[Guest post] 'Can't Be Evil' NFT license - A tentative NFT worldwide license standard

The IPKat is pleased to host the contribution below by Katfriend Paolo Maria Gangi (Studio Gangi) on yet another NFT-related development [for previous instalments, see here, here, and here]. Here's what Paolo writes:

'Can't Be Evil' NFT license – A tentative NFT worldwide license standard

by Paolo Maria Gangi

Can't Be Evil ... 

The NFT art market, that is NFTs which specifically link an artwork or a digital file (a song, for example), have already gone mainstream and, of course, artists and projects owners have asked lawyers to prepare IP licenses to protect their IP. All this has been complicated by the fact that NFTs are both a new and complex concept. This means that, at the time when this market emerged (which can be probably traced back to 2020 – it seems not that long ago, but time in the crypto-sphere is running at a different pace), it was unclear what an NFT exactly is. Let alone was it clear how to protect the IP rights in the artwork linked to it. At the time of writing, however, there have already been a consistent number of NFT projects, and many of them contain well-written T&C (the BAYC Yuga Labs for example). Legal scholars have also already publicly debated some of the most relevant issues.

A16Z Enters the Arena

Now, well-known Silicon Valley VC firm Andreessen Horowitz (A16Z) has decided to enter the arena and has made it public - under the Creative Commons (CC) CC0 1.0 Universal license - a set of NFT CC licenses under the name 'Can’t Be Evil'.

A16Z is the most active and important economic VC in the crypto-sphere (as of August 31, 2022, A16Z has made 141 VC investments in the crypto sector for a value of USD 7,565,000,000; source: Coinstack Research). A16Z’s influence in the crypto-sphere, and particularly of partner Chris Dixon, tends to be not only economic but also somehow “cultural” – the release of the Cant’ Be Evil licenses falls well within the “cultural” strategy of both A16Z and Chris Dixon.

The explanation of the name 'Can’t Be Evil', available on the A16Z website, is worth reading as it says a lot, not only in relation to this sets of licenses but also the philosophy underpinning the entire web 3.0: “"Can’t Be Evil” is a guiding principle in web3 (and a riff on the “don’t be evil” slogan popularized by Google) arising from a new computational paradigm: blockchains are computers that can make strong commitments and that are not controlled by people. In other words, blockchains enable a new “trustless” version of the internet where users don’t need to trust one another or rely on centralized services and corporations to transact […] instead of trusting people or corporations to not be evil, we can ensure through code that they “can’t be evil.”

Why a CC license?

CC licenses were born in the Silicon Valley (and yes: A16Z is rightly located in the Silicon Valley) to help foster the software industry since the creation of software requires the work of waves of generations of developers. Therefore, big Silicon Valley software corporations usually release software under a CC scheme (there are various CC licenses with a different scale of rights and obligations).

In the case of NFTs, the use of a CC license makes a lot of sense because the value of an NFT is not uniquely centered on the related artwork, which is any case relevant, but on the artist's bio, the blockchain on which is minted and, ultimately, the token (the non-fungible token, in fact, as different from the artwork linked to it). That is ultimately the logic upon which the famous NFT sold by Beeple for USD 69 million can be freely downloaded without undermining its value (the same can be said for any of the BAYC NFTs or other famous NFT collections): the economic value is linked to the sole, unique, non-fungible token (and its author’s bio and reputation) while the artwork alone (without the NFT) can freely circulate. This means that, even if NFTs artists decide not to make use of a CC license (they obviously can include in their NFTs a proprietary a license which reserves to them the entire copyright on the linked artwork), it is the mechanism itself of the NFT which substantially tends to make sense only under the point of view of a CC license (notwithstanding the fact that an NFT does or does not contain a CC license, the artwork remains freely downloadable so that the value resides, in any case, in the non-fungible token with the linked artwork and not in the artwork alone separated by the artwork).

The 'Can’t Be Evil' set of licenses – general remarks

As a very general remark, the 'Can’t Be Evil' licenses are a (very) well-written set of 6 licenses developed by lawyers and operators who have a deep understanding of NFTs and web 3.0. The set is based on the general CC license framework – each license grants in fact “different sets of rights with different degrees of permissiveness”.

... or ...?

A16Z has published a document containing guiding rules on the licenses as well as their text.

Moreover, the licenses have been deployed on Arweave (a decentralized storage, similar to IPFS, although it offers a better level of protection) so that the licenses can be directly linked on-chain by the smart contracts: “our CantBeEvil.sol contract exposes getLicenseURI() and getLicenseName() functions in your project’s smart contract that, when called, allows anybody to see what creative license applies to the NFT”.

The 'Can’t Be Evil' licenses can be also found in the A16Z repository on Github.

The 'Can’t Be Evil' set of licenses – specific remarks

First of all, the entire set of licenses appears to be very (too) US-centric. For example, in section 1.6 (see as an example license CBE-ECR) there is a reference to OFAC (the US international sanctions system) but there is no mention of other governmental sanctions systems like inter alia those of the EU or of the UK.

Secondly, the guidelines document notes that section 1.4 of the licenses “makes specific reference that the transfer must be “lawful” to transfer the license, to address the situation of someone losing their licensed rights because their NFT was stolen. Alternatively, the Creator may choose to instead provide that the ownership of the NFT (and the licensed rights that attach to such ownership) will simply be based on the records of the relevant blockchain”. The document also adds that “the liability of various parties in these types of transactions are not yet established, and this alternative may still not be enough to avoid liability or involvement for the Creator in a stolen NFT scenario”. However, the licenses do not consider the statistically very frequent case (given the high number of scams and cybersecurity incidents on the NFT market) of NFTs stolen and immediately after that re-sold to buyers who are acting in good faith, bad faith (this being very difficult to prove in court) and everything in-between: in these cases, section 1.4 does not seem to say much.

Thirdly, it is worth highlighting that section 3.4 sets as governing law the law of the State of New York – lawyers who will make use of the set of licenses as a general template should adapt that clause to their own needs (i.e., substitute with the governing law of their choice).

Conclusion

The publication of A16Z’s 'Can’t Be Evil' licenses is surely a positive event as it will introduce a higher level of professionalism on the NFT market and will allow NFT artists and project owners (or most likely, their lawyers) to rely on a professional set of NFT licenses. This said, with the publication of this set of licenses, A16Z is also definitively pushing towards the overall application of the CC licenses in the NFTs area. This, from the point of view of the author of this post, is a positive aspect, but it is obviously open to discussion – and will depend on the circumstances at issue – whether NFT artists and project owners should make use of other types of licenses instead.