[Request for Comment] Establish a “Legal Property” in NFT Metadata?

Summary

This Request for Comment seeks a discussion on the desirability and possible implementation of an optional “legal property” uniform resource identifier (”URI”) field that could be included within SuperRare-minted NFT metadata. In addition to the specific discussion points below, this RFC invites general discussion on the types legal infrastructure that we should consider exploring and building within the SuperRare social and protocol layers.

Background and Motivation

The discussion over what intellectual property rights are conferred to NFT holders has invigorated excitement over the potential of NFT licensing and the general value proposition of NFTs. SuperRare Labs was early in characterizing NFTs as bearer licenses to the associated media content, but the actual agreement between Artists and Collectors occurs off-chain and indirectly through the superrare.com Terms of Service. This presents certain problems:

  • it is difficult to understand exactly what rights apply to which NFTs at any given moment in time since a platform’s Terms of Service may change over time and may be recorded off-chain
  • off-market secondary sales (i.e., sales on OpenSea) involving NFTs originally minted through superrare.com do not necessarily invoke or refer to the superrare.com terms of service, thereby potentially challenging the license’s enforceability and the ability of future collectors to be put on notice of such licenses
  • Artists are effectively forced to accept the default platform Terms of Service, which limits Artist sovereignty and curbs commercial flexibility and creativity
  • There is currently no on-chain legal infrastructure upon which new licensing and business models and protocols may develop
  • Content distributors or other third parties that could make commercial use of NFT media content will have high due diligence and implementation costs in evaluating the value and enforceability of NFTs with no clear rights information
  • Default licenses facilitated directly or indirectly by the DAO should be based on the insight and experience of an informed community of SuperRare artists, collectors, and users (and their lawyers lol)

To address the aforementioned problems, the author believes that SuperRare Artists at least should be able to “attach” their preferred set of rights to their NFT creations and that the SuperRare DAO should begin pioneering a community-led, protocol-enabled approach to NFT licenses and commercial agreements.

Discussion Point 1: Do you want SuperRare to implement a URI field dedicated to referencing one or more legal resources (i.e., licensing information or licensing instructions) as part of the NFT metadata standard for SuperRare-supported minting contracts?

Yes, I sure do. The addition of a “legal property” field within an NFT’s metadata could:

  1. Give Artists more sovereignty and flexibility over the legal rights associated with their creations;
  2. Increase the enforceability of NFT-related legal terms;
  3. Fulfill legal notice to collectors and marketplaces with respect to the rights and restrictions that accompany NFT ownership;
  4. Pave the way for standardized, protocol-supported licensing practices and business models;
  5. Motivate content distributors to make licensed use of SuperRare-minted artworks.

Discussion Point 2: How could a legal resource field be implemented at the SuperRare protocol and product level?

Initially, a “legal property” field could be extremely basic, largely duplicative of the existing content URI, and open for the Artist to voluntarily attach their preferred legal agreement. The discussion over what standard license types and technical formats should accompany SuperRare-minted NFTs need more community discussion, but in the meantime, Artists should at least be able to attach whatever legal resource they want at the minting stage in typical file formats (i.e., .doc, .txt, .pdf).

Current NFT Metadata Standard

NFT metadata on SuperRare is currently defined as a .json string that is stored on IPFS (see an example of a piece owned by the Author and courtesy of @burst). That string contains the artwork details (i.e., title, Artist, description, year created, etc.) and a “uniform resource identifier” that points to an IPFS location storing the actual media content and content details.

For example:

{“uri”:“https://ipfs.pixura.io/ipfs/QmXSa3xnD2VrWHTf3n852A1KQX7Sx1C5LVBP3C1UHxNCmF/TRSHRT_IMG_5068.jpg",“dimensions”:“3024x4032”,“size”:“12626471”,“mimeType”:"image/jpeg”}

“Legal Property” Metadata Implementation

I propose adding in an additional URI that points to a legal resource selected by the minting Artist. The URI could point to a legal contract or instructions stored on IPFS or Arweave that defines the scope of the content license or other commercial terms.

Possible “Legal Property” Protocol Implementation

There could exist many different protocol implementations of this standard, but the idea is that Artist-selected legal agreements are stored or referenceable on-chain. Eventually, specific terms within those licenses could be stored on-chain to facilitate the use of the licenses by third parties (i.e., content streaming platforms, NFT frame manufactures, derivative works markets, art galleries). For example, certain legal terms types and details could be encoded in the URI or as an NFT attribute, possibly making NFT licensing information more machine readable and implementable within future content licensing mechanisms. Relatedly, the a16z “can’t be evil” licenses represent different license versions on-chain as an enum (see here).

