What Is CC0? The Copyright Designation Buzzing in the NFT Space

Over the past two years non-fungible tokens (NFT) have exploded in popularity, with blue-chip projects like Bored Ape Yacht Club (BAYC) or CryptoPunks selling anywhere from several thousand to over a million dollars per NFT. Celebrities have even endorsed some NFT projects, including World of Women, which drew in an exclusive partnership with Reese Witherspoon’s production company Hello Sunshine in February.

While some in the crypto space are skeptical that the wave of profile picture (PFP)-focused NFT projects will remain relevant, many holders are hopeful about the potential long-term value of NFTs through intellectual property rights and a copyright designation known as CC0.

NFTs and intellectual property (IP) ownership

NFTs are digital assets that exist on a blockchain. They are unique and cannot be replicated, and are used to verify ownership of an item.

To those unfamiliar with digital collectibles, buying an NFT can be confusing because owning one does not necessarily equate to a physical, real-life asset. In this way, it is often difficult to understand what you actually “own” when you purchase an NFT.

One of the ways NFT communities have made the value of their NFTs more concrete is by giving holders exclusive access to events, membership groups, merchandise and long-term perks. This approach is known as “utility.” But more valuable than unlocking perks, some argue, is the long-lasting value of intellectual property (IP).

Purchasing an NFT creates an indelible record of ownership that lives on the blockchain. Like sticking a flag post into the moon, purchasing an NFT tells the world that you own a piece of digital artwork – and with that ownership may come the right to commodify it.

“Intellectual property is like an umbrella term,” says Jeff D. Karas, a financial lawyer who focuses on crypto and digital assets. Under the umbrella of intellectual property falls three legal categories of IP ownership: trademark, patents and copyright.

From T-shirts to baseball caps to liquor and even to cereal and candles – owning an NFT might give you the right to reprint the art associated with it and stamp it all over any kind of good you may want to sell, depending on the ownership rights a project affords its holders.

For example, BAYC parent company Yuga Labs released the IP rights to CryptoPunks and Meebits in August 2022, outlining how owners could use their NFTs for derivative works. Prior to this, BAYC holder Andy Nguyen opened a physical burger joint in Long Beach, California, based on the likeness of his NFT, Bored Ape #6184, that he purchased in March for 90 ether (ETH), or about US$267,000.

The value of the NFT, in Nguyen’s case, was not in the JPEG or the metadata attached to the NFT, but the record of ownership documenting his right to use the IP for his fast-food business.

Meanwhile, the NFT licensing startup Snowdrop is creating a newsletter and branding service that connects NFT holders with companies that want to use their artwork for products like moisturizers and beverages.

CC0, explained

However, there are some NFT enthusiasts who believe NFT artwork shouldn’t belong to just a single person or company. A growing trend in the NFT world is a copyright classification known as CC0, which refers to a specific “no rights reserved” copyright.

CC0 is the most permissive of Creative Commons licenses. Under CC0, a creator can share content in its entirety for any purpose, even commercially. Anyone, without having to ask permission, may use the work in any way they like, including to display, perform, reproduce, publish and modify the work.

According to Karas, CC0 classification is similar to a public domain classification, which usually includes classic artwork and works by artists who are no longer living.

A CC0 classification allows creators of digital content – including code, text, music, photos and videos – to waive all copyright and related rights on their creative works. CC0 does not give one person exclusive rights over the work, nor does it put any limits on how others can use or share it.

Some argue that CC0 classifications give projects more value because there’s no limit on how many times a person’s NFT may be reproduced. Nouns, an experimental Etheruem-based CC0 project, has generated millions in trading volume through spinoff projects and derivative artwork. The project is based solely on the premise that the more widely shared derivative art is, the more value the original NFT will become.

CCO controversy

The profile picture collection Moonbirds made a splash in early August after announcing the project will transition to a CC0 license, rather than giving NFT holders exclusive rights to use the Moonbirds IP.

Needless to say, not all NFT holders were happy. Some complained that they had to pull out of licensing deals once Moonbirds announced the switch over to CC0 because they no longer owned the exclusive right to license the artwork.

Downside of CC0

While CC0 classifications are democratic in nature, they may present a double-edged sword, according to Karas.

“There are all these great derivative projects out there, but maybe you don’t want all the new projects because maybe they’re incongruent with your project’s morals,” he says.

For instance, if an extremist group used an artist’s CC0 image to incite violence and the image became a viral meme, that situation could damage the reputation of the artist, the NFT community and the artwork itself.

“That’s the strong argument where it might make sense to hold on to your IP rights as a project, because you get to control the narrative,” Karas explains.

But not everyone thinks the downside of CC0 renders it useless. Many believe that openly sharing artwork fulfills the true spirit of art because there are no limits or constraints preventing it from being freely shared. Some folks, such as members of the CC0 investment decentralized autonomous organization (DAO) C0C0 believe in supporting CC0 ecosystems because they foster a culture of open-source information sharing, which some consider to be core to the Web3 ethos.

Meanwhile, top VC firm a16z recently made the argument for new types of NFT IP licenses inspired by the work of Creative Commons, dubbing them the “Can’t Be Evil” licenses. These open-source agreements are specifically tailored for NFTs and outline a range of commercial and personal use rights between NFT artists and buyers.

It’s ultimately up to NFT creators and communities to decide what legacy they hope to leave and how they want to incentivize profit among NFT holders.

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