Web3 Terms and Conditions: What terms and conditions are right for the space? A🧵

The only answer is the typical answer that lawyers always give: It depends. 

Clearly, whether a project has restrictive terms or CC0 depends on a lot of different factors; however, the NFT community is currently concerned about the terms for NFTiff and Moonbirds

for completely different reasons. It makes sense that everyone is hyperfocused on these issues, but it is difficult for the community to balance both simultaneously. 

On one hand, NFTiff's draft terms and conditions that were accidentally uploaded on the "sold out" site, had people worried about traditional companies having terms and conditions that "stole" Punk holder's IP rights through a nonexclusive irrevocable license. 

People were understandably worried about this; however, lawyers (well specifically @exlawyernft) knew that this seemed to be a draft and could not be the final terms. After a thread and a DM, the correct terms were re-uploaded and went from:

To: "By purchasing an NFTiff and linking it to your CryptoPunk, you grant Tiffany ... an irrevocable, nonexclusive, royalty-free license to use your CryptoPunk and its underlying intellectual property, if any, to design, manufacture and sell the corresponding pendant." 

The "including any and other Intellectual Property Rights" was a mistake. The non-lawyer translation is: "you give us a license to use your Punk to make this pendant". 
https://nft.tiffany.com/legal/

Tiffany's isn't going to start using your Punk for advertising or selling Punk pendants to the public. The community was worried about big companies just "stealing" holders' IP rights through legalese and terms and conditions that no one reads. 

The correct terms were on the minting site, but only the "sold out" site had the previous draft that was uploaded by mistake.

https://twitter.com/dt_chain/status/1556026503078494208?s=21&t=UHDNVsEeisHiiuavS6UfFA

On the other hand, with Moonbirds, everyone was surprised by the sudden change to CC0 and felt that holders' IP rights were being taken away too. 

Again, this is understandable but PROOF claims they were spending too much time and money on DMCAs and defending their copyright.

It is a difficult balance because while holders are granted licenses, the project has to continue to defend the copyright. When you file a DMCA, you need to be the copyright holder or authorized to act on their behalf. 

A license holder is not the copyright holder and may not necessarily be “authorized” to act on behalf of the copyright holder. 

So PROOF needs to file the DMCA notices and they most likely use a lawyer to do so.

Let’s assume it takes 6 minutes for a lawyer to file a DMCA notice and charges $500 an hour. 

Each DMCA notice would be $50 and PROOF would have to file one for each infringing work. 

I do not know how many DMCAs PROOF filed, but clearly, it can get expensive very quickly.

And that does not include demand letters about violations of copyright protections, correspondence, research, and other legal advice. 

And this would be for every instance of perceived copyright infringement. 

I am not saying what PROOF did is right or wrong. I just wanted to give some perspective on how PROOF was spending a lot of money on legal fees to fight copyright claims. 

Both NFTiff and Moonbirds have spurred additional conversations about IP rights and it is exciting to see everyone so interested in a topic I work in! 

Usually, my non-lawyer friends do not care about IP rights at all! 

These conversations are very important because Web3 is focusing significantly on IP rights so understanding those rights is key! 

Make sure you understand what IP rights you are getting or signing away!

These are the people you can expect to write a thread and lead discussions on IP rights and other legal issues on Rug Radio's Law Line with @DeFiDefenseLaw and @GencoLaw.

**This is neither legal advice nor an endorsement. These are merely smart people that are active in the space.**

@DeFiDefenseLaw
@theweb3attorney
@SyedLawTM
@AshKernen
@eliana_esq
@omribouton
@peltzm
@carlosg_esq
@MetaverseLawyer
@BirdnalsNFT
@rothken
@cryptonesy
@ikhanesq


@exlawyernft
@thenftattorney
@KylerW56 
@EsqLida
@MattFeinbergEsq
@NeerMcD
@learnedchaos
@lawtoshi 
@niftyjawn
@ijhammer
@HalfonJesse
@CarlosDM_Esq
@JeffD_Esq 
@sh3k1n4h 

Business Development/Legal:
@PabloEnriqueEsq 

Resources: 
https://www.thecod3x.com/
@DAOResearchCo 

There are so many great lawyers in this space who love to talk about these topics so please feel free to tag them if I forgot them! 

You can read the unrolled version of this thread here: https://typefully.com/FineArtLawyer/c6Q8y7J

Web3 Terms and Conditions: what terms and conditions are right for the space?