Alternatively, on-chain registries or oracles could be established to store or communicate the individual license terms associated with individual NFTs. If legal terms are ever interpretable and enforceable by smart contracts, an entire NFT commercialization protocol layer could exist that conceivably treats individual legal rights as unique digital assets and legal events as on-chain transactions. Such a protocol implementation could create as-of-yet unrealized NFT markets and would enable the public to examine licensing activity surrounding particular NFTs as a possible new NFT valuation metric.

Platform Implementation Design Considerations

Many Artists rely on user-interfaces like SuperRare.com to facilitate their interaction with the SuperRare Protocol, including to ability to mint artworks. Any changes to the protocol standard defining new metadata standards will likely depend on participation from such user-interface providers to make the additional metadata options available to Artists. Here are some proposed design considerations for such user-interface implementations:

  • Sovereignty. Artists should have the absolute right to upload or select whatever agreement they want, if any.
  • Flexibility. All normal file types should be supported (i.e., doc, pdf, txt)
  • Modularity. Term types and details ought to be selectable by the Artist and modular such that different variations of related terms can exist
  • Automated Assembly. Written contracts or related encoded legal terms should automatically assemble based on Artist input
  • Legal Standardization. Platforms could facilitate selection certain license types endorsed by the SuperRare DAO
  • Clear Notice. Whether an NFT has a standard license, a custom license, or no license attached to it at all, the buyer should be put on conspicuous notice by marketplace of what exists in the “legal property” field for any given NFT
  • Educational. Platforms should make best efforts to provide ancillary documentation around the tooling and different terms types to help out Artists who may not have a strong legal background

Let’s Let the Community Build It

Many technical aspects of this RFP are already being discussed and developed by third parties who are recognizing some of the same issues in the NFT Space. This RFC invites all interested third parties to offer their thoughts, questions, and excitement as pretext for possible community grants that could become inspired by this discussion.

Discussion Point 3: Should the types of “legal properties” that exist for SuperRare-supported minting contracts be standardized?

Yes, but only at the behest of the SuperRare community. What rights and restrictions accompany NFT ownership is an important decision that requires case-by-case consideration and some legal understanding. There is reasonable debate and diversity in thought over what legal agreement types and tooling should be preferred, so the author proposes that the DAO facilitate a study to examine and interpret existing licensing formats, solicit feedback from the community and industry, and to propose a subset of legal agreements that can act as standard legal resources that may be issued with a minted NFT. The Author offers the following points that may be helpful for discussion or consideration:

  1. Organizing license terms and types into specific enumerated categories could set up future models that facilitate protocol-enabled licensing;
  2. The standardization of legal rights that accompany SuperRare-minted works could create a market preference for content borne out of the trusted SuperRare ecosystem;
  3. Collectors should generally know what to expect when buying a SuperRare NFT;
  4. The current license terms in the SuperRare.com Terms of Service serves as a good starting place for policy discussion on preferred license terms;
  5. Agreements that purport to offer broad commercial rights that are only invokable off-chain should be disfavored compared to Agreements that particularize licensing rights within a specific protocol or product environment
  6. A future standard SuperRare legal resource should contemplate the effect of subsequent NFT fractionalization event on the Collector’s and fraction holders’ rights
  7. The community should consider agreements that grant collectors the right to sublicense artwork content
  8. Downstream commercialization of artworks should honor a royalty to the minting Artists
  9. Artists should consider treating Collectors as joint-licensors

Discussion Point 4: What commercial use cases or utility concepts can you imagine that could rely on or benefit from a “legal property”?

Since legal contracts can generally be written to map onto any existing or future business models, there is really no limit to the possible commercial implementations that could benefit from a “legal property” field. Of course, the legal property field could simply include standard display license with commercial or non-commercial rights, but the Author identifies some potential specific licensing use cases below that could be implemented within a legal/protocol layer:

  • The right to make copies of a work could be leveraged by display and NFT frame providers seeking to sell frame copies of NFTs to buyers who do not actually own the underlying NFT
  • A derivative works license could kickstart a new generation of so-called “remix” NFTs with legal provenance to the original minting Artist
  • A content distribution licensing could enable content distributors to host curated streamed SuperRare content to viewers around the world, getting more eyeballs on SuperRare content while creating new NFT collectors and creating curation data
  • A license to use SuperRare-minted NFTs as album cover art or to be synchronized with music (i.e., Spotify canvas art)
  • A public display license could encourage transparent licensing practices for museums and galleries who wish to display SuperRare-minted NFTs with the consent of the Artist
  • A collaboration license enabling Artists to incorporate minted music content into their minted NFTs
  • A commercial agreement relating to the Artist’s independent offer of goods, services, experiences or utility that accompanies NFT ownership

