How CC0 can help – or hurt – NFT projects

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Creative Commons licenses (CC0) are, once again, in the spotlight in the field of cryptography. After Nouns, Goblintown and Cryptodickbutts, Moonbirds has become the latest A-list 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, posted a Tweet thread on August 4, 2022 stating that both projects would remove their copyrights. Anyone could freely exploit and monetize their intellectual property.

The move sparked outrage from holders of Moonbirds and Oddities who purchased these assets believing they had the opportunity to monetize the art associated with their NFTs. Overnight, without consulting the owners of Moonbird or Oddities, anyone would have this privilege. Some IP lawyer events called it a “bait and switch”.

Beneath the controversial action of Rose and her creative team was a gamble: that CC0 is ultimately the best kind of copyright for Moonbirds and Oddities to have. Otherwise, why would they make the decision without informing the incumbents?

CC0 is a type of creative tool that dedicates a work to the public domain, meaning a creator waives all copyrights and lets others freely distribute, develop, and market their work.

Copyright removal allows projects to extend their brands through derivative use that does not require permission or attribution to the original founding team.

Some copyright lawyers argue that CC0 can weaken an NFT project’s brand by waiving the right to remove harmful derivatives and removing the scarcity value of owning an NFT from that project.

The case of copyright

So why would a project choose 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 of time, says intellectual property lawyer Jeremy Goldman, partner of the Frankfurt litigation group Kurnit Klein and Selz. Depends on type copyright license that a creator adopts for their work, others may use that creator’s work for commercial and derivative purposes 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 want to use it and enjoy it, only I can be able to give you permission to do that,” Goldman adds. By copyrighting their work, creators can take legal action against those they believe are infringing on their intellectual property.

Yuga Labs and Larva Labs filed a lawsuit against derivative products that looked too similar 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, a copyright lawyer in Toronto. Larva Labs even went so far as to limit the amount of money a CryptoPunk holder can earn with their NFT to $100,000, The Block previously reported.

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

Final decisions about the art, or music or video associated with an NFT for that matter, are ultimately left to the original creators, Goldman says.

“When you buy the NFT, you get an extra layer of [ownership] rights, but you do not get the intellectual property rights to the art. This is why there is some confusion. These intellectual property rights are entirely controlled by the artists,” adds Goldman.

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

Earth 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 simple. Unlike the early days of Larva Labs, which had unclear copyright rules, CC0’s rules allow anyone to do whatever they want with the intellectual property of the work without permission from the creator.

CC0 also removes the limits on the marketing and use of a work, which is 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 a derivative work that references the names. It’s like how citations ultimately reinforce an academic paper, Nouns co-founder Punk 4156 told The Block.

However, the unlimited reproducibility that comes with CC0 is not without risk. Racist, sexist, xenophobic or other elements that can weaken a public domain project’s brand, says Omar Abdallah, attorney at Rose Law Group. If so, there are not many legal remedies the project team can take. As was the case with names, 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 brands, it really depends,” says Omar Abdullah.

Although CC0 is a relatively newer trend in NFT projects than copyright, current data shows that CC0 has lower trading volume and transaction levels than copyright. The top copyrighted project, Bored Ape Yacht Club, has three times the sales volume of the top CC0 Moonbirds project.

There is no single copyright license for NFT projects, Mohammad says. The type of copyright a project adopts or not should be based on whether the founders of the project want the owners to retain the commercial rights or whether they want global brand recognition to flourish through freely made derivative works.

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

“People forget 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, parody right. It’s not like that’s always been the situation where if there’s a right to author on a piece of intellectual property, it will be blocked forever.

© 2022 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended for use as legal, tax, investment, financial or other advice.



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