Yuga Labs Releases Long-Awaited CryptoPunks Licensing
Another example of the potential decentralization of the IP ownership of NFTs is contained within the terms recently released by Yuga Labs in conjunction with CyptoPunks. When Yuga Labs acquired CryptoPunks in March of 2022, they issued a press release that said “[w]ith this acquisition Yuga Labs will own the CryptoPunks and Meebit brands and logos, and as they’ve done with their own BAYC collection, Yuga Labs will transfer IP, commercial, and exclusive licensing rights to individual NFT holders.”
On August 15, 2022, those long-awaited licensing terms were finally released. Some interesting features of those terms include:
- An explicit coupling of licensing rights to the asset itself, which means when the asset is transferred the licensing rights which accompany that asset follows.
- Listing of the smart contract which the applicable NFTs were deployed on, potentially to preemptively cut off claims by V1 CryptoPunk owners to IP rights under the agreement. V1 CryptoPunk owners purchased an NFT with an error in the code for the smart contract. To fix the coding error, the original creator (Larva Labs) sent out a new smart contract. V2 CryptoPunks became successful and popular. Recently, original V1 CryptoPunk owners decided to wrap their V1 CryptoPunk NFTs in a new smart contract and sell them. The wrapped version of the V1 CryptoPunks fixes the coding error but resulted in duplicate CryptoPunk NFTs (i.e. the artwork is identical between V1 and V2).
- No explicit reservation of rights to amend the IP licensing terms on a going-forward basis (as was included in the Moonbirds terms).
These terms by Yuga are far more comprehensive than the Bored Ape Yacht Club licensing agreement. Ed Lee, the author of Nau NFT, put together a helpful infographic showing certain differences between the CryptoPunks and Bored Ape Yacht Club licenses.
It is unclear if this CryptoPunks license was released first to determine any potential weaknesses or holes before releasing a revised license for Bored Ape Yacht Club holders, or if it was simply done to create clarity after their statement on the issue regarding their CryptoPunk IP purchase.
Final Thoughts
The Web3 industry mentality surrounding the decentralization of ownership, including ownership of copyrights and other IP, is a new development which is likely to have legal ramifications across all industries. As with any developing industry, it will likely take time for law to be established regarding these current Web3 industry practices. As shown in the above Moonbirds and CryptoPunks licensing changes, these current practices and the laws surrounding them are constantly changing. That is why it is important for developers to engage legal counsel early to assist those developers in creating an appropriate IP strategy for their particular goals. While there are clearly challenges in expanding and decentralizing the IP of NFT owners, these trends are an exciting development in that it demonstrates Web3 being put into commercial practice.