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Copyright and Pure NFT

December 21, 2021

Hello, friends! Did you miss me? Do you remember the previous article about the Pure NFT possibilities in digital distribution stores? I hope you liked the idea as much as I did. The prospect of returning to the transmitted games era, I'm sure you will agree, is great in itself. Moreover, game and software publishers will benefit with Pure NFT too.

But today I decided to touch on another very interesting topic, which is extremely painful for the NFT market. Copyright, buyer's rights and the law aspect.

The topic is complex, perhaps boring for someone, so I will try to write as simply and clearly as possible, with examples and explanations. I hope this article will help people learn a little more about the NFT market, about their rights, and about protecting them.

Let's start with the sad one. Promoted networks and NFT markets almost do not protect the real content creators’ copyrights in any way. Blockchains used to create NFT and marketplaces are partly to blame for this. If the accounts are anonymous, no one asks for authorship confirmations, and KYC/AML are strictly situational, it is strange to expect a careful attitude to copyright…

To the credit of some marketplaces, they are trying to solve the problem. They are asked to add as much information as possible when registering NFT, give links to social networks, etc. But!

This doesn’t limit in any way those who use other people's works, creating NFT on their basis. It’s not so difficult to find a good author on the web who knows nothing about the NFT, and start selling his works.
What can the resource administration do then? In the best case, hide the created NFTs from the marketplace or block a fraudulent account. But only if the real author gets in touch.

Who will be in the red in this case? A fraudster who, most likely, has already withdrawn the funds received? Or the real author? Or maybe NFT buyers?

The only way to somehow contain the wave of fakes and openly stolen content in the NFT sphere is the mandatory passage of KYC/AML. This rule should apply at the level of the entire blockchain, and not a specific market. Because nothing prevents a conditional fraudster from making NFT directly in the blockchain, without marketplace constructor, and then sell it to everyone.

As a result, the blockchain has become a common tool, no better (and sometimes worse) than other copyright fixing services. But it could have become the author's best friend, impartially fixing the authorship and confirming the authenticity.
But if the axe, instead of chopping, only gets your hands wet and rubs calluses — this is not a reason to return to the hacksaw, right?
In the FOIL Network, I without much surprise found a built-in KYC/AML and the requirement to pass it to create an NFT.
It's very simple. To create an NFT, you will need a verified account, you will not be able to bypass this requirement. Yes, you can use an alias, but real data will be required for verification. This immediately takes the FOIL network to a much more serious level.

Why? Because now a fraudster who used someone else's work to create his own NFT and then sell them will have to undergo verification and transfer the data to a trusted center. This means that he will not be able to sit behind the mask of anonymity, and if (when) the real author appears, he will be able to file an absolutely real claim for violation of his copyright - not to “an indefinite person or group of persons”, but to a very particular individual.

This will help to minimize fraud in the field of NFT.

Someone may say that this contradicts the basic principles of cryptocurrencies, where the anonymity of the wallet and transactions is extremely important.

And I will agree with this. But the problem is that the principle of complete anonymity in the case of NFT works in the negative! For NFT, information about the author, confirmation of authenticity and the absence of third-party duplicates are extremely important.

Therefore, it seems to me that FOIL Network is moving in the right direction, not completely abandoning the principles of anonymity in cryptocurrency, but introducing reasonable restrictions aimed at the convenience and security of authors and buyers. Because not only those who produce content suffer from scammers, but also those who buy it! What do you think will happen to the price of NFT when it turns out that it was made not by the author, but by a fraudster?

By the way, about the buyers’ rights.

Having started a conversation about copyright, I can't miss one interesting point. I have repeatedly heard the opinion that buying an NFT is almost the same as buying the original, after which you can do anything with it.
And... this is absolutely not true. The buyer only has the right to own the non- fungible token itself. If you remember the previous articles, you have already guessed what is the matter here.

The vast majority of current NFTs do not contain the content itself. Only its hash and a link to the media server where this content is located. This means that the NFT buyer does not have any rights to the content attached to the NFT. He can't, to be quite strict, even show it on his blog!

And I can even guess why the sites that sell NFT do not pay any attention to this. When the NFTs themselves do not contain content, it is simply impossible to create a clear license agreement!

As a result, NFT buyers who want to get the rights to the content itself are forced (already separately from the platform and the blockchain) to conclude classic agreements with the authors.

Somewhat different from “almost like buying the original”, isn't it?
Let's calculate the necessary actions:

  1. Buy NFT;
  2. Contact the author, if at all possible;
  3. Draw up a license agreement or a contract for the alienation of copyright;
  4. Sign the contract on both sides.

By the way, does anyone know why NFT is on this list at all?

And - the cherry on the cake. If the sites were seriously engaged in copyright and user rights, they would have to conclude license agreements with all the NFT creators and maintain their own media server for storing content. That is, in fact, to turn into a Shutterstock with a blockchain bolted for some reason.

Perhaps this seems to be an unfounded criticism, but in my opinion, where the blockchain only complicates everything instead of simplifying the mechanisms, it simply does not belong.

