How should a contract be signed when IP authorizes the issuance of NFT digital collections?

Source: Lawyer Jin Jianzhi

One way for NFT to get out of the circle is to link with real-world IP. With the help of IP Dongfeng, which already has a certain mass base, we can take advantage of the trend. How to ensure that the process of taking advantage of the trend is smooth and away from disputes? So, for the platform side, how to sign the contract for IP authorization to issue NFT is very particular.

The name of the contract with this kind of content is generally called a certain IP authorization agreement or a certain IP cooperation agreement or even a certain IP authorization cooperation agreement. Even if the contract names are slightly different, their substantive contents are basically the same. On the basis of paying a reasonable consideration, ensure that the issuer legitimately and legally possesses relevant authorizations during the issuance and subsequent operation of NFT.

01 How to write the scope of authorization?

Excellent version of the Handout Party:

Party A authorizes Party B to modify and copy certain IP (hereinafter referred to as "authorized works") rights, distribution rights, information network dissemination rights, adaptation rights, and all other rights necessary for the generation, circulation, sale, and promotion of NFT digital collections, and Party B has the right to file an infringement lawsuit against the infringer in its own name.

In order to achieve the purpose of this agreement, Party B has the right to grant third parties the right to use the authorized works and exercise the rights granted by Party A to Party B. Party B has the right to transfer Party B's rights and obligations under this agreement to them. Affiliates.

Mankiw Lawyer’s Detailed Version:

Up to now, the IPs used to issue NFT digital collections are mainly works referred to under the Copyright Law, including But it is not limited to written works, artistic works, photographic works, audio-visual works, etc. The specific copyrights involved in different works in different scenarios are actually different. The process of IP authorized issuance of NFT involves multiple scenarios such as casting, chaining, sale, and transfer. Therefore, it is necessary to clarify the corresponding rights of different works in different scenarios during the NFT issuance process. Related rights are the first step in drafting the minimum risk scope of authorization.

According to the first NFT infringement case and the top ten intellectual property cases in 2022, the dispute over the infringement of the right to disseminate work information network in Hangzhou Yuanyouzhou Technology Co., Ltd. and Shenzhen Qice Diechu Cultural Creative Co., Ltd. ((2022) ) Zhejiang 01 Minzhong No. 5272), the Hangzhou Internet Court and the Hangzhou Intermediate People's Court held that:

"First of all, from the perspective of the casting process of NFT digital works, there is an uploading behavior of the work, which makes the casting The digital works stored in the user's terminal device are copied to the network server; secondly, from the perspective of the sales process of NFT digital works, it refers to the presentation of the NFT digital works on the trading platform for the purpose of sale. When the work is presented, the display behavior allows the public to obtain the work at the selected time and place. When the registered user of the NFT trading platform pays the consideration and service fee through the digital wallet, it immediately becomes a member of the platform. The publicly displayed owner of the NFT digital work. In other words, The casting and trading of NFT digital works include the three aspects of copying, selling and information network dissemination of the digital work. "However, as to whether NFT trading behavior is subject to the issuance right, the Hangzhou Internet Court and the Hangzhou Intermediate People's Court believe that NFT trading behavior is not subject to the issuance right regulation, but there is still some controversy among all parties. However,for the platform, if the distribution rights are not agreed within the scope of authorization, they will not be able to enjoy the convenience of "exhausting the distribution rights at once", and may not be affected by the re-sale or re-gift of NFTIPConstraints.

However, it should be pointed out that the NFT situation analyzed by the Hangzhou Internet Court and the Hangzhou Intermediate People's Court only targeted original works, that is, written works, artistic works, photographic works, and audio-visual works. For derivative works and audio and video recordings, since the rights holders involved are not only the copyright holders of the original works, but also include the copyright holders of the derivative works, audio and video producers and performers, so if the derivative works, audio and video works are released, For NFTs, due diligence is required to verify whether the copyright holder of the original work has obtained relevant authorization from the copyright owner of the derivative work, the audio and video producer, and the performer, and the scope of authorization should be adjusted based on the results of due diligence. The platform can confirm the authenticity and completeness of the authorization chain by reviewing the manuscripts, originals, legal publications, copyright registration certificates, certificates issued by certification agencies, signed authorization agreements and other documents involved in the original work, and retain the review work. record of. Just in case, no matter what the level of verification, it is recommended that the platform party requires theIPparty to make a statement and guarantee that it has a complete authorization chain, and agree on the corresponding Liability for breach of contract.

