CryptoPunk copyrights are being debated in the NFT community with input from Punk owners, collectors, artists, influencers, investors, and entrepreneurs. And while Larva Labs, the people behind CryptoPunks, did write up a license agreement that grants Punk owners certain rights, it’s still not very clear what the rules are. So I tried to gain some clarity on this issue and did some research. This is what I’ve learned.
CryptoPhunks #7804, #7523, and #2890CryptoPunk Copyright Landscape Snapshot
Testing by @punk4156In February 2021, we saw the rise of alt-punk projects like Unofficial Punks, Bastard GAN Punks, and Dystopian Punks. These projects appropriated and remixed the CryptoPunk pixel style in a massive community-driven conceptual art movement.
Most recently the CryptoPhunks project storefront was delisted twice on OpenSea and has ultimately been relisted. This avatar project is a replica of the original CryptoPunks with two small changes: the images are mirrored and they’ve added a color border that denotes the rarity of the feature set.
We’ve seen CryptoPunk influencer @punk4156 flip the Punk he owns, mint it on Foundation, and successfully sell it for 3.333 ETH (~7K USD). And we’ve also seen conceptual artist Ryder Ripps mint Punks on Foundation and get slapped with a DMCA takedown request.1
CryptoPunk and Copyrights
I’ve been discussing, debating, and writing about copyrights as a pioneer in the Trash Art movement for over a year. When I saw these conversations bubbling their way up into the CryptoPunk community I was intrigued. I’ve mostly been watching the conversations and chiming in when I felt it was appropriate.
Recently, I saw a CryptoPunk owner, @SpottieWifi, tweet that they successfully sent a DMCA takedown request to the CryptoPhunks for the Punk they owned. And I was perplexed because it was my understanding that Punk owners don’t own the copyrights on the images.
Confirming Phunk #5528 was quickly delisted by OpenSea after I emailed a DMCA complaint to copyright@opensea.io
— VoteRilla.com #KeepItRilla (@SpottieWiFi) July 11, 2021
We debated the subject and eventually came to an impasse as you often do on Twitter. Eventually, another commenter, @thenftattorney, informed us that Larva Labs adopted the NFT License in 2019. I eventually started digging into this to gain clarity. Unfortunately, I never found it. What follows is a summary of what I’ve learned so far:
Screenshot of Discord Post by pents90CryptoPunks x The NFT License:
Larva Labs adopted the NFT License for CryptoPunks and Autoglyphs in 2019 in a Discord post by co-founder, John Watkinson (@pents90). It seems there is no transfer of IP, copyright, or trademark to Punk owners. However, what is granted by the license is that the art can be used for your own personal, non-commercial use and you can commercialize your own merch up to 100K a year. Two things you’re not allowed to do with this agreement is modify the art or sell third-party products with it.
CryptoPunks x The CryptoPunk License
I eventually discovered in Discord that a specific copyright license agreement has been written up for CryptoPunks. It looks like this license agreement was also adopted. However, it seems to provide less clarity on the terms that were outlined in The NFT License above. For example, this license only grants Punk owners the right to reproduce, display, transmit and distribute images of Punk they own. There is no mention of commercialization with the merchandise. And there is also no transfer of the copyright, IP, or trademarks to the owners in this license either.
CryptoPunks x DMCA Takedown Requests
There are only two types of people who can send DMCA takedown requests. The copyright holder or an agent of the copyright holder.2 It’s unclear at this time whether Punk owners are recognized as agents of Larva Labs per the NFT License. I have reached out to them for clarification on this. I’ve also reached out to OpenSea to confirm whether or not they view CryptoPunk owners as agents of Larva Labs.
In Conclusion
It seems that Larva Labs did adopt The NFT License and also write up a CryptoPunk License that grants owners certain rights. However, it’s still not very clear for Punk owners what those rights are or how they are enforced. And I haven’t been able to find a definitive answer as to which license is currently being used. As with most things copyright-related, it’s all very complicated.
Update – July 12, 2021 @ 9:11 AM EST
In discussing this topic on Twitter with @StagflationUSA, General Council for @nft42, we both agree that ownership of the underlying IP (i.e. the art) is retained by Larva Labs. This is the case with many projects, including AvaStarsNFT. Where Avastars differentiate themselves is that they are unambiguous that owners get full commercial use rights.
He also stated that there is at least some ambiguity regarding whether Punk owners have limited commercial use rights (up to $100k a year) under the NFT License posted by @pents90 in Discord in 2019. But if we read between the lines, Larva Labs approving CryptoPhunks sends a strong message to Punk owners. And if we want to know Larva Lab’s true intent here, long-term and short-term, the Meebits Terms & Conditions are the best evidence for that.
One thing I learned from our discussion is that a limited commercial use confers (i.e. gives) an IP right to the Punk owners. I didn’t realize that and from a legal perspective, I’m not entirely sure I understand all the implications. One theory I have is that this means Punk owners have the ability to submit DMCA takedown requests as a result of the IP right granted to them.
