assets.” • "the top 10% of traders alone perform 85% of all transactions and trade at least once 97% of all assets.” • "NFT’s price correlates strongly with the price of NFTs previously sold within the same collection”. • Source: https://www.nature.com/articles/ s41598-021-00053-8
P R O B L E M 1 : N O C O P Y R I G H T
T H E G E N E R AT I V E A R T P R O B L E M • A non-negligible number of artwork, particularly pfps, are procedurally generated. Stock image and traits (glasses, hats, etc) are merged together from pre-determined percentages. • I haven’t made an exhaustive list, but most of the top pfp projects involve some of generative process. (Cryptopunks, Bored Apes, World of Women, Doodles?). • Instructions and code on how to do this are easily available.
W H Y I S I T A N I S S U E ? • This type of procedurally generated works may not be protected by copyright. • Human authorship requirements and originality requirements. Generative works may not meet the threshold of protection. • Same problem as AI art.
O P T I O N S F O R M A C H I N E - G E N E R AT E D C O P Y R I G H T • Public domain: no copyright due to no originality/creativity. (EU) • No registration. (USA) • Some form of protection given to programmer or user. (UK) • Sui generis rights. (Japan? China?)
P R O B L E M 2 : B A D R I G H T S M A N A G E M E N T
T H E C A U T I O N A RY TA L E O F # 8 3 9 8 • Set Green purchases Ape #8398 in July 2021. • Starts developing series “White Horse Tavern”. • Ape stolen, bought by @DarkWing84, who initially refused to give it back. • Ape returned (details undisclosed, speculation is that a payment was made).
W H Y D O E S I T M AT T E R ? • Mediating rights using a bearable instrument is bonkers. • You can’t rely on badly drafted Terms of Use to manage creative works. • Licences and transferable copyright have written requirements for a reason.
T E R M S O F U S E A N D L I C E N C E S • ToS are often contradictory, confusing, badly drafted. • Personal use (as profile pictures), and limited commercial rights (merch), but not many other rights given. • Galaxy Brains found several contradictions between ToS and official communications. https://bit.ly/3RdbzlW • Public misunderstanding.
L I C E N C E S • Growing number of industry licences (and growing number of projects using CC0). • “Can’t be evil” and similar licences. • No licences are added to the actual NFT, most are included as a link in the listing. • What about buyers down the chain of resales who have not agreed to the licence? • This is web3, what if the item is sold in another marketplace that doesn’t contain the licence link?
T R A N S F E R O F R I G H T S • Most jurisdictions have formal requirements for transfer of rights, “in writing and signed”. • We could argue if an NFT can fit those requirements. Signature is defined broadly, and while “in writing” is also broadly interpreted, at least it has to be in a legible format. • Most NFTs do not even try to transfer rights. If anyone wants to do so, they should do it with a “dumb” contract.
R O YA LT I E S • One of the most advertised possible benefits of NFTs. • Sellers can get royalties from resale, this isn’t possible with traditional copyright works (exhaustion, first sale doctrine). • But royalties are encoded for each platform, if sold in another marketplace, no royalties. • Users are starting to try to encode royalties into the smart contract. Discussion in the community of whether this is wanted and/or needed.
P R O B L E M 3 : B A D F O R L I T I G AT I O N
Y U G A L A B S V RY D E R R I P P S • Ryder Ripps is a conceptual artist who has been a very vocal critic of BAYC, he created a website called Gordon Goner where he details the evidence that BAYC is filled with racist dog- whistles. • He launched his own version of BAYC called RR/ BAYC, it’s identical. • Yuga Labs sued for “false designation of origin, false advertising, cybersquatting, trademark infringement, unfair competition, unjust enrichment, conversion, and tortious interference.” • RR defends his actions as freedom of speech and that it’s a protest against BAYC.
W H Y N O C O P Y R I G H T ? • The surprising thing for me was the absence of copyright in the largest and most high-visibility case dealing with NFTs. • BAYC are not registered with the US Copyright Office! Only 12 bored ape related registrations, all by buyers. • Yuga Labs doesn’t want to test the copyright (see Problem 1).
C O N C L U D I N G
@ T E C H N O L L A M A Thanks!

