Yet Another NFT Copyright Failure
During the NFT heydays of 2021 and 2022, a great deal of discussion focused on making the technology useful to both artists and buyers. However, despite lofty promises, the results never really panned out.
Though some artists did manage to make significant money from NFTs, for most creators, NFT marketplaces became a haven for copyright and trademark infringement. Some large markets even stopped sales due to the issues. This trend continued even after NFTs began to decline in value.
For buyers, there was hope that NFT would be used to convey some transfer of copyright or license and grant some level of ownership beyond a line in the blockchain.
However, that never came about either. Studies found that almost no NFT projects were using the technology to transfer copyrights and attempts at enforcing creator royalties were dropped by large platforms.
Though NFTs may have fallen out of the public consciousness, they are not gone. One of the biggest players in the space, Yuga Labs, recently made another run at granting rights through NFTs.
However, it did not go as planned. The move raised more questions than it answered, showcasing a lack of understanding of copyright.
It’s another blow to the already struggling reputation of the NFT market.
Moonbirds, Bored Apes and Copyright
Note: This section is based heavily on this article by Sander Lutz at Decrypt. They go into much more detail than I can here on the history, so please check out the article if you’re interested in this topic.
Back in February, Yuga Labs, the company behind the Bored Ape Yacht Club NFT collection, purchased Proof, the company behind the Moonbirds collection. Earlier this week, they announced on X (formerly Twitter) that Moonbirds would be a collection with commercial rights. This means owning the NFT would convey some rights to the images they’re based upon.
However, there was a serious problem with that. In 2022, the original creators published the collection under a CC0 license, effectively placing the images in the public domain.
Yuga Labs acknowledged this, saying, “If you’ve made stuff during the CC0 era – cool. But from now on, you’ll need to own a Moonbird to keep doing so.”
However, that is not how public domain dedications work. As Creative Commons clarifies, the dedication is permanent and cannot be revoked. Anyone who used the images or created derivative works based on them would be free to continue to do so.
Yuga Labs did attempt to backtrack on this, saying that the commercial license would only apply to the new 3D versions being created. However, it’s unclear what enforcement the older works would see.
That’s because while the CC0 license clearly states that the images are in the public domain, it only applies to the works’ copyright. There is still the trademark issue, which covers Moonbird’s branding.
What this means for Moonbirds moving forward is unclear. It is unclear what a non-owner can do with the public domain images, and it’s also unclear what rights a buyer gets if they acquire one. In short, the situation is a mess, and there’s no easy way to fix it.
Fixing the Mess
Simply put, there’s no easy fix here. Since the original Moonbird images were placed under a public domain license, others will have permission to use those images, even commercially, for some time.
While trademarks can place some limitations on certain uses, you can’t use a trademark to protect a public domain work. We saw this recently when Steamboat Willie lapsed into the public domain. Though Disney still holds the trademark to Mickey Mouse (and the copyright to later works), there’s been a bevy of uses of Steamboat Willie, and the cartoon is easy to stream online.
In short, a Moonbirds NFT buyer cannot completely own that piece of art. While new art can be placed under a different license, that would only apply to what is unique to the new work. Others would still be free to publish, sell and even create derivative works based on the original art.
While the trademark protection means that others can’t use the Moonbirds brand, where that line is drawn is fuzzy at best, considering how connected the art is to the brand.
In short, it’s unclear what Moonbirds buyers will be getting. However, they won’t be getting the level of exclusivity that many say they want.
Ultimately, the best approach would likely be to launch a wholly new project. It’s much better to start off with this intent to offer licenses from day one than trying to force it on top of work licensed to the public domain.
The Wrong Tool
As discussed in 2021, blockchain technology isn’t a tool for solving copyright problems. Simply put, blockchain technology cannot address the major challenges copyright faces.
Though blockchain technology can be a novel way to record information, it can’t fix confusion about the law, challenges with enforcement, and other issues that rightsholders face.
The best I can say about this case is that the crypto element didn’t make it significantly worse. It would still be a mess even if we removed the blockchain element. A company trying to license new versions of public domain works is a headache even without crypto.
Crypto may have added a new layer to the problem. But it didn’t cause it.
In the end, Yuga Labs needs not better technology but better communication. It must clearly outline what it plans to do, what rights an NFT grants the owner, and what rights it claims over the earlier works.
A statement like “If you’ve made stuff during the CC0 era—cool. But from now on, you’ll need to own a Moonbird to keep doing so” adds to the confusion. It misunderstands copyright and doesn’t clearly outline what rights are being claimed and sold.
Bottom Line
As I’ve said before, blockchain and cryptocurrency technology have always felt like a solution in search of a problem.
We saw this in March when a court ruled that Craig Wright was not the inventor of Bitcoin. Blockchain technology was supposed to make it impossible to fake authorship or ownership. Yet, it failed to do so on the most important authorship cryptocurrency could ever face.
When it comes to transferring copyrights, trademarks or other rights, it could prove somewhat useful. However, that’s only if the terms are clearly spelled out and there is no confusion about what rights are being acquired.
This is a classic example of a crypto company understanding the technology but not the fundamentals of copyright and trademark. Yuga Labs failed on a more basic level, failing to understand the copyright situation and further failing to communicate its intent.
These are fundamental issues related to intellectual property. If companies like Yuga Labs can’t resolve these issues, blockchain technology will not be useful for any intellectual property-related purpose.
The issue here isn’t necessarily the technology but the company behind it.
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