“Wen Lambo?”, and The Rabbit Hole of NFT Intellectual Property

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The last scandal that fueled the debate around IP in the realm of NFTs was started by Lamborghini, a brand that has accrued strong memetic value in the crypto space.

On 2 February, several crypto artists who depicted Lamborghini cars as a part of their works received notices of infringement:

This action could be correlated with the imminence of Lamborghini’s entrance into the NFTs market (on 18 January 2022, they announced the creation of 5 NFTs). Apparently, those were sent to artists that are exhibiting their works on the SuperRare platform.

The platform itself is known for taking rather definitive actions against artists that collided with SuperRare’s views regarding copyright infringement. Their terms (cited in the last part of the notice) stipulate that SuperRare reserves the right to “remove any content that allegedly infringes another person’s rights”. This particular line gives the platform the power to remove content when the first shadow of a doubt is cast upon a potential infringement. What does “allegedly” means in this context? Is it necessary only a simple notice on the behalf of anybody that unilaterally considers that a breach in copyright rights was conducted? In the particular case of @bigcomicart, the work in question represented a collage. He is calling fair use in his defense.

At this moment only a court can rule if it was fair use. Not the artist, not the other potential harmed party, and definitely not the platform. Favoring by default the accuser only assures a certain path to harm innocent artists.

Lamborghini’s decision had, arguably, the opposite effect and spurred a vengeful reaction inside the crypto art community. Where does art stop and infringing on others’ copyrights begin? Is it fair the price tag needed for defending your point of view in court?

This only represents the last act of a saga that has countless chapters and spurred heated debates. In traditional media, the case of IP and crypto is usually cast in a grim light and it could be boiled down to “there are a bunch of greedy bastards, stealing art for profit”.

The truth is more nuanced. Blatant art theft in the NFT world is countered with ease by the community, and one has to understand that when it comes to crypto art, there is a strong bond between artist and audience. No true crypto artist will copy the entire work of another and claim it as their own, and questionable cases will be filtered through the artist’s own lenses and usually enter into fair use territory.

Inside the crypto art community, there are already two main sides established – both have a lot of variations between the ends of the spectrum: the hardline enforcers of IP regulations and the contesters of IP regulations. There are a lot of arguments on each side, but the essence is that both are stating that their one vision represents the true spirit of web3.

One narrative is based on the idea that blockchain enforces by design the idea of intellectual property by linking inextricably the work and its creator, thus web3 must guard and implement even more thorough IP rules. The other states that given the inherent provable provenance of a certain piece on-chain there is no need for following IP traditional directives further and encourages the spread of fully open creative licenses; they tend to consider the “old” IP rights a way to wrongly defend the interest of the privileged ones, the rich individuals and corporations that could sustain the financial cost of waging legal action.

Depending on how strong the support for one faction was in the space at a certain time, the group that was in the weaker position was bullied by the others. The IP evangelists waged war on Max Osiris Art and Robness (for a little more context you can read this article). In the process, the dialogue transformed into two radical monologues.

Neither side will win this sterile dispute. If it won’t stop, the entire debacle will have unintended consequences: actors from outside the crypto space will decide how intellectual property will look inside crypto space, while the community members are too busy cutting each others’ throats. And the artists are suffering in the process. The sad part is that the only winners are those who shouldn’t have any gain at all – corporations that have the means to push notices of infringement and grifters that are hiding behind the “total liberty of creation” narrative to sell flipped PFPs.

It’s unfair to see how creators like Max Osiris are taking the full blow of cancellation while others are benefiting from the struggle they have waged. This IP thing is indeed art-related, but shouldn’t be more important than the art itself. Artists should never suffer neither from art theft nor from artificial boundaries in expressing themselves.

The technical part of the problem

Besides the ethical implications, there are two technical features that are contributing to the foggy state of IP when it comes to NFTs.

Most of the “traditional” NFTs are not indivisible digital goods that carry the art and the metadata inside the actual token. These shortcomings gave room to various interpretations about what is actually sold and if the token represents the work of art that is linked to it by default.

Even if the argument stated by web3 supporters in the defense of NFTs could be considered compelling (they compared NFTs with a land title — a piece of paper that by no means include the actual land, only it’s coordinates), it never fully stopped the opposite rhetoric.

The second technical feature that fueled further the debate is that the links pointing to the art could become obsolete/ the art could be changed through centralized marketplaces. The latter issue was beautifully exhibited by Twitter user @neitherconfirm almost a year ago:

Evidently, the things above don’t help when it comes to a clear path of interpreting IP rules in the context of NFTs. Still, those problems exist only when we are taking into consideration the “old” NFT standards. Atomic NFTs are here to fix those issues.

No more wondering if the art is represented by the token, no more fear that the art could be changed outside the token. Art+metadata+token are on-chain, under a unique identifier. Art can be retrieved directly from the chain through a permanent link.

The solution

I voiced it countless times: both sides could coexist peacefully. The issue could be resolved on-chain, not in court. There is an easy solution, already implemented for another issue that plagued NFTs. Have you heard of

The goal of the Royalty Registry is twofold:
Make it easy for marketplaces to use the appropriate on-chain royalty configurations
Make it possible for contracts that did not originally support on-chain royalties to add them

Imagine a similar registry, only for intellectual property rules for each NFT in existence. A permanent database on Arweave, consisting of IP contracts for NFTs, no matter the chain they were minted on. A database that could be easily and forever referenced by any marketplace.

This way we could mitigate all the fuss about IP with a single feature. One artist could choose a more conservative license and they could pick each right that is granted to the buyer, or the opposite, they could choose to submit their work under a CC0 license, granting their work fully for the public domain.

This registry should come with a metadata standard too, that could be integrated inside each new NFT and be read with ease by marketplaces. Even more, we could integrate fields for other NFTs or artists that were indirectly referenced in a collage NFT for example, a chain of provable provenance in which all the parts involved will get their recognition without hindering the artistic drives of others.

Not only this solution would represent a potential deescalation of the current clash of conflicting views, but it could become an undeniable base for traditional regulators to upgrade the laws regarding IP of digital goods traded internationally.

So when it comes to it – the single way we could achieve unity in this space is by reconciling different stances, not by subduing other points of view.

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