Understanding IP Matters: Crypto and NFTs – Creators’ Rights at the Crossroads

The explosion of the non-fungible token (NFT) market and the jaw-dropping prices being paid for digital art — $69 million for a single work and millions for others ­— have made some fast millionaires, while also giving rise to scammers and a widespread debate about the value of intangible goods.

For some artists, the market for NFTs has proved to be a huge boon. For example, Chicago-based photographer Brittany Pierre sold over six figures worth of her art on the OpenSea marketplace in 2021 after teaching herself how to mint an NFT, whereas previously she had difficulty paying rent and groceries.

For established artists who have curated an online following and understand the value of scarcity, the opportunities presented by NFTs have produced a level of autonomy not previously experienced in their careers.

On the other hand, for popular artists who have been slower to begin selling digital products, OpenSea has become yet another marketplace to police unendingly for knockoffs and IP infringement — much like Amazon and Facebook. Trademark and copyright violations are widespread, artists and brand owners allege on Twitter.

In the latest episode of “Understanding IP Matters,” the podcast from the nonprofit Center for Intellectual Property Understanding, host Bruce Berman teases out how culture, IP and decentralization intersect in an interview with CoinDesk SVP Sam Ewen. Ewen is a longtime marketing executive who has created brand experiences across physical, digital and social platforms for Samsung, NIKE, Target, HBO, Pfizer, American Greetings, ADIDAS, GE, AT&T, Expedia, Estee Lauder, Showtime and many others. He likens the cyberworld today to the internet of the 1990s and hip-hop culture that preceded it.

First, Ewen grounds the conversation by reminding us that the origins of Web 3.0 are rooted in “tremendous inequities,” which the 2008 financial crisis exacerbated.

“Out of that came a remarkable opportunity to look at how technology, assets and ownership were going to be re-imagined for a digital age,” he says. The movement towards a verifiable ledger — which reduces the need to rely on middlemen who have lost our trust, like banks — is here to stay.

But as the cryptocurrency market surpasses three trillion, naysayers continue to insist this is all a fad. While Ewen agrees that a large majority of current NFT projects are overvalued and will at some point “plummet in price,” he’s convinced there’s “too much value, too much excitement and too much psychology about why this does work to assume that, well, maybe we all got it wrong and we’re going to go back.”

How Digital Culture Collides with IP rights

On the internet, Ewen explains, replication is an inherent and important part of the culture — think no further than memes. Slight tweaks to images, audio, text and video clips are made over and over again to communicate slightly different meanings. As we use memes to represent our emotions and our sayings, repetition begets shared understanding. This is a big part of the reason why the NFT boom is leading to “an orgy of intellectual property infractions,” Ewen wrote in a recent article for CoinDesk.

“We feel a sense of ownership over the creative delivery of objects that we didn’t create the initials of, but we then remixed and made into something else,” as he puts it.

Which leads to the obvious question, how much do you have to change something to claim ownership over and profit from it? He cites the Metabirkin project — in which an NFT artist made a million and half dollars selling over 100 different 3-D versions of the notoriously exclusive Birkin bag by Hermes — as an example of a violation.

“When someone’s making millions of dollars off of what, in essence, is your shape, your design, your trademark, I think it does cross a line where a cease and desist had to come, because they’re saying, if anyone’s going to put out a digital version, it should be us.”

Blockchain technology has begun to influence the market for patents too, with IPwe and IBM teaming up last year to make it easier to search, share and verify patent data. For many, a verifiable ledger or blockchain would be the ideal platform to search provenance and licensing history.

How NFT Projects Approach Ownership and IP Rights  

Ewen highlights in detail the very different approaches that three popular NFT projects — CryptoPunks, Bored Ape Yacht Club, and Nouns — have taken in regards to how the assets they’ve produced can and cannot be used, including monetization and royalties.

For example, Nouns has chosen to release one NFT a day under a Creative Commons, no rights reserved license — meaning anyone, whether you own the NFT or not, can do anything with it. The idea being, the more Nouns are seen everywhere, the more value is accrued to the NFT owner. Other NFTs function more like purchasing a Warhol. You can display it on your wall, but you cannot make a brand out of it, because you don’t own any of the underlying rights.

From a timing perspective, Sam likens the state Web 3.0 is in today to 1999 in the internet timeline.

“If you were there in 1999, you would’ve seen a lot of dot-coms that are no longer here today. But you also would’ve seen Amazon and Google and the companies that were the underpinnings of the future internet. We’re in that same time now. To not pay attention is a disservice to yourself, not today, but five years and 10 years down the road, because those same companies are being born right now in the Web 3.0 space. If you’re resistant to it, you’re just going to get left behind.”

Listen to Sam and Bruce discuss why digital assets will endure; what NFTs really are; why hip-hop is the grandfather of NFT and meme culture; the role social media has played in helping the market for NFTs flourish; the opportunities that NFTs present to big brands; whether Web 2.0 leaders like Facebook will be able to reimagine themselves for Web 3.0; the tension between patents as property rights and the open-source ethos powering blockchain; the potential benefits of Web 3.0 for content creators; and much more.