Last month, a study published by The Galaxy examined the top 25 most valuable NFT projects and found that, despite many understanding that NFTs transferred either the copyright or the license in the original work, only 1 in 25 of those projects even attempted to do as such.
The reason for that, as I pointed out in my article on the subject, was that NFTs were never about copyright and, instead, were about creating scarcity of digital goods.
While there have been attempts to marry copyright licensing (or transfer) to the NFT process, they’ve largely been on the edges and none have seen major traction.
However, now the venture capital firm Andreessen Horowitz (a16z) is hoping to change that. In a blog post published last week and covered by Adi Robertson at The Verge yesterday, the firm is introducing what it calls “Can’t Be Evil” (CBE) licenses, a series of licenses that can be affixed to NFTs to clearly indicate what rights the NFT creator transfers to the buyer.
The project is patterned heavily after the Creative Commons approach, providing a series of six licenses, each marked by an abbreviation and a series of rights that are either granted or not.
While the system looks simple and promising, once you dig down, there are a series of difficult problems with the approach that could frustrate both NFT artists and their buyers.
To understand those problems, we have to first look at how they work and the issues that the licenses are trying to solve.
Understanding the “Can’t Be Evil” Licenses
Though the licenses are, at first blush, very similar to the Creative Commons system, these licenses are ultimately very different both in terms of how they work and what they cover.
For a start, Creative Commons licenses are between a creator and the public at large. Anyone can exploit a work licensed under a Creative Commons license. The point is to avoid the requirement of each individual user asking for permission separately and, instead, give a blanket license to everyone.
CBE licenses are between the creator of the NFT and the person who purchased it. No one else is involved. Any rights or permissions granted under a CBE license only apply to the NFT purchaser and holder.
To that end, there are six licenses, each with slightly different permissions and requirements.
- Exclusive Commercial Rights (ECR): This one is the most straightforward. The NFT creator grants the purchaser (or holder) the exclusive rights to copy, display, modify and distribute the work for commercial purposes. The original creator retains no exploitation rights.
- Non-Exclusive Commercial Rights (NECR): Similar to the ECR license, but the original creator retains their rights as well. This means that both the creator and the purchaser can exploit those rights.
- Non-Exclucive Commercial Rights + Termination for Hate Speech (NECR-HS): The same as the NECR license, but the purchaser’s license is terminated if the work is used for hate speech.
- Personal Use License (PR): This license grants no commercial rights to the buyer and only allows them to copy, display and distribute the work for personal purposes.
- Personal Use License + Termination for Hate Speech (PR+HS): Similar to the PR license but with a termination clause should the work be used in hate speech.
- Creative Commons 0 (CC0): This is essentially the Creative Commons Zero license, which is seen as largely a public domain dedication. This means that anyone, not just the buyer, is free to use the media connected with the NFT is any way that they want.
The idea is fairly simple. The creator of an NFT attaches one of these licenses to their NFT and, as a result, they clearly communicate what rights they are and are not granting the buyer.
This is designed to solve the issue of NFT sellers either not addressing copyright or using bespoke licenses that are confusing, incomplete or otherwise may be problematic.
However, this approach has its own problems, and it’s not difficult to spot at least some of them.
Some of the Problems with Can’t Be Evil Licenses
The first problem is that there is no “All Rights Reserved” option. While normally that would just be the default and not need to be spelled out, with NFTs there’s often an assumption of SOME rights transfer, making it more necessary.
If the goal is to be completely clear about what rights are and are not being transferred, an All Rights Reserved option is likely necessary.
However, when one drills down into the terms and conditions of the licenses, there are some real issues with the licenses themselves.
First, as pointed out by Robertson, all the non-CC0 licenses are sub-licensable. This means, for example, a buyer of a Bored Apes NFT could license the media to be featured to a film studio or another visual artist to make new works based upon it (with certain licenses).
While that is fine and not unusual, if the NFT is sold or otherwise transferred, all the sublicenses terminate immediately. Given that NFTs can be sold (or even stolen) on a whim, this creates a great deal of uncertainty for those trying to obtain and exploit those sublicenses.
In short, their sublicenses could literally be terminated at any point and there is nothing that they can do under these terms. While many sublicenses can be revoked, there are usually terms and conditions about such a revocation. This license imposes no such conditions.
Another is the issue of hate speech. First, the hate speech revocation clause doesn’t just cover hate speech, in addition to speech that is, “unlawful, defamatory, harassing, abusive, racist hateful or cruel” it also covers language that is, “vulgar, fraudulent, illegal or obscene.”
Obviously, it’s very possible for speech to be seen as fraudulent or vulgar, but not hate speech. This makes the hate speech clause something of a misnomer.
But the bigger issue is that all of these terms are very subjective. This raises the question of who makes the determination of what is “hate speech” under this license.
According to the terms, that decision is “as determined in Creator’s sole discretion.” In short, the creator and the creator alone determines what is hate speech under this clause. Though these licenses are generally irrevocable by creators, this is a crucial exception that could, theoretically, be triggered at any time.
Finally, these licenses are limited to copyright only. This means that other, connected, rights may not transfer. For example, if an NFT contains trademarked media, that trademark would not be covered. Likewise, if people are featured in the media, there may or may not be publicity rights.
These issues are shared between CBE and Creative Commons licenses. However, one gaping hole in the CBE license structure is the lack of handling of moral rights.
In most countries, moral rights are a set of rights that a creator has in a work beyond the ones granted by copyright. They include the right to be attributed, right to object to derogatory treatment of the work (including destroying it) and others.
Creative Commons actually addresses moral rights in their licenses, requiring signers to wave their moral rights as it pertains to the license. However, the CBE licenses don’t mention moral rights at all. This raises serious questions about what happens when and if moral rights and the rights granted by a CBE license collide.
There is no obvious answer to that question at this time.
The big idea here is both very interesting and potentially good. The idea of providing Creative-Commons-style licenses to NFTs to clearly indicate what rights are being transferred is, in general, positive.
However, this kind of licensing is extremely difficult. In its 20 years of existence, Creative Commons has gone through four different versions of its licenses. Simply put, it’s difficult to draft copyright licenses that are easy to understand, international in application and can be applied to a wide variety of works.
To that end, the CBE licenses fall short. Though their goal is to create greater certainty for buyers and sellers of NFTs, the licenses, through both omissions and choices, actually create less certainty in many areas, especially for sublicensees.
This isn’t to say that many of these issues can’t be fixed in future updates of the licenses. Instead, this points to the complexities that one faces in trying to deal with copyright and NFTs.
Simply put, licensing and transferring copyrighted works is hard under the best of circumstances and, when you mix the complexities of NFTs into the process, things get even more challenging.