NFT copyright is still a total mess, says report

Illustration by Alex Castro / The Verge

A new review shows that many creators and buyers don't know what ownership is. Only one of the 25 most valuable NFT projects tries to give buyers direct intellectual property rights to the underlying art, and many offer confusing or vague licenses despite recent efforts to clean up the space.

The terms of major NFT projects, including the Yuga Labs project Bored Ape Yacht Club, are analyzed in the report. Many of their operators, including Yuga Labs, appear to have misled NFT purchasers about the extent of their rights, according to the report. Some projects have tried to prevent confusion by adopting the Creative Commons license, but in the process of doing so, some have effectively untethered intellectual property rights from the NFT.

This is in line with the conclusions of a review by Cornell University and the Initiative for cryptocurrencies and contracts. One of the largest and most influential NFT series, BAYC, has been called out as being particularly incoherent. The BAYC terms promise that buyers own the underlying art for their token, but they also grant a license that directly undermines this claim. You don't need a license to use the art if you own it. The claim that major artists are using NFT terms of service is not true. It is quite reasonable to think that a separate deal with Yuga wasn't negotiated by the production studio.

The terms of service for Yuga Labs'CryptoPunks and Meebits series were recently updated, laying out what a more professionalized version of NFT licensing might look like. The World of Women is the only project in the survey that attempts to formally transfer the ownership of art to its NFTs. It doesn't know how selling the NFT transfers the rights to any derivative works.

When the NFT's original creators retain their intellectual property rights, they can change the terms in ways that some NFT buyers might not like. The Moonbirds project switched to the CC0 license after telling buyers for months that they owned their art. The CC0 means anyone, not just the NFT holder, can use the art.

The goal is to improve NFT licenses. This could be useful for NFT fans who want to license their purchases. The current state of play doesn't suggest they're a great way to manage intellectual property rights.