More Related Content

These are not the Apes you’re looking for: Why copyright and NFTs don’t work well together

  • 1. T H E S E A R E N O T T H E A P E S Y O U ’ R E L O O K I N G F O R : W H Y C O P Y R I G H T A N D N F T S D O N ’ T W O R K W E L L T O G E T H E R D R A N D R E S G U A D A M U Z , U N I V E R S I T Y O F S U S S E X
  • 2. A P O L O G I E S https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3905452
  • 3. A N D A S T O RY…
  • 4. “ W E H AV E W I T H U S S E V E R A L D E V E L O P E R S , A N D T O O F F E R S O M E B A L A N C E , A C O N S E R VAT I V E G U Y ” …
  • 5. I C O M E A S A F R I E N D LY C R I T I C
  • 6. M Y T H S A N D R E A L I T I E S
  • 7. T O P P O P U L A R M Y T H S • NFTs protect the underlying asset. • NFTs can transfer rights over the underlying asset. • NFTs are linked cryptographically to the image/video/song. • NFTs are immutable. • NFTs are decentralised.
  • 9. S O M E S TAT I S T I C S • "the average sale price of NFTs is lower than 15 dollars for 75% of the assets, and larger than 1594 dollars, for 1% of the assets.” • "the top 10% of traders alone perform 85% of all transactions and trade at least once 97% of all assets.” • "NFT’s price correlates strongly with the price of NFTs previously sold within the same collection”. • Source: https://www.nature.com/articles/ s41598-021-00053-8
  • 10. P R O B L E M 1 : N O C O P Y R I G H T
  • 11. T H E G E N E R AT I V E A R T P R O B L E M • A non-negligible number of artwork, particularly pfps, are procedurally generated. Stock image and traits (glasses, hats, etc) are merged together from pre-determined percentages. • I haven’t made an exhaustive list, but most of the top pfp projects involve some of generative process. (Cryptopunks, Bored Apes, World of Women, Doodles?). • Instructions and code on how to do this are easily available.
  • 12. W H Y I S I T A N I S S U E ? • This type of procedurally generated works may not be protected by copyright. • Human authorship requirements and originality requirements. Generative works may not meet the threshold of protection. • Same problem as AI art.
  • 13. O P T I O N S F O R M A C H I N E - G E N E R AT E D C O P Y R I G H T • Public domain: no copyright due to no originality/creativity. (EU) • No registration. (USA) • Some form of protection given to programmer or user. (UK) • Sui generis rights. (Japan? China?)
  • 14. P R O B L E M 2 : B A D R I G H T S M A N A G E M E N T
  • 15. T H E C A U T I O N A RY TA L E O F # 8 3 9 8 • Set Green purchases Ape #8398 in July 2021. • Starts developing series “White Horse Tavern”. • Ape stolen, bought by @DarkWing84, who initially refused to give it back. • Ape returned (details undisclosed, speculation is that a payment was made).
  • 16. W H Y D O E S I T M AT T E R ? • Mediating rights using a bearable instrument is bonkers. • You can’t rely on badly drafted Terms of Use to manage creative works. • Licences and transferable copyright have written requirements for a reason.
  • 17. T E R M S O F U S E A N D L I C E N C E S • ToS are often contradictory, confusing, badly drafted. • Personal use (as profile pictures), and limited commercial rights (merch), but not many other rights given. • Galaxy Brains found several contradictions between ToS and official communications. https://bit.ly/3RdbzlW • Public misunderstanding.
  • 18. L I C E N C E S • Growing number of industry licences (and growing number of projects using CC0). • “Can’t be evil” and similar licences. • No licences are added to the actual NFT, most are included as a link in the listing. • What about buyers down the chain of resales who have not agreed to the licence? • This is web3, what if the item is sold in another marketplace that doesn’t contain the licence link?
  • 19. T R A N S F E R O F R I G H T S • Most jurisdictions have formal requirements for transfer of rights, “in writing and signed”. • We could argue if an NFT can fit those requirements. Signature is defined broadly, and while “in writing” is also broadly interpreted, at least it has to be in a legible format. • Most NFTs do not even try to transfer rights. If anyone wants to do so, they should do it with a “dumb” contract.
  • 20. R O YA LT I E S • One of the most advertised possible benefits of NFTs. • Sellers can get royalties from resale, this isn’t possible with traditional copyright works (exhaustion, first sale doctrine). • But royalties are encoded for each platform, if sold in another marketplace, no royalties. • Users are starting to try to encode royalties into the smart contract. Discussion in the community of whether this is wanted and/or needed.
  • 21. P R O B L E M 3 : B A D F O R L I T I G AT I O N
  • 22. Y U G A L A B S V RY D E R R I P P S • Ryder Ripps is a conceptual artist who has been a very vocal critic of BAYC, he created a website called Gordon Goner where he details the evidence that BAYC is filled with racist dog- whistles. • He launched his own version of BAYC called RR/ BAYC, it’s identical. • Yuga Labs sued for “false designation of origin, false advertising, cybersquatting, trademark infringement, unfair competition, unjust enrichment, conversion, and tortious interference.” • RR defends his actions as freedom of speech and that it’s a protest against BAYC.
  • 23. W H Y N O C O P Y R I G H T ? • The surprising thing for me was the absence of copyright in the largest and most high-visibility case dealing with NFTs. • BAYC are not registered with the US Copyright Office! Only 12 bored ape related registrations, all by buyers. • Yuga Labs doesn’t want to test the copyright (see Problem 1).
  • 24. C O N C L U D I N G
  • 25. @ T E C H N O L L A M A Thanks!