A “legal property” without any tokeneconomic utility proposition would serve the goals of this RFC, but the Author invites discussion on the following possible utility implementations that could be achieved if SuperRare Artists subscribe to a license type that treats the DAO as a quasi automated licensing rights organization:

  • Require Artists to stake $RARE as a means of contributing their works to a licensing environment that connects their content to interested content distributors, with the DAO paying staking rewards back to Artists and/or Collectors as a licensing fee
  • Require content distributors to stake $RARE as a means of accessing the pool of licensed content, with additional $RARE payouts to smart contracts that distribute royalties to relevant Artists and Collectors
  • Staked positions programmed to ensure certain time commitments to the licensing arrangement and could act as collateral against potential disputes
  • At the election of the Artist, Collectors of the licensed NFT act as joint-licensors with economic rights creating a revenue generation mechanism for Collectors
  • Allow third party intellectual property holders to contribute licensed content to be remixed by SuperRare Artists
8 Likes

Thank you for putting this together @elo.

I think that, if implemented, this would represent a significant step forward for the industry as a whole. In terms of UX, there will be a delicate balance between giving the user fine-grained control and overwhelming them. To this extent, I believe that standardization of both agreements and how they are referenced is critical.

It will be interesting to see how early community implementations of this technology will innovate on the underlying concept, and the degree to which standardization will occur naturally. I think our position as both a DAO and product organization is particularly suited to fostering early innovation, allowing the best implementations to emerge, then building around them in a standardized way.

Documenting licenses on-chain or in decentralized storage introduces the extremely interesting possibility of the legal agreement self-modifying in a programatic and verifiable way. For instance, one could program the token to release ownership of the IP after a certain amount of time, though the possibilities here are endless and ripe for experimentation. It is interesting to think about how the license or any referenced legal documents may become part of the artwork itself in this way.

5 Likes

Great initiative here!

Discussion Point 1: Do you want SuperRare to implement a URI field dedicated to referencing one or more legal resources (i.e., licensing information or licensing instructions) as part of the NFT metadata standard for SuperRare-supported minting contracts?

I think it’s essential to have these legal resources in the metadata. There are proposals in the air to have these on-chain (in the NFT smart contracts), but from our experience the current usage does not justify to do that on-chain rather than in the metadata (as opposed to a16z licenses).

The way we do it at Āto (Website and Github repo) is that we have a license field pointing to a pdf (a legal contract), that’s the ‘human-readable’ part:


"license": "https://ipfs.io/ipfs/bafybeihzpdxi43xtpbemmhi2ry5wqaj2iangccyumbyeis4bsfykzljazi/thistle-test-IP-license.pdf",

and a license_detail entry with a few parameters (the ‘machine-readable’ part):

"license_details":[
   {
      "trait_type":"exclusivity",
      "value":"true"
   },
   {
      "trait_type":"privateUse",
      "value":"true"
   },
   {
      "trait_type":"displayOnMarketplaces",
      "value":"true"
   },
   {
      "trait_type":"displayOnEveryMedia",
      "value":"true"
   },
   {
      "trait_type":"rightToAdapt",
      "value":"false"
   },
   {
      "trait_type":"rightToAddALogo",
      "value":"false"
   },
   {
      "trait_type":"merchandisingRights",
      "value":"true"
   }
]

Discussion Point 2: How could a legal resource field be implemented at the SuperRare protocol and product level?

We have an API that actually does that, the NFT issuer (the author/artist) selects a few parameters and the API returns a pdf file which can then be added to the NFT metadata. An NFT marketplace we’re working with is offering three different presets so that their users are not bothered with these things.

The API generates a legal contract in both English and French. In the current version, the French law is selected because it’s one of the most protective for the artists. The contract deterministic model is structured to comply with the Berne Convention which is applicable in 179 countries, but you guys could provide your own license template.

Discussion Point 3: Should the types of “legal properties” that exist for SuperRare-supported minting contracts be standardized?

It definitely should be standardized but we’ll probably want to leave some room for variations and specific parameters. I believe any NFT should have its license attached. When there is no license, the holder of the NFT actually don’t own much in terms of IP. On the contrary, if you publish using CC0 the NFT holder don’t own much either because everyone actually own the IP (that said, CC0/a16z can be relevant in some cases). Āto’s approach is somewhere in the middle.

