Intellectual property rights will be key in Web3 and NFT Evolution

Intellectual property rights (IP) have proven to be an important ingredient in the digital world. Especially in 2022 with the development of web3 and NFTs and the increasing illegal activities around it.

Intellectual property rights (IP) are a fundamentally important part of a modern economy. An old concept dating back to the early Middle Ages, intellectual property first appeared in the 14th century. It is to secure an idea of ​​own belonging/right, such as physical property rights and property registers of land and other material goods.

But the thing about ideas is that they are not rivalries, and this concept of non-rivalry makes it exciting and challenging. Intellectual property rights have been fundamentally important in creating capital goods; things one can own that involve ideas and the incentives around financing and licensing those ideas.

This is becoming a core part of the industrial economy’s business models. Some of the largest companies in the world have large amounts of their balance sheets made up entirely of intellectual property.

But then came the internet and the opportunity to copy data and information freely. It’s starting to create problems for intellectual property, given how easy it is to steal or hack. New business models have emerged that thrive on harvesting data and other information.

This has caused a shift to what is referred to as ‘web3’, a product of open source programming and code to create a new decentralized web. Much of web3’s basic financial infrastructure and real estate is open source. That is, it does not use the old system of industrial intellectual property rights. Therefore, IP rights remain an issue with the rapid traction of the web3 and non-fungible token (NFT) sectors.

Web3 and the need for IP

Blockchain is essentially a ledger mechanism for recording things. Humans have gone through multiple iterations of ledgers to determine who owns what. This is where NFTs come in as a way to record and track the ownership of digital goods.

Despite hiccups, the NFT market continues to expand as we move into 2023. The NFT market is even projected to reach more than $230 billion by 2030. But with that rapid rise comes many obstacles. Stamping an NFT for a virtual asset that contains artwork, a song, or trademarks that the creators no longer own or have a valid license for can lead to serious legal problems.

One of the headline-making examples of possible trademark infringement regarding NFTs was the Hermes Rothschild lawsuit. The French luxury brand claims virtual artist Metabirkins infringed on its federally registered Birkin emblems. Although Mason Rothschild counter-argued that their Metabirkins were not commercialized goods.

The NFT community looks forward to the final verdict, as it may become a benchmark for the use of intellectual property in NFTs.

Accepts IP

Many people ask if it is legal to take a screenshot of an NFT, and if so, why do people buy the NFT and not just take a copy of it? People are free to take screenshots of NFTs in the same way they can take a screenshot of a photograph of a portrait. However, each NFT is connected with a smart contract, making it unique and authentic. Blockchain technology ensures that ownership of a particular NFT can be easily verified.

There have already been many major discrepancies and doubts about ownership claims. Buyers of popular non-fungible token collections such as Bored Ape Yacht Club and Moonbirds do not legally own any IP rights, a Galaxy Digital report claimed.

Over the past year, many brands have wondered whether it is the best time to explore web3 or whether it is still too early. Some popular brands have gone all out, while others have been more reluctant, given the unclear regulation surrounding the space.

But this also coincides with the need to protect intellectual property rights for projects, ideas, slogans, etc. Many companies that have already started to incorporate web3 into their business models have raised similar interests. BeInCrypto reported in early 2022 that the entertainment industry was near the top of this list.

See the context

So what is the future of IPs in this industry? BeInCrypto contacted Mary MaChief Strategy Officer at MixMarvel, to shed light on this matter. Mary Ma suggested that “collective ownership would be a feasible solution to the current IP dilemma.”

Speaking further, there are two broad areas to choose from for IP regulation. One of them is the Creative Commons Zero (CC0) license. This allows artists to put their work in the public domain so that anyone can reproduce it and profit from it. The second is a solution between “all rights reserved” and “no rights reserved” that would give NFT owners commercial or limited commercial rights.

Traditionally, protection of works of art is automatically granted through copyright regulation and enforced through centralized establishments. The US nonprofit Creative Commons published the CC0 standard license in 2009. This allows creators to claim that their works belong to the public domain.

Solutions to consider

With creators of CC0-categorized works relinquishing ownership of those works within the legal experience, anyone can use them for commercial purposes.

Ma added:

“NFT creators are increasingly choosing this ‘no rights reserved’ CC0 license for their projects in recent days. Contrary to popular belief, ‘no rights reserved’ does not mean that the original work becomes worthless due to unlimited duplication or that creators will no longer be able to monetize their own work. In fact, it’s quite the opposite.”

Robbie Broome described a similar scenario in a tweet on July 27 that read:

The CC0 license’s removal of limits on copying, distribution and secondary creation, the self-propagating effect, will allow project owners to enjoy getting attention without putting too much effort into promoting their work.

Overall, various projects brewing in the space should adopt appropriate IP licenses accordingly to avoid mishaps or confusion. Especially now when regulators have a keen eye on creating strict laws that could push the sector further.

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