Oh, I didn't think there would be so much negativity. But what can you do — the topic is very fertile. In any case, we need to move on to finding a solution instead of further investigations that reveal a lot of sad things.

To begin with, I imagined a hypothetical situation where it would be possible to immediately attach a license agreement or a copyright alienation agreement to the NFT.

For one site, this is quite realistic, but quite time-consuming - again due to the lack of content in the NFTs themselves and the need to be an intermediary between the seller and the buyer. As a result, what will the transfer of rights (part, under a license agreement, or all of them, under an alienation agreement) look like in the case of a classic NFT exchange?

So, the solution.
  1. At the time of placing the NFT on the exchange, the author enters into an agreement with the exchange on the transfer of content (which the NFT "contains") and rights to it, depending on what rights he wants to transfer.
  2. The exchange, for its part, signs the contract and accepts the content referred to by the NFT for storage.
  3. When a buyer appears, the exchange enters into a contract with him and transmits the content related to the NFT.

The situation is legally complicated by the fact that both the buyer and the author are completely anonymous accounts.
"Is it possible to do something simpler?" - you ask.

Yes, it is possible. In order to fully transfer rights together with the NFT, we don’t need so much. Just the transfer of content attached the NFT and the automatic signing of the transfer of rights agreement.

That is, the very concept of p2p, which the current NFT exchanges have slightly forgotten about. An honest, clean open system that doesn’t allow the author’s and the buyer’s rights violations.

And... we're going back to the FOIL Network.

The Pure NFT concept itself directly speaks about the continuity of the content and the token containing it, so adding automatic agreements to this system was the most obvious solution. Moreover, the FOIL system itself has the “Documents and Document Templates system” is already available to users, allowing them to draw up and sign a contract for the rights transfer.

But... you want it to be even easier, right?

Therefore, I was very glad to learn that automatic agreements are planned to be implemented in the wallet interface, thereby giving authors the opportunity to choose under which contract they will post their NFT on the marketplace.

By the way, let's look at what rights the authors can transfer and on what conditions.

The simplest, but at the same time the most ultimatum, is the complete alienation of copyright. This means that the author fully transfers the rights and then does not participate in any way. Absolutely all exclusive rights are transferred to the buyer, and he can really do anything with the content. Modify, create his own NFT based on it, perhaps even make merchandise.

This is very, very great for the buyer, because in this case he buys not just a digital print of the work, but the work itself, with all the rights.
Most likely, the price for such NFTs, especially those containing real digital art works, will be quite high — because in this case it is possible to create a single, unique NFT.
Why? Because the author simply can’t transfer exclusive rights to hundreds or thousands of people.

But for some buyers, this will be a huge plus precisely because of the exclusivity.
Next, we will analyze the license agreement, the most frequently used form of transferring part of the rights in contemporary art.
Most likely, you are aware of the popular open Creative Commons licenses. If so, then you will understand what we are talking about. If not, I will allow myself a little boring explanations.

Licenses are agreements that allow the buyer to use the author's work in ways X under conditions Y.
That is, the contract may specify that it is possible to use the work, including for commercial purposes, but on the terms of mandatory indication of authorship without the possibility of making changes to the work.

This means that the buyer who purchases an NFT with the specified work can make merch based on it, use it as a logo for his promotion, or even insert it into his game, but he is obliged to indicate the authorship and cannot make any changes to the work.
The second point is often very important, since with the ability to change the work at will, no one prevents an unscrupulous buyer from changing three pixels or changing a couple of notes, and then posting the result under his own name and on his own terms.
Another point of license agreements is that they can be non-exclusive and are issued simultaneously with many persons who will receive the same license rights.

Finally, the author may not transfer any rights to his works, do not enter into agreements and sell NFT as is. This will be a direct analogue of the NFT sale on other exchanges, when the buyer receives only the ownership right to the NFT and the attached content. That is, even bragging about the acquisition in the blog will not be very much, from the point of view of copyright.

In general, I really like the system with alienation of rights and license agreements, since the NFT market will finally become much more defined. It will become clear to everyone why exactly he acquires a particular NFT. Is it just collecting, or maybe the buyer wants to use the purchased content somehow?

And finally, let's dream a little.

Pure NFTs allow you to put virtually anything into an NFT. Any content. Imagine a whole project, with a full transfer of copyright, put on the market as an NFT. Documentation, resources, technical description…
Maybe this will be a new breath of air for developers who are unable to finish a game or a program, but don’t want to send their offspring to the trash? How many such projects lie in the carefully forgotten corners of hard drives, and how many could bring real benefits if the developer could give them a way?

P.S. In the next article there will be a full guide on creating the NFT with the connection of a rights transfer agreement. I think this will be useful for everyone who is engaged in creating or buying NFT. Stay in touch and see you soon!

Next time, we will try to evaluate the Pure NFT possibilities in the field of digital distribution.

Thank you for your attention, see you next time!

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