02 How to choose IP licensing?

Reach out Party Essence Version

Within the scope of the aforementioned authorization, Party A grants Party B an exclusive license to Party B realizes the agreed purpose of issuing its digital collection. Party A shall not itself or authorize any other third party to carry out the generation, circulation, sale, promotion and other related businesses of digital collections of authorized works.

Mankiw Lawyer’s Detailed Version

The value of NFT comes from many aspects, but its price comes from the relationship between supply and demand. If the platform party is concerned about the NFT issued by itself, If there is a need for positioning, in addition to ensuring a certain number of NFTs issued by oneself, one must also ensure that the NFTs issued on the entire chain are "scarce", which determines the platform side's need to obtain in the scenario of issuing NFTs. Exclusive license As the goal, that is, except for the platform, no one else, including the copyright owner himself, can issue or handle all matters related to digital collections within the agreed time and scope. To hinder the platform’s control over scarcity.

03 What are the fees and return and exchange agreements?

The best version of the hand-in-hand party

1. < p>The total merchandise transaction revenue (i.e. GMV) obtained by both parties through NFT digital collections will be divided into revenue shares according to the ratio of Party A []% and Party B []%. Party A and Party B shall separately agree in writing on the income calculation method, settlement method, settlement time, etc. of each NFT digital collection project.

2. Both parties understand and know that the issuance of NFT digital collections is an innovative business model. There are currently uncertainties in relevant laws, regulations, and regulatory policies. Either party promises to comply with existing laws, regulations, and Fulfill all obligations under the contract based on regulatory policies. If there are relevant inquiries from the external public, media or regulatory agencies, any party receiving the relevant notice shall notify the counterparty of the contract as soon as possible and cooperate with relevant explanations if necessary. If the contract cannot be continued to be performed due to force majeure such as guidance from regulatory authorities or a suspension notice, Party B has the right to terminate the cooperation in advance after notifying Party A. This contract shall be terminated from the date of Party B's notification, and neither party shall be liable for breach of contract. . If there are disputes or controversies related to NFT digital collections that cannot be attributed to any party, and if it is necessary to compensate a third party or bear other legal liabilities, both parties A and B shall bear the corresponding responsibilities equally.

Lawyer Mankiw’s detailed version

The licensing fee for NFT digital collections is the same as the traditional IP licensing fee, and there are three types Methods: One is the fixed price model. That is, within the scope of the contract, a one-time payment is made to buy out the IP, and the IP party does not participate in the share of subsequent operations. This method is common in single works of some artists, as well as in periodic popular IP. The second is the basic + sharing model. The third is the pure sharing model. This method is generally suitable for situations where the brand size is relatively large or the IP size is small. The fee agreement is mainly a business consideration. Therefore, the platform party can agree on a suitable licensing fee model based on multiple considerations to ensure that both the IP party and itself are happy.

For platform parties, NFTThe biggest black swan in the issuance process of digital collections does not come from the market, but from From uncertain regulatory policies. Once the black swan comes, the outcome faced by the relevant NFT digital collection projects will be liquidation. During the liquidation process, the pressure faced by the platform not only comes from the accountability of the IP party, but also from the rights protection of users. Therefore, it is a better risk prevention clause to take precautions in advance and agree that both parties will not compensate each other if there is supervision or the contract is terminated. For uncontrollable users, refunding money early to prevent the situation from escalating from civilian to criminal is the best solution at present. If the platform side has better negotiation skills, it will require the IP side to participate in possible negotiations during the contract signing stage. A refund and compensation plan is naturally the best solution. But if the sharing fee is settled in real time or on a monthly basis, the IP party will obviously not be so enthusiastic about public welfare, spit out the money received, and actively refund users. ThereforeWhen signing the contract, if it is a shared licensing fee model, adjust the settlement time to annual settlement or quarterly settlement, and even reserve a small proportion of the IP party's sharing fee over a longer period of time to cope with the project Retirement will greatly reduce the platform party’s risks.

04 Special considerations for overseas IP

05 Mankiw lawyer suggested

Although the traditional IP authorization process and risk points , Contract signing is basically standardized in the industry, but in the field of IP authorized NFT issuance, it is still full of unknowns and potential risks. For platform parties, this is an unprecedented opportunity, but they should still remain vigilant and seek advice from professional lawyers to avoid potential legal risks and ensure the clarity of the contract. Mankiw lawyers look forward to new industry leaders succeeding in this exciting field, bringing more possibilities for digital creativity and ownership rights.