One of the main issues with deploying and commercializing NFTs, especially after the rapid growth of marketplaces such as OpenSea or Rarible, is what rights are granted to the purchaser. This is a similar problem What was encountered in the early days of the development of the InternetIn general, for works published via websites that have found one of the best solutions in the Creative Commons project, standardizing a series of license agreements that are no longer focused on software (as was the case with open source licenses created by the 1998 and later initiative open source), but on intellectual property rights for other types of works to be shared on the Internet (texts and images).
recently team az16crypto (Andreessen Horowitz’s venture capital fund specializes in the Web 3 sector with total resources raised for approx $7.6 billion) proposed a set of free public licenses called “Cannot Be Evil”, based on the Creative Commons model, that aim to regulate intellectual property rights in NFTs, standardize their content, and thus ensure greater certainty in the circulation of these types of tokens.
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NFT licenses, because a new model is needed
The rapid spread of NFTs, especially with regard to image and avatar representation, has highlighted a series of new problems compared to those of Web2.0 intellectual property products. It often means buying an NFT Purchase a non-fungible token Registered on the blockchain associated with metadata linking that registration to the specific content that the token refers to. This content is stored off-chain (such as in large marketplaces such as OpenSea) or, in rare cases, on-chain. In the second case, the buyer is more secure in terms of events that might involve the thread managing to save the contents, but in the first case, if that thread suddenly decides to delete all managed files, that connection will be lost without the NFT buyer can stop it.
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Moreover, in most of the NFT related projects that have been implemented in the last couple of years, there is ambiguity about the type of rights given to the purchasers as the licenses are often unrelated or different from each other which makes it difficult for the users to be able to understand the content effectively. Add to this that even the texts of the licenses are often kept off-chain, Which leads to more uncertainty About the validity of the same, given that texts can be modified at any time even without the consent of the buyer of the NFT.
How does “You Can’t Be Evil” work?
In light of these issues, the licenses provided by az16crypto, which were developed with the support of two large US law firms, It has been proposed as a standard for trading NFTs, by adopting a series of technical-legal measures aimed at eliminating or at least minimizing, risk profiles for buyers and providing greater transparency of the applicable conditions. The decision to name the set of licenses “can’t be evil” (with a reference to Google’s slogan “don’t be evil”) derives from the very nature of the blockchain: the trust mechanism found in such systems lies in the immutability of the software they run and in the impossibility of modifying transaction records Executed, it prevents people participating in the network from acting maliciously (this is, above all, when data is stored directly in the blockchain).
In such cases, it is no longer necessary to trust the counterparty, because the fulfillment of obligations is guaranteed by the code itself. Even if these statements seem to be dismissed by recent news events, with the collapse of the FTX exchange, It should be noted that similar events derive from adopting models that replicate those already in Web2.0: When the centralization of services occurs, the need to trust the person who manages them returns, at the expense of decentralization which would instead eliminate this need.
A similar risk has also arisen in connection with NFT markets and associated rights management. The centralization of storage of the content to which the NFTs are associated and the modifiability of licenses (if any) do not provide guarantees For buyers of non-fungible tokens that they must “trust” that previous authors or purchasers (or marketplaces) do not decide to change the terms and conditions or, in the case of marketplaces, continue to hold the content to which the NFTs are associated.
The “can’t be evil” set of licenses therefore has a purely legal component, the actual text of the licenses, and a technical component that ensures they can’t be changed. Contractual texts are stored in a permanent and immutable manner on Arweave and a special smart contract has been created that can be integrated into the smart contracts used to create NFTs. in this way, When the author decides to create an NFT and make it available to the publicit can call the smart contract, select the license it intends to apply to the non-fungible token (out of the six available) and thus make it permanently bound to the distributed work since both the call and the license body are stored on-chain.
The six types of licenses
Following methods already adopted by Creative Commons, six licenses have been proposed, based on the progressive restriction of intellectual property rights granted to NFT purchasers.