Is a banana taped to a wall infringing upon copyright protections of a different banana taped to a surface?!

There’s an ongoing lawsuit over this question so I’ll give my thoughts.

2. Currently, American artist Joe Morford alleges that Italian artist Maurizio Cattelan’s “Comedian” infringes the copyright of his own artistic work, “Banana & Orange”.

Both are clearly bananas taped to a wall using duct tape, but let’s explore the legal side of it. 

3. You’ll remember Cattelan’s “Comedian” as the work at Art Basel Miami back in 2019 that seemed like a joke and was eaten by a performance artist. Cattelan had the last laugh when the gallery (Perrotin) sold three copies of the work for a total of $390,000 that week. 

4. Morford, who is currently pro se (legal term meaning he is representing himself), alleges that Cattelan improperly copied his “Banana & Orange” work, which has been registered with the United States Copyright Office since 2000.

5. Both are made with the same medium: bananas and duct tape. Further, both works are arranged in a similar manner; however, Cattelan’s work is clearly missing the orange of Morford’s “Banana & Orange”.

6. United States District Judge Robert N. Scola, Jr of the Southern District of Florida is presiding over this matter and recently denied Cattelan's motion to dismiss the case.

7.I currently have a complex international commercial litigation case before Judge Scola so I know that Judge Scola is a no-nonsense judge. At this stage, Judge Scola thinks that Morford sufficiently alleged that Cattelan's banana infringes his banana.

8. In the background of the Order, Judge Scola remarked, "Thankfully for the Court, the question of whether a banana taped to a wall can be art is more a metaphysical question than a legal one. But the legal question before the Court may be just as difficult -..."

9. "...[D]id Morford sufficiently allege that Cattelan’s banana infringes his banana?"

10. The Legal standard when considering a motion to dismiss under the Federal Rules of Civil Procedure is, if the Court accepts all of the complaint's allegations as true, does the claim demonstrate that the pleader (Morford), is entitled to relief?

11. In considering this, Judge Scola analyzed whether Morford established: 

1. Ownership of a valid copyright
2. Copying of constituent elements of the work that are original

12. Copying requires both "factual and legal copying". Basically that the defendant "actually used" the copyrighted work (and may have had access to it) and that the copied elements are "protected expression" such that appropriation is legally actionable.

13. When a plaintiff cannot demonstrate that the defendant had access to the copyrighted work, the plaintiff must meet a higher standard and show tha the works are "strikingly similar". 

14. This means that the similarities are so striking that the possibility of independent creation, coincidence, and prior common source are practically precluded. 

15. Under the case law, there are a few different tests for courts to determine whether two works are substantially similar; however, Judge Scola sums it up by saying: 

16. "Morford must plausibly allege that Cattelan had access to Banana & Orange and that—after dissecting Banana & Orange and stripping (or filtering) away the non-protected elements of it—there is a substantial similarity between the two works." 

17. While Judge Scola ultimately observed similarities for purposes of the motion to dismiss, the ultimate decision is left to the trier of fact. 

18. On the first prong (whether a valid copyright exists), Judge Scola held that the Mordford's Banana & Orange was absurd and farcical, it met the minimal degree of creativity needed to qualify as an original. 

19. On the second prong (copying), Judge Scola held that while Morford cannot claim a copyright in bananas or duct tape, he may be able to claim that he had some degree of protection in the "selection, coordination, [and] arrangement" of these otherwise unprotectable elements. 

20. When determining copyright infringement, the courts also look to the extent of copying with respect to "both the quantitative and the qualitative significance of the amount copied to the copyrighted work as a whole."

21. Judge Scola held that the banana and duct tape are both quantitatively significant and qualitatively significant in "Banana & Orange"; therefore, the alleged infringement of Mordford's banana is sufficient to state a claim.

22. This does not mean that Morford wins. This just means that the Court is going to allow discovery and hear more about this alleged copyright infringement.


23. What do you think? Can a banana and duct tape be “art”?


Is taping a banana to a wall sufficiently original and creative?


Is it possible that Morford and Cattelan came up with the idea independently of each other?

@EsqLida @NeerMcD @BirdnalsLAW @eliana_esq @exlawyernft


24. You can read the unrolled version of this thread here: https://typefully.com/FineArtLawyer/TW7ph2E