Creative Commons, commercial use, and NFTs

A Day In the Life

| Part 1 | Part 2 | Part 3 | Part 4 | Part 5 |

Welcome to this week’s edition of “Weird NFT questions nobody had thought about before last month”. In this week’s edition, we have an interesting development in the interface between NFTs and Creative Commons licences.

A few days ago, podcaster Pete Cogle posted a question in Creative Commons Slack. It reads:

“I have been producing music podcasts which feature independent artists since 2006. All my podcasts have been produced under on CC license or another. In 2010 I created a podcast where the digital artwork and two pieces of music were created by one artist. I collected (curated) 6 more pieces of music and released this as an MP3 file with a https://creativecommons.org/licenses/by-sa/3.0/ license. There have been no issues until today when the artist listed the MP3 as an NFT as part of their larger body of work.The artist asked my opinion about selling it as an NFT and I said no, partly because the podcast contained other CC licensed tracks and because I created it, not them, even though it contained some of their derivative works. We have agreed that this NTF will remain minted (ie. visible) but will not be sold. However it’s still possible to “make an offer” on the piece on the website. I’m wondering if it will be sold at some time in the future.”

Creative Commons CEO Catherine Stihler answered in a very good analysis of the subject. In short, NFTs are not related to copyright, and as CC licences are copyright licences, they may not interfere with potential uses of CC content. However, she warns:

“While we’re not presuming that the minting of an NFT does indeed implicate copyright, we felt Cogle’s concerns pointed to important related questions about the spirit of CC licensing and people’s expectations around what can and should happen with a work once it’s been offered to the public under one of CC’s copyright licenses.

Our thoughts, in a nutshell: Because Cogle’s podcast episode was originally made available under CC’s BY-SA license, it seems that as long as the person minting the NFT abides by the terms of the license (e.g. offers proper attribution and complies with anything that would be triggered by the SA clause), they are operating in line with what the license enables, both legally and in spirit. To extend the “limited edition prints” analogy from earlier, this would be a bit like pressing a limited run of vinyl records using CC-licensed audio.”

I agree with the analysis. There is a clear split between the intention of sharing a work under a CC licence, and the exclusionary nature of NFTs. Friend of the blog and blockchain expert extraordinaire Alexandra Giannopoulou put it succinctly in a tweet:

I think it’s an interesting contradiction between the open sharing/reproducibility ideal of CC and the “scarcity” NFT narrative. Besides this mostly theoretical point, I wonder if it can be considered a violation of the notorious ‘Non commercial’ restriction of some CC licences.

— Alexandra Giannopoulou (@alex_giann) May 6, 2021

Besides all of the above, I think that there’s still a lot left to unpack, and this is related in many ways to my previous writing on the subject of copyright and NFTs (first post here). The problem we have when trying to analyse NFTs from a copyright perspective, either the licensing or infringement elements, is that when you strip away all of the hype, an NFT for the most part is nothing more than a short metadata file encoded using a digital file, and not the digital work itself.

It’s vital that we understand this very important characteristic of NFTs, as the legal analysis may rest entirely on the type of information that is contained on the NFT, and how it was generated in the first place.

There are different types of NFT (I go through them in this post), but the most common by far is the metadata file. To prove this, I looked at 20 random NFTs in 3 platforms, OpenSea, Mintable, and Rarible, and all of them were comprised of metadata sales (feel free to replicate the experiment).

An NFT is therefore mostly a piece of code that is written into the blockchain, and it contains various bits of information. The most important parts of the NFT are the wallet address of the creator, and a unique ID.  The unique identifier is the selling point of NFTs, this is a hash that has been created by the person who minted the NFT, minting means that a creator uses a digital work to generate a unique hash that is then written into the blockchain in the shape of a smart contract. In principle, this is what gives the NFT its “scarcity” value, it’s supposed to be unique. In reality, anyone can mint as many versions of the same work as one wishes (I just minted the same artwork in two platforms to prove the point, here and here).

There is often a third element present in NFTs, and it is a link to the original work used to mint the NFT. This is the most important bit from a licensing and copyright perspective, which is what could be used in copyright infringement suit, or to invalidate a licence use.

As mentioned repeatedly in these pages, the “minting” of an NFT is done by encoding a digital work, be it an image, a sound recording, a video, or an animation. In order to do this, one has to use a digital copy of the work, this could be a private copy of a work in one’s computer, and this copy could be obtained under a CC licence, or it could even be an unauthorised copy. This digital file is converted into a unique hash using the minter’s own wallet address, and the combination of these is the NFT. The NFT can also contain the link to the file.

This is where the particulars of the technology become important. There are various ways of minting a work. One can do all the hard work and mint the work oneself using smart contracts and compiling the file locally. Almost nobody does this, and most NFTs are minted using a platform, which is considerably easier, but one has to pay a transaction fee. The platform will let you upload your file to their file server, or they will let you mint a local copy of the work itself, or they can also allow you to mint your own copy hosted in an IPFS service.

To illustrate all of the above, I created an artwork and uploaded it to Flickr under an Attribution-Non-Commercial-ShareAlike CC licence (pictured at the top of this blog post). Bizarrely, Flickr still uses version 2.0 of the CC licences, but I digress…

So imagine my Evil Twin decides to embrace the NFT revolution, but he has no artistic spark. He notices my artwork and downloads the image, minting it into an NFT, and uploads it to an IPFS cloud server. This appears like a straightforward copyright infringement and licence breach case. It’s obvious that the unauthorised upload of my work is in breach of the terms of the CC licence, it fails to properly attribute my work, doesn’t provide a link to the original, and one could also argue that it is a commercial use, so it is in breach of the non-commercial terms of the licence. It is also in breach of the share-alike viral clause.

My Evil Twin would argue that the NFT is not the work itself, it’s just metadata, but the metadata contains a link to the infringing file. This could easily be considered a communication to the public, and therefore copyright infringement. In short, to provide a link to a work without authorisation to a new audience can be considered copyright infringement, even if one is not hosting the work itself.

Now, imagine that my Evil Twin knows copyright, and wants to stay on the right side of the law. So he downloads the file to his computer and mints it, but most importantly, he doesn’t upload the file to the Internet, and keeps it locally. The NFT would not be a communication to the public as it doesn’t provide a link to the work, and one could even argue that it’s not copyright infringement at all, as the NFT is not a copy of the work, but a hash of the local copy of the work using his wallet. My Evil Twin goes on to sell the NFT of my work for a gazillion dollars, while my original file languishes in Flickr, accruing a measly 25 views, but giving me a warm fuzzy feeling of having shared something.

I would argue that in this second scenario, I would have no legal recourse, the licence is not breached, and there’s no copyright infringement. So while the letter of the CC licence is intact, the spirit is somehow broken, the CC licensed work has been used for profit without the intention of the author.

Concluding, as the NFT hype continues unabated, it is likely that we will encounter more examples of possible copyright infringement, and maybe even a few clashes between public domain works, CC licensed work, and maybe even other open source licences. It will be important to look at the type of NFT that is being shared, and whether it contains a link to a digital copy.

My thinking on copyright infringement and NFTs continues to shift. Most NFTs are not infringing, but at some point some will, and given the sums involved in the space, it’s only a matter of time before someone gets sued.

Interesting times.