Allowing the author (or some other entities) to modify the license after the minting process is something we can do as well, but it adds complexity (such a license communicated a posteriori may not be enforceable against the buyer). An on-measure license embedded into the NFT defines what the NFT owner can or cannot do, then he can use his NFT in many other new services yet to be built.

4 Likes

I think it is very good step forward and worthy of discussion. My main question is at what level this should be implied to maximise impact.
You could, for instance, organise it together on sections with parties like foundation, makersplace, rarible. This certainly doesn’t make it easier but creates more impact for the artists and ultimately the buyers

2 Likes

Yes. All of this. Im also curious if it’s capable to place in-contract some technical safeguards, such as hiding and preventing sells of superrare contracts on different websites, such as nftx or opensea. One collector in particular has created his own side hustle marketplace featuring specific superrare contracts. Also see this: https://twitter.com/manifoldxyz/status/1601354760292302848?s=20&t=Ioc-f1OFqh0XJbu0gHUhjQ

2 Likes

Great initiative @elo and +1 that this has the potential to immensely move the space forward, as a whole. In my personal view, the on-chain recording and enforcement of legal rights to an NFT is crucial when taking a long-term view, and this could be a really good first step in that direction.

Some good points have been raised regarding control and standardisation - I’m not sure I have the full answer but intuitively it feels that (at least initially and from a protocol POV) a maximum level of freedom should be granted to the creator, and evolution will likely run its course and yield a number of standards of its own accord. I think this happens in the lifecycle of most products. Granting maximum freedom might also mean it’s more likely for this to gain industry-wide adoption.

That said, offering a set of ‘templates’ to begin win won’t hurt either, as most artists won’t be legal experts, just as they don’t write their own smart contracts. Making sure the buyer is not overwhelmed, understands what they are buying, and doesn’t need to spend hours in DD just to understand the terms, is also an important consideration. This is even more important in regards to protecting the SuperRare brand attached to the artworks purchased on this platform.

I think it will be interesting to think in detail about how these two sides of the coin can be reconciled. I could imagine having a system where you can have both - but using a SuperRare-approved standard is clearly indicated (think twitter blue checkmark?). And of course, experimental implementations can become verified standards, over time.

4 Likes

@Brennan Yes! I also think standardization is key, but still giving Artists the autonomy to avoid the standard outright if they prefer a different set of terms. However, if SuperRare is successful in creating a network of licensees who want rights to the licensed content, I could see there develop a market preference for a predictable, community-approved set of rights which should encourage Artists to adopt the standard in any case.

In terms of UI, yeah we want the legal-isms to be very easily digestible, composable, and flexible in the sense that the Artist has some discretion to adjust parameters within a given set of rights (i.e., 100 derivative works per 5 year period, right to renew under different terms after 5 years, non-commercial display license for gallery to self-burn after 30 days). “Licensing legos” as SuperRare Labs CEO @SuperRareJohn has put it.

There is really no limit to the possible experimentation, which is why I think it makes sense for the DAO to spur some protocol development efforts around this and possibly some type of licensing playground separate from the main superrare.com site where Artists can start releasing art with novel licenses attached. Come to think of it, the standalone act of licensing through smart-contracts opens the door up for a whole new type of conceptual art that could create an entirely new type of NFT market.

Thanks for the reply @Julien! It seems that the Āto tool may have some serious applicability to the problem/solutions described in my post. I’ll respond to you in sections as you replied to mine. In the meantime, I encourage you to check out the SuperRare DAO grants program which recently launched - https://twitter.com/SuperRare/status/1603471705413980164?s=20&t=LsYLdOdPKNfe10a5btT_Sw

  1. On Chain versus Off-Chain - Yeah I tend to agree that purely on-chain may be overkill if an off-chain resource can accomplish the same goal, so long as that off-chain resource is fixed and always accessible. But part of the value of this in my mind would be the ability to trustlessly license content at the protocol level so that licensing behavior can be understood as on-chain state changes and so that tokeneconomics can start to play a role.

Regarding your “trait_types” - would a smart contract be able to make sense of this off-chain resource at any level? For example, let’s say that an Artist wanted to give the collector the right to mint 10 derivative works. It would be incredible for the collector holding the NFT to be recognized as an authorized party by a smart contract capable of “minting” up to 10 derivative works licenses, which act as standalone NFTs that the collector can then use, sell, or share. That way it’s always clear who the rights holders are and when the resulting derivative work is minted it will have legal provenance to the original Artist.

