KEY POINTS

  • Moonbirds and BAYC were named among NFT collections with shady IP statements
  • Creative Commons license moves NFTs to the public domain, making it hard for NFT holders to assert ownership in court: Report
  • BAYC is one of the most expensive NFTs in the market

The Non-Fungible Token (NFT) space is one of the emerging industries facing tremendous reception from consumers but it does have its downside. Aside from theft and copyright infringement, the industry is facing another troublesome issue – IP rights. According to a new report, Bored Ape Yacht Club (BAYC), Moonbirds and other NFTs are "falsely stating" that NFT holders "own the IP."

Galaxy Digital, a tech-driven financial service and investment management firm, revealed in its latest report that Moonbirds, BAYC and other NFTs misled buyers about Intellectual Property (IP) rights. According to the report, the license provided by Yuga Labs, the company behind BAYC, to its holders is full of contradictions.

"Yuga describes its license as unlimited, exclusive, worldwide, royalty-free that allows for full commercial use," the report said. However, in the ownership section of BAYC, Yuga states, "when you purchase an NFT, you own the underlying Bored Ape, the Art, completely."

'Bored Ape #8971', part of the Bored Ape Yacht Club collection of 10,000 computer-generated cartoon apes which are traded in the form of NFT is seen in this undated handout. Benoit Bosc/Handout via REUTERS
'Bored Ape #8971', part of the Bored Ape Yacht Club collection of 10,000 computer-generated cartoon apes which are traded in the form of NFT is seen in this undated handout. Benoit Bosc/Handout via REUTERS Reuters / BENOIT BOSC

According to the report, "at face value, the above statement in the BAYC license agreement suggests that NFT token holders own the intellectual property that underlies the NFT. But the copyright holder is the entity that owns the intellectual property to the underlying art and Yuga's license makes no assignment of intellectual property to holders of the NFT."

The report added that "the copyright holder has the sole power to grant a license to use intellectual property they own. By clearly granting a license in their agreement, Yuga implicitly acknowledges that the NFT holder does not, in fact, own the art."

In the case of Moonbirds, the report pointed out that while its website states that NFT holders own the IP, it is in contrast with the terms written in the Moonbirds' license.

"On the official website as of August 8, 2022, users could clearly see a statement that reads 'You own the IP,' which directly contradicts the expressed terms contained in the original Moonbirds license, which conveyed no intellectual property rights to Moonbirds NFT holders," Galaxy Digital noted.

The report also noted that of the top 25 NFT collections, only the World of Women NFT attempted to "confer intellectual property rights to the purchasers of their NFTs." Aside from those, the report highlighted that the Creative Commons license removes NFT ownership from a legal perspective since it exposes intellectual property into a public domain, making it impossible for NFT holders to assert their ownership in court.

"The Creative Commons license, while seen as a solution to the restrictive licenses used by most projects, renders NFT ownership obsolete from a legal perspective as it moves the intellectual property fully into the public domain, making it impossible for NFT holders to defend their ownership rights in court," Galaxy Digital underlined.

Read more