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:
- Give Artists more sovereignty and flexibility over the legal rights associated with their creations;
- Increase the enforceability of NFT-related legal terms;
- Fulfill legal notice to collectors and marketplaces with respect to the rights and restrictions that accompany NFT ownership;
- Pave the way for standardized, protocol-supported licensing practices and business models;
- 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.
“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:
- Organizing license terms and types into specific enumerated categories could set up future models that facilitate protocol-enabled licensing;
- The standardization of legal rights that accompany SuperRare-minted works could create a market preference for content borne out of the trusted SuperRare ecosystem;
- Collectors should generally know what to expect when buying a SuperRare NFT;
- The current license terms in the SuperRare.com Terms of Service serves as a good starting place for policy discussion on preferred license terms;
- 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
- A future standard SuperRare legal resource should contemplate the effect of subsequent NFT fractionalization event on the Collector’s and fraction holders’ rights
- The community should consider agreements that grant collectors the right to sublicense artwork content
- Downstream commercialization of artworks should honor a royalty to the minting Artists
- 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