  1. Your API seems to be a good solution for a minimum model for contract assembly/creation. It seems to me that all we have to do is get a subset of SuperRare-blessed terms that can act as the contractual building blocks. More ambitious protocol-enabled licensing probably comes after. I love that you are approaching in from the French law perspective. I see it as incredibly valuable for there to exist a standard agreement that attempts to map onto as many jurisdictions as possible, with a policy preference for Artist-favorable jurisdictions. I imagine the output of this efforts would result in a github repo of a bunch of community sourced agreements.

  2. License Modularity and Revocability - agreed here. We ought to enable variations of a standard set of terms that map onto real world business solutions. We just need interested content distributors to help us understand the most applicable business use cases. I think revocability is important. I could see licenses having fixed termination dates in the spirit of protecting the Artist from giving away too much too soon. But this revocability ought to be VERY clear to collectors up front an included as part of an UI design. Part of this effort should at some point also result in some type of on-chain registry of the rights information so any interested buyers can examine the termination time periods relevant to any particular NFT.

Thanks for the reply @b123! I always envisioned this effort as something that is perhaps SuperRare-branded, but platform/contract-agnostic. Anyone and everyone should be able to attach the SuperRare community licenses to their NFTs, but where things get really interesting is when there are ways to understand on-chain which works are subject to certain licensing terms. Then Artists could simply submit their works to a licensing pool that is accessible by content distributors or businesses subject to the standardized terms of the license pool. That way, Artists not on SuperRare could still take advantage of the commercial opportunities created by the SuperRare network.

That could be where $RARE steps in as the licensing glue to ensure that network effects of the licensing ecosystem are captured within SuperRare. Lots of possible models here and I am no protocol engineer, but I could imagine imposing a $RARE staking requirement on content distributors that want access to the licensing pool with additional $RARE topups to smart contracts that delivery royalties to Artists/Collectors based on how/if their content was used by the content distributors. That would make it very easy to know exactly which content distributors are allowed to make use of SuperRare-licensed content. If you aren’t staking, then your use is presumably unauthorized.

On the other hand, Artists (including non-SuperRare Artists) would stake $RARE as a way of accepting the terms and conditions of such a licensing pool. The DAO could pay out $RARE rewards to staking Artists as a licensing fee and create social efforts to get more content distributors “plugged in” to the licensing ecosystem to create more commercial opportunities for Artists. The DAO at that point would be well positioned to extract a licensing fee which could then be used to maintain the program, find more content distribution partners, etc.

To finally answer your question, making this a $RARE utility use case would maximize the impact.

1 Like

We actually take a very similar approach at Veriken (https://veriken.com) to Ato with having both a human readable license agreement along with metadata for license parameters such as personal use, commercial use, exclusivity, etc.

Our metadata also includes information about the family of templates plus versions so different agreements could be used. Right now we allow users to select between a16z licenses and our own license agreements with plans on opening this up in the future. We envision supporting additional legal agreements, not just licenses, so the metadata options will not necessarily be the same across the template types.

We also take a similar approach of allowing the user to select base templates plus parameters and then automatically generate the PDF for them. We’ve added a “License Wizard” on top of our APIs that allow them to select the various parameters or marketplaces/storefronts can simply provide defaults.

Discussion Point 2: How could a legal resource field be implemented at the SuperRare protocol and product level?

One early use case and architecture discussion to have is around the token license being static or something that can evolve over time with appropriate stakeholder consent. A static license set per contract (a16z approach) or even per token is relatively straight forward to implement but limits what you can do.

Things like license upgrades (Ex: personal use to commercial use) or term limited licenses with renewals are fairly common use cases in the licensing world that may need to be accommodated for. Propose/accept workflows can be utilized for the updates to ensure license rights cannot be modified without the current token holder consenting. Depending on the implementation, you may also need to track the license issuer role to propose the updates if that entity is different from the token minter.

At Veriken (https://veriken.com) we’ve decided to implement dynamic licenses and have the license PDF and metadata top level instead of being contained within then standard token metadata. This allows us to use smart contract calls to modify the license data without modifying the normal token metadata.

There are a few other approaches for license updates to consider including burn/reissue or attaching amendment tokens to the original. Good to have a discussion on what the best approach is for Ethereum/EVM and also chain agnostic. We are built on top of NEAR which influenced our implementation direction.

yes I like it - I have my own license I use already