Legal Issues of Li Ning + Boring Ape NFT Joint Marketing

Recently, Li Ning announced through the official account of the social platform that it has reached a joint activity with the Bored Ape Yacht Club (Bored Ape Yacht Club) #4102 NFT.

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(Screenshot of Li Ning’s official Weibo)

Li Ning will launch clothing with the NFT image printed on it, and #4102 Boring Ape will also serve as the manager of Li Ning’s ‘boring is not boring’ pop-up store in China. Previously, Adidas also photographed the boring ape number #8774 and used this image as one of the signs in its own NFT project.

In the environment where the domestic alliance chain NFT has basically become a trend and the supervision is gradually tightened, can Li Ning publicly use the public chain NFT of BAYC (Boring Ape) for linkage marketing? The legal basis of the corresponding behavior and whether it is contrary to current laws, regulations or regulations?

PART1:   

Authorization basis: CC0 mechanism

Li Ning directly applied the purchased “Boring Ape” NFT image to product printing and materials (some people in the industry pointed out that Li Ning directly purchased BAYC#4102 after the marketing activities), the important reason is that “Boring Ape” gave Unlimited number of adaptations, reproductions, distributions, etc. are authorized. This involves the CC0 authorization mechanism associated with it.

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(Part of the Bored Ape Agreement: https://boredapeyachtclub.com/#/terms)

(1) CC0: “Let possession be all”

Under existing law, copyright law defaults to copyright protection for works of art, regardless of whether artists care about copyright. If the creator labels the work “CC0”, it is basically regarded as a waiver of property intellectual property rights in the legal sense.

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(CC0 license related instructions: https://creativecommons.org/licenses/)

This allows NFT holders to make secondary creations and other commercial uses of the work, and binds the concept of “owners of NFTs enjoy copyright licenses” with the corresponding NFTs. It embodies “no rights reserved”, which is obviously different from the disclaimer of “all rights reserved” adopted by mainstream digital Tibetan platforms in China.

(2) Smart contract empowerment, business does not need “white lotus”

Regardless of the seller or the holder, the commercial demand for NFT explosion is the same, so under the “creator sharing system” contract, the arrival of the CC0 model is actually a matter of course.

1. The seller’s perspective

The popularity of the CC0 model is inseparable from the creator sharing mechanism in smart contracts. If the NFT smart contract allows the creator to take a share of each NFT transaction, at this time, in order to maximize the income, the creator tends to add more empowerment to the NFT – the full transfer of the property rights of the digital original, It will undoubtedly be a key part.

2. Buyer’s Perspective

From the perspective of consumers, after understanding the nature of NFT technology, they often disdain to get a “white lotus” picture that can be viewed from a distance and cannot be played with after buying at a high price. A general license (preferably an exclusive license) for property rights such as the right to adapt pictures is the basis for commercial realization of works (especially works of art), and is naturally the basis for payment by the buyer.

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(Derivative development based on CC0 mechanism)

It can be seen that allowing NFT holders to develop and use corresponding digital components without any worries is actually a consensus of interests between buyers and sellers , which satisfies the inherent needs of safe use, and is a manifestation of the basic philosophy of the Web3 era.

Part2: 

Regulatory Feasibility: “Old Wine in New Pot” 

In layman’s terms, Li Ning just used the new authorization mechanism of the boring ape NFT to carry out the traditional IP co-branding behavior, that is, the so-called “old wine in a new pot”, and the blockchain technology has always been in an auxiliary neutral position throughout the process.

(1) Public chain

Although Boring Ape is a public chain NFT, this joint event is a pure off-chain event. The blockchain filing mechanism is actually to meet the regulatory needs. The domestic cautious attitude towards the public chain stems from the regulatory difficulties brought about by the absolute decentralization mechanism of the public chain, but it does not mean a direct denial of the blockchain public chain technology.

Therefore, no matter whether NFT originates from the public chain or the alliance chain, if it is only used for offline joint use and not on the chain again, such activities will not fall within the scope of the blockchain red line.

(2) Hype and financial containment

Hype prevention focuses on the rationality of NFT pricing and selling prices, while financial containment focuses on NFT empowerment and sales specifications, both of which take NFT itself as a direct object.

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(Industry Initiative on NFT Financial Risk Prevention)

This time, Li Ning only adapted and co-branded the digital components of the boring ape after the sale, and the corresponding publicity and sales behaviors acted on the picture itself, not only did not involve financial attributes, even the actual technical side was not directly involved.