Update – July 12, 2021 @ 7:45 PM EST
The CryptoPhunks published a manifesto that outlines a call for the decentralization for the future of NFTs. They also share some background on the origin of the Phunks and some insights into their unprecedented delistings by OpenSea.
What’s still unclear to me is the reasons for being relisted. I’ve asked the Phunks if any were reasons given. And if they have had communication from OpoenSea and LarvaLabs (i.e. did Larva Labs state they are okay with the project?), but have not yet received a reply.
Update – July 12, 2021 @ 8:34 PM EST
Head of Product at OpenSea, Nate Chastain, has confirmed that Larva Labs has not provided guidance on the CryptoPhunks project at this time (i.e., they have not okayed it or requested its takedown). I originally wrote that Larva Labs gave the thumbs up to greenlight the project, but I’ve updated the article to change this inaccuracy.
Regarding DMCA takedown requests, he is also aware of at least one punk owner who filed a DMCA takedown request that was honored by OpenSea. With the disclaimer that he is not a copyright lawyer and not licensed to practice law, he did state that based on his limited understanding that OpenSea would honor DMCA takedown requests from punk owners. They consider them to be good-faith takedown requests.
Update – July 12, 2021 @ 11:34 PM EST
It has been confirmed in the CryptoPhunks Discord that they do not have a license agreement with Larva Labs. It is also confirmed that CryptoPhunks will not be verified on the OpenSea platform.
A policy I just learned about is that OpenSea doesn’t verify homage or derivative projects. However, if we have seen one that is verified, like Unofficial Punks, it’s because they were grandfathered in.
The concern was that verifying them introduced buyer confusion. The other option available is to safelist homage and derivative projects – which removes the confidence meter during the purchase flow. This is an option available to the CryptoPhunks storefront.
Update – July 13, 2021 @ 1:10 PM EST
OpenSea’s Head of Product, Nate Chastain, has confirmed that they “received a DMCA from Larva Labs about infringing material in the “CryptoPhunks” collection and are complying with that notice by delisting the collection from OpenSea. I wanted to publicly note this to make sure that we exposed the reason for its delisting to that community.”
He goes on to further clarify the steps that were taken by OpenSea before the Larva Labs DMCA request was made. “Clarification: I delisted it originally, then re-listed and opened for Trust & Security review. T&S then delisted it. Ultimately we had a discussion about how to better serve homages/derivatives and move ourselves from being an arbiter of what constitutes transformative work.”
It should be noted that in order to avoid liability under the DMCA, the platform must take down the content whether or not the service provider believes that the content may be original. But the offending party can send a counter-notice. Collin (@StagflationUSA), the GC for @nft42, adds that service providers like OpenSea “don’t have to comply with Larva Lab’s DMCA request, but if it wants Safe Harbor under the DMCA it is highly incentivized to comply to avoid liability for any direct or secondary copyright infringement that may occur on its website.”
At this time I’m still waiting to hear back from the CryptoPhunks on whether they sent a counter-notice to OpenSea. I have questions out to project leaders but have not heard back yet.
Final Update – July 14, 2021 @ 6:51 PM EST
This may be the final update for this article, but it’s not the final chapter in these discussions. For example, what rights are conferred to CryptoPunk owners? Something that Larva Labs has been unable to answer clearly at this time. What’s the fate of homage and derivative projects in the NFT space? At the moment alt-punk projects like Unofficial Punks remain verified, while other projects and derivatives are sent DMCA takedown requests. What role will on-chain provenance play in the way copyright law is adjudicated? Many believe that on-chain provenance will replace copyright as the centerpiece of rights management. However, according to Collin Dyer, Esq. PhD, “transferring copyright-licenses requires a (physical) signed a contract under current US law.” So, it follows if you don’t have the signature, then you don’t have a license.
One thing I’m curious about is if a cryptographic signature (i.e. my ethereum address) could be a sufficient replacement for a physically signed document. And although I’m done reporting my findings here. I will continue to seek answers to all my open questions. And I invite you to do the same! DYOR.
Additional Resources
What are the Legal Experts Saying? – synopsis of articles written by legal experts
The NFT License – adopted by Larva Labs in a Discord post
The CryptoPunks License – unclear if/when it was adopted
Meebits Terms & Conditions – the best evidence for knowing Larva Labs true intent
Avastars Digital Asset Ownership License – they are intentionally unambiguous that owners get full commercial use rights
The CryptoPhunks Manifesto – A Call for Decentralization for the Future of NFTs
Disclaimers:
- I don’t own a CryptoPunk (yet).
- I do own four CryptoPhunks.
- I created the Unofficial Punks and ignited the alt-punk movement.
- I did my best to keep my biases about copyrights out of the article above, but I’m human.
Notes:
- https://www.coindesk.com/cryptopunks-get-punked
- https://theartistsjd.com/dmca-takedown-notice/