Who Owns Bored Ape Yacht Club IP Rights?
By Josh Bobrowsky
Disclaimer: Before we start I am not a lawyer or providing legal advice. All writings are simply my opinion.
Background
BAYC and their parent company Yuga are some of the largest players in the current NFT ecosystem. They have done a great deal to drive the space forward and in 2021 they were one of the best investments in the world. Initial sale of the apes was less than $300 and current value of all apes and subsequent assets delivered to holders is over $175,000.
As of writing this today the minimum cost of a Bored Ape is roughly 78ETH or $133,000.
I point this out in part to highlight the high stakes nature of the IP rights.
To date there have been many IP licensing deals put into place within the BAYC ecosystem totaling millions of dollars in value.
Legal rights according to Yuga
Above is the full terms and conditions for BAYC on their website. I highlighted a single line here because it makes the statement:
You Own the NFT. Each Bored Ape is an NFT on the Ethereum blockchain. When you purchase an NFT, you own the underlying Bored Ape, the Art, completely.
The word I’m focusing on here is you own the Bored Ape, The Art, Completely.
As I read this (not a lawyer) that would mean that you have the ability to license, or assign ownership to anyone for any duration you would choose. However, the writing remains silent on what happens to contracts after transfer of ownership of the NFT regarding 3rd parties.
Here is where things get a bit confusing.
What happens to a contract if you sell your Ape?
According to their Terms of Service it would appear a contract in place prior to selling an ape would still be valid because at the time of contractual arrangement you completely owned the IP rights.
However, this appears to be potentially in contrast to what Garga one of the founders of BAYC says.
Quick background on this thread, it is referencing sending an ape to a burn address then putting said ape onto the BTC blockchain.
“If you transfer your ape to an address you no longer control (even if it's the 'burn' address), you have effectively given up your license.”
Does that also mean that any contractual obligations that were written when you had complete ownership are now invalidated?
That feels illogical. If true then any licensing deal would be nullified on transfer of ownership.
Thus, the only way to ensure a licensing deal long term would be to buy the ape directly or you are taking on some level of counter-party risk.
Does it matter?
For your average trader IP rights may not directly matter but for the brands signing licensing deals it matters a lot.
If the only way to ensure you have lasting IP rights is to own the ape, this may change the dynamics of licensing deals into the future.
Conclusion
IP rights are a multi-billion dollar industry. This gets more complex when stepping into the world of NFTs. NFTs also present some of the most interesting questions around intellectual property today.
There may not be an easy answer for many of the questions today, but it would be great to get some clarity on what happens to deals if the underlying asset changes hands after a licensing deal is finalized.
I’m excited for the evolution of the space and to better understand who owns what.
Cheers
Josh Bobrowsky
Skybrook Founder & CEO