PART3:  

Risk Analysis and Legal Advice

The joint name of Li Ning and Boring Ape is undoubtedly a successful trial under the current blockchain supervision background. After the administrative supervision risks have been roughly eliminated, some customers have consulted the feasibility of jointly naming well-known domestic NFT-IPs. In this regard, we make brief legal advice from the perspective of the buyer (joint party):

(1) Authorization restrictions

IP co-branding naturally needs to be commercialized, which will involve at least three rights of adaptation, reproduction, and information network dissemination . If the NFT issuer chooses to retain the intellectual property rights of the NFT, the NFT holder is not entitled to any commercialization of the NFT. use.

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(For example, Larva Labs retains the relevant intellectual property rights to the CryptoPunks series of NFTs)

Suggestions for this:

1. When the buyer chooses a joint NFT, it should consider the content of its accompanying intellectual property authorization, and should at least guarantee the authorization of the three rights of adaptation, reproduction and information network dissemination , not only at the personal level, but also at the commercial level. level permission;

2. For the authorization model, it is recommended to give priority to the exclusive authorization of NFTs, or the NFTs for which the author has declared to give up intellectual property rights , so as to avoid confusion between NFT authorization and authorization to third parties offline by the author;

3. Some NFTs will limit the commercial use income when they are released. Although the holder enjoys the commercial use rights, it is only based on a certain commercial income (for example, it can only be used in commercial activities of 100,000 US dollars) , the buyer needs to evaluate the scale of commercial use first ;

4. It should be noted that if NFTs are produced in batches, and similar NFTs are difficult to form significant differences in style, the use of such NFTs in the use of adaptation rights may cause rights conflicts .

(2) The issue of invalid authorization

NFT is an on-chain technology. Whether the on-chain person and the author of the digital component are the same, or whether the two parties reach an agreement on the scope of authorization, etc., will directly affect the validity and scope of the NFT authorization. If the publisher is not the author himself, all authorization actions of the publisher with respect to NFT are only valid after the author’s permission or ratification.

Suggestions for this:

1. When purchasing NFT, the buyer should conduct necessary investigations on the ownership of the corresponding digital components , such as requesting to provide author creation materials, copyright registration materials, digital components on-chain records, etc., to determine the ownership of digital components;

2. In view of the anonymous nature of the blockchain, the author of digital components often does not know their true identity. Therefore, in the case of inconsistency between the issuer and the creator, the platform needs to further examine the true identity of the author of the digital component to determine that there is no authorization. Disputes, while avoiding the predicament of no one to sue in the event of a dispute;

3.  Authorized geographical review , there are geographical restrictions on intellectual property protection, and the buyer needs to pay attention to whether the joint project is included in the scope of authorization (that is, pay attention to whether the NFT has given a global use authorization or a specific use authorization).

(3) Authorization confusion

Domestic NFTs mostly adopt the authorization mechanism of “one thing, multiple issuances” . In this case, the CC0 mechanism is attached. With the increase of the number of NFT holders, there will be a phenomenon of authorization confusion. In view of the same basic digital components in many parties, whether it is adaptation behavior Or propaganda, are prone to conflict of rights.

Suggestions for this:

1. There is a certain conflict between the CC0 mechanism and the “multiple issuance of one item” distribution model, and the buyer can give priority to adopting the “one item, one issuance” NFT;

2. Under the one-thing-multiple-issue mechanism, if the scope of NFT authorization cannot be effectively restricted, consider purchasing all the NFTs to ensure the exclusivity of authorization.

(IV) Trademark squatting and rights protection

Most foreign “blue-chip NFTs” may have been registered as trademarks in China , which will cause malicious restrictions on the commercial use of NFT rights holders, such as limited publicity and promotion. At this time, even if the buyer enjoys the commercial use rights of digital components, it still needs to pay the necessary time cost for rights protection and even business opportunity cost.

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(The picture comes from the Internet)

Suggestions for this:

1. Review the trademark registration of NFT digital components;

2. Priority is given to NFTs that give the holder the right to sue (the original author has abandoned the copyright model, and the holder can be authorized to sue by himself), so that the holder can protect the rights by himself in the event of infringement or unfair competition;

3. After purchasing the NFT, based on the scale and purpose of commercial development, register the copyright of the digital original, and apply for the corresponding trademark protection.

write at the end

NFT is not just a simple Right click and a random JPG format of several elements. The most important thing is its own brand awareness and the consensus of the community it has built, especially the sense of atmosphere in which it is located. This is also web3. 0 The characteristics of decentralization and the cohesion of consensus.

Under the introduction of the CC0 mechanism, the corresponding NFT uses intellectual property rights as the basis of its commercial value, which will give its pricing and selling prices a reasonable basis .

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/legal-issues-of-li-ning-boring-ape-nft-joint-marketing/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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