Bored Apes, Moonbirds ‘Misled’ Buyers of NFT IP Rights: Galaxy Digital Report

One of the most compelling sales pitches for anyone NFT projects are the opportunity for holders to commercialize their avatars to create and sell derivative works of art, merchandise and more. But a new report from Galaxy Digital suggests that major NFT projects have been “misleading” buyers about what they’re getting when it comes to supposed IP rights.

Released on Friday, “A Survey of NFT Licensing: Facts and Fictions” examines the largest NFT projects today based on implied market capitalization, particularly with respect to the rights they claim to provide to their holders. The report concludes that in fact “the vast majority of NFTs convey zero ownership of intellectual property” to their owners – and it highlights two projects in particular that Galaxy researchers believe have wrongly marketed IP rights to buyers: Bored Ape Yacht Club and Moonbirds.

Some NFT projects are much more lenient with IP than others, the report claims. Yuga Labs’ Bored Apes is arguably the most famous example of a project offering a broad license for holders to use theirs Ethereum NFT images as they see fit. It has led to clothing, marijuana packaging, music projectsEven Monkey themed fast food restaurants.

Other projects place barriers to commercialisation, such as e.g Doodles, which the report notes limits the amount of revenue that can be generated from derivative works, plus limits the ability to modify the original artwork. Meanwhile, Gary Vaynerchuk’s VeeFriends the project has a very limited “personal use only” license that does not allow user-made commercial products.

There are also projects that embrace a completely open source philosophy, or Creative Commons Zero (CC0) “no rights reserved” approach, allowing anyone and everyone to use the artwork to create derivative projects – not just NFT holders. Noun is no doubt most famous example of itwhile Moonbirds going to switch to that type of license.

But even when an NFT project offers broad commercialization rights, Galaxy Digital’s report claims the language can be muddled or contradictory, or outright false. Alex Thorn, head of Galaxy Digital Research, said Decrypt that there is often “a discrepancy between what the public thinks they are buying and what they are really buying” with such NFTs.

An NFT is a blockchain token which represents ownership of an item. Profile picture collections like Bored Ape Yacht Club and CryptoPunks are popular examples, plus the technology can be used for sports and entertainment collectibles, digital artwork and video game items.

In the case of the Bored Ape Yacht Club, for example, Yuga Labs’ license states that “when you buy an NFT, you completely own the underlying Bored Ape, the Art.” However, Yuga Labs remains the copyright holder who owns the intellectual property, and as such, Galaxy Digital writes that Yuga “implicitly acknowledges that the NFT holder does not actually own the art.”

Earlier this weekissued Yuga Labs much longer and more comprehensive IP license agreements for CryptoPunks and Meebitsa couple of popular NFT projects like that acquired earlier this year. These agreements provide more clarity on NFT holders’ rights, but Yuga Labs’ Noah Davis told Decrypt last week that the Bored Ape license will not be updated to match these licenses.

Decrypt reached out to Yuga Labs for comment on the Galaxy Digital report and its criticism of the Bored Ape Yacht Club licensing agreement, but did not hear back by the time of publication.

Meanwhile, the Moonbirds are chastised in the report for their recently announced plan to embrace a CC0 license. Tech entrepreneur Kevin Rose Web3 startup Proof launched the project earlier this year, and wrote on the website Moonbirds that “You own the IP” when you buy a Moonbirds NFT. Despite that claim, Proof said it will put Moonbirds in the public domain.

“The fact that Proof can unilaterally change the terms of the license, and did so, is further evidence that Moonbird’s NFT holders did not actually ‘own the IP,'” the report said.

Thorn described it to Decrypt as a “more serious case of inconsistency between marketing materials and the stated licenses” than something like Bored Ape Yacht Club. Many Moonbirds owners have expressed anger at the decision, with one claiming that a planned “six-figure licensing deal” with a brand fell through after the CC0 announcement.

Bevis did not immediately respond Decrypt their request for comment regarding the Galaxy Digital report.

The report further claims that only one project in the top 25 by market capitalization “even attempts” to actually grant IP rights to holders: Women’s world. It notes that Women’s world has the most well-thought-out license agreement that tries to overcome the shortcomings of others on the list – but it also has problems, especially with how rights are transferred after secondary market sales.

“Essentially, there are no NFT projects that transfer IP rights,” Thorn said Decrypt. “It poses a big problem for the future of metaverse and also dramatically undermines the proposed dream of Web3, which is user-owned digital property rights on this future version of the Internet, he said.

Why? By and large, Thorn suggested, that’s because the NFT space is still nascent, and such initiatives for commercialization rights gained momentum only last year. Some of these licensing deals seem “amateurish,” he said, and many projects are simply taking cues from each other. But the license terms are becoming more detailed as the NFT space matures.

“Boed Ape Yacht Club is a good example, because as they got bigger and bigger, and they built his metaverse outthese agreements have become clearer and clearer and more professional, Thorn said Decrypt.

Galaxy Digital’s report ultimately concludes that NFT owners must fight for clarity about IP rights, and that it is up to project creators to find ways to embrace true Web3 ownership, rather than simply assigning a license. Otherwise, it suggests, “The NFT landscape will clearly be formulated into Web2 products marketed and disguised as Web3 products.”