Nfts
Moonbirds Copyright Controversy Reveals Flaws in Crypto’s IP Obsession
It’s not really a secret: when NFT emerged as a consistent asset class in 2021, their value proposition was primarily widespread speculation. Since then, NFT projects have spent untold millions attempt to pivot their brands towards a more serious and sustainable future; most have opted for the ephemeral and provocative concept of intellectual property, or IP.
However, it has never been resolved what exactly intellectual property means in such a context, nor to what extent NFT projects can confer intellectual property rights on their holders. These unanswered questions resurfaced this week, when Yuga Labs, the several billion dollars company behind Bored Monkeys Yacht Club—announcement that it was considering granting exclusive commercial rights to holders of MoonbirdsA Ethereum NFT collection acquired in February.
There was only one problem with this plan: in 2022, the original creators of Moonbirds filed the collection under Creative Commons 0 (CC0), an extremely strong legal tool that waived any copyright claims on the Moonbirds NFT artwork and released the pixelated owl characters in the public domain.
The Moonbirds’ official statement on the matter, released Monday, appears to be an attempt to circumvent this reality. “If you made stuff in the CC0 era, that’s cool,” the company said. wrote. “But from now on, you will need to own a Moonbird to continue doing this.”
Twitter users immediately pushed back. Many, including copyright attorney Alfred Steiner, argued that the company’s position was legally invalid: Moonbirds were now in the public domain and nothing could put that toothpaste back in the tube.
It wasn’t long before Yuga appeared to adjust his position. Hours after the initial announcement, the company’s co-founder and CEO, Greg “Garga” Solano, wrote that commercial rights related to Moonbirds would only be attached to new 3D versions of the Moonbirds artwork, which would be granted exclusively to current NFT holders.
These commercial rights, Solano said, would be akin to those enjoyed by holders of the Bored Ape Yacht Club NFT. For years, Yuga has allowed BAYC holders to create and sell Bored Ape-themed projects like hamburger restaurants And canned water businesses. The implication was that Moonbirds-themed chocolate bars and stuffed animals could be around the corner, but only current NFT holders would be allowed to create them.
So what is the truth? Can anyone freely riff on Moonbirds copyrights until the end of time? Or does Yuga have the power to control who creates Moonbirds-themed products?
According to Brian Frye, a law professor at the University of Kentucky who specializes in NFTs and intellectual property, both claims can be true at the same time, a fact that exposes key problems in the way intellectual property is currently understood and discussed in the context of cryptography.
For Frye, it all comes down to the crucial difference between copyright and trademark. When Yuga says that Bored Ape or Moonbirds NFT holders have special commercial rights, the company is implying that these come from the copyright of an individual NFT.
Copyright protects the content of a work, such as the plot of a book or the unique characteristics of a painting. Yuga would therefore argue that each Bored Ape or Moonbird has its own copyright, which a holder can use for their own benefit.
But Frye – and other lawyers, including Alfred Steiner– don’t believe that commercial experiments like the Bored Ape hamburger restaurant are actually based on copyright. Instead, Frye claims, they exploit the generalized Bored Ape brand, which falls under trademark law. To put it simply: people line up to eat a Bored Ape burger because it is affiliated with the Bored Ape Yacht Club brand, not because it represents Bored Ape. #6184 specifically.
This distinction is a double-edged sword. In the case of the Moonbirds controversy, this means Yuga is probably can font which commercially exploits the Moonbirds brand. But it also means that the very notion of individualized, copyright-based commercial rights controlled by NFT holders is somewhat fanciful.
In practice, Yuga simply says that he will choose selectively not sue current NFT holders for trademark infringement. But little would protect said holders if the company changed its mind.
The original Moonbirds filed under CC0 will remain in the public domain. But this CC0 distinction does not confer any rights to the Moonbirds brand. Any member of the public who attempts to open a Moonbirds ice cream shop in the near future will likely run into a problem. legal rideif they receive a stern call from Yuga’s lawyers.
Decrypt I contacted Yuga Labs several times regarding this story, but never received a response.
For Frye, the Moonbirds episode reveals the extent to which intellectual property has become a buzzword and supposed value-add for NFT brands, despite the lack of legal clarity around the subject.
“There is a certain subset of [Yuga’s] clients who are really obsessed with the idea that intellectual property is important,” Frye said Decrypt. “They don’t even really know what it means, but it’s a talismanic: ‘IP!’ I want to own the intellectual property, whatever it is.
Indeed, in the hours following Yuga’s Moonbirds announcement this week, the collection’s floor price jumped nearly 30% – or the cost of the cheapest NFT listed on a marketplace – according to NFT floor price.
But this short-term victory could be a Pyrrhic victory. Since winter 2022 saw NFT prices explode, Yuga has struggled to regain the cultural dominance it once enjoyed. It once cost nearly $430,000 to join the BAYC at the project’s peak in April 2022; now you just have to $42,000.
Last week, while announcing After Yuga just suffered a wave of layoffs, CEO Greg Solano said the company had “lost its way.”
Being more aggressive in controlling the Moonbirds brand – which is what this week’s announcement really boils down to – could temporarily boost holders’ perception of Yuga’s value. This may already be the case. But in the long run, Frye says, this sort of self-imposed limitation on who can engage with the Moonbirds brand could backfire in crypto, where what’s cool is everything.
“The only thing they have going for them is some form of goodwill with their customers,” Frye said. “And now to come back and say, ‘We’re going to try to reclaim intellectual property rights that are largely illusory anyway,’ that seems like an incredible ‘L’ for them.”
Edited by Andrew Hayward