The Six types I:
- CBE-ECR (Exclusive commercial rights without retaining the creator): through which all rights to commercial exploitation of the work are exclusively granted. In such event, the author wholly waives these rights and reserves no right to exercise them further;
- CBE-NECR (non-exclusive commercial rights): similar to the foregoing rights in terms of the extent of the exploitation rights granted, but with the specification that they are not exclusively transferable. This means that the author reserves the right to grant all or part of these rights to third parties as well.
- CBE-NECRHS (Non-exclusive commercial rights with creator retention and hate speech termination): In this case, the clauses set forth by CBE-NECR are added to those relating to the author’s possibility to terminate the license if the work is exploited contrary to certain criteria (violence, speech hate, pornography, etc.); The decision on the existence of the breach may also be made by the DAO (Decentralized Autonomous Organization) or another committee;
- CBE-PR (Personal License): This is a license to exploit the rights for the purchaser’s personal use only;
- CBE-PR-HS (Personal License with Hate Speech Termination): with content similar to the foregoing and the addition of a termination clause if standards are violated;
- CC0 (“CBE-CC0”): With this license, there is double reference, since the applicable provisions will be those of Creative Commons 0, i.e. the well-known “no copyright” which makes the work in the public domain.
All of the “can’t be evil” licenses have some common provisions, and they are specifically designed for the world of NFTs. First, it is irreversible (except as specified above In the case of licenses that contain a “No Hate Speech” clause); This prevents authors from being able to override the contractual terms applicable to the NFT once it is in circulation. Second, all licenses contain contractual clauses that make them applicable even to subsequent NFT purchases (subject to their non-fungibility). When a purchaser of non-fungible code decides to transfer it to a third party, the license originally granted to that original purchaser automatically terminates and it is transferred to its successor in ownership. It is important to note that this mechanism also makes it possible to manage the “chain of rights” attached to the NFT (easily reconstructed by examining the blockchain records) that will follow the token through all its various steps.
The set of licenses also includes clauses to protect purchasers in case the author violates the rights of third parties to create the work, and since they can be traced on the blockchain, they also help prevent illegal use of tokens by allowing the reconstruction, also legally, of the different sections of ownership (element It also has a certain significance in mind for the scams that involved some of the most famous NFT projects).
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How to choose and apply licenses
We have highlighted that licenses are designed and structured according to the levels of rights they grant. To choose what best suits the NFT project, the author must therefore assess the extent of rights he wants the purchaser of the non-fungible token to exercise. To do this, and provided the decision is not to grant the work into the public domain (allowing anyone to use it freely), you can assess the type of license as “it can’t be evil” Starting from which all rights of economic exploitation are granted (CBE-ECR) Up to a person allowing personal use only with the right to terminate if standards are violated (CBE-PR-HS).
As already expected, implementing the license requires naming the CantBeEvil.sol smart contract (generated using the Solidity language) within the smart contract that generates the NFT, and then specifying the chosen license type that will be permanently associated with the non-fungible token.
The rapid growth and proliferation of non-fungible codes, especially in the last two years, has increasingly highlighted the need to be able to refer to contractual standards that give certainty to legal relations in the Web 3 world. From a legal point of view, We are not in a completely new scenario But we can refer to those solutions and methodologies that have already been identified in the construction of web2.0, and adapt them to the peculiarities and characteristics of this new sector.
The Can’t Be Evil suite of licenses takes its cues from the work – now twenty years old – that has been done through the Creative Commons initiative, taking its positive cues and trying to adapt them to the new solutions offered by the blockchain. All this also enhances potential and same properties In order not to distort its decentralized nature and prefer to build trust, which is its main result.
With regard to these aspects, therefore, attempts to standardize and give greater legal certainty to transactions made via blockchain technology should be welcomed and recognized that, only by accompanying the deployment of these new technologies – Preserving its original nature With the certainty of law, it is possible to build a new method of online interconnection and overcome current models that base transactional trust on a few central subjects.
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