Recently, Yuga Labs, the creators of the Bored Ape Yacht Club and spin offs the Mutant Ape, announced it had acquired the intellectual property in CryptoPunks from Lava Labs, which invented CryptoPunks originally.
Yuga Labs also picked up the IP in the Meebits NFT collections from Larva Labs and this move is of significance as many in the NFT world have paid little attention to just what it was that they have bought. IP licensing models greatly between different projects, and Bored Apes and CryptoPunks are no different.
Larva Labs’ have no publicly accessible or metadata linked licence for Punk holders, which has led to some concerns, but in a discord post they asserted that CryptoPunks were issued under the Nifty Licence:
The Nifty Licence was a spin-off from Crypto Kitties and allows for non-commercial use and limited commercial use for physical goods only. No digital or brand collaborations are allowed using art licensed under Nifty. The Meebits project from Lava Labs included express licensing granting:
a limited, worldwide, non-exclusive, non-transferable license to use, copy, and display the Art for your Purchased Meebit for the purpose of commercializing your own physical merchandise that includes, contains, or consists of the Art for your Purchased Meebit (‘Commercial Use’), provided that such Commercial Use does not (a) include any form of collaboration or involvement of any brand or other third party, or (b) result in you earning more than USD$100,000 in gross revenue each year
Yuga Labs, on the other hand, have an unlimited, worldwide commercial licence in place for NFT holders of Bored Apes which is short and somewhat contradictory, after it asserts owners have full ownership in the Art, it purports to issue a personal use and commercial use licence for the Art, which of course is unnecessary if the NFT owners have full ownership in the Art (and as noted in para. i, Yuga has no ability to enforce any of the terms anyway):
Larva Labs have no ongoing royalties on sales of CryptoPunks. Yuga Labs does, which has valuation implications for their company as Bored Apes have surpassed US$1BN in secondary trading, leading to significant revenue flows to Yuga Labs.
More importantly, because Yuga Labs’ licensing model allows for commercial use, they are now encouraging third party developers and community creators to incorporate CryptoPunks and Meebits into their web3 projects. No official terms have been issued, but it is widely expected that Cryptopunks and Meebits will have the same licence as Bored Apes shortly.
This “freeing” of the IP provides immense potential for developers. The community’s ability to get more involved will ultimately lead to new ideas and projects. Now that CryptoPunks and Meebits will be included in this type of licensing model, it will be interesting to see how the use of these NFTs will evolve within the community beyond their current usage.
The key takeaway from this deal is that it is important to ready the licence terms of what you are getting if you buy an NFT. Ultimately, the potential of what can or cannot be done with an NFT will lie within the terms of licence under which it is acquired. As a rule of thumb, existing brands are likely to have longer and more complicated licensing around their valuable IP, whereas generative and new art projects such as Bored Apes are far more likely to have broader rights granted to NFT holders. The devil remains in the detail.