The Battle Over IP Rights: What Story Protocol is Doing to Address OpenAI’s Controversial Data Use

$80 Million Series B Funding to Fight Against AI-Powered IP Theft

In an era where artificial intelligence is increasingly dominating various sectors, the battle over intellectual property (IP) has reached a fever pitch.

The latest advancement in addressing intellectual property theft by generative AI models is Story Protocol's $80 million Series B funding round.

Based in San Francisco, Story Protocol is committed to protecting creators' intellectual property from unauthorised use by AI developers like OpenAI.

This round was spearheaded by the renowned venture capital firm a16z crypto, with participation from other notable investors including Polychain Capital, Scott Trowbridge of Stability AI, Adrian Cheng, founder of K11, and digital art collector Cozomo de' Medici.

The funding round was initiated in early summer and successfully closed this month, marking a new chapter for PIP Labs in its mission to safeguard creators' rights.

Seung Yoon (S.Y.) Lee, co-founder and CEO of PIP Labs, highlighted that the funding structure involved equity with token warrants, emphasising the forward-thinking approach of PIP Labs to align investor interests with the growth of their blockchain ecosystem.

This latest funding brings PIP Labs' total fundraising to $140 million, having previously secured $54 million in a Series A round last year, also led by a16z crypto.

Jason Zhao, co-founder and chief product officer at PIP Labs, revealed that the firm has received smaller angel investments bridging its Series A and B funding rounds.

According to CNBC, the two-year-old company has been valued at $2.25 billion in its latest funding round.

AI and the New Frontier of IP Theft

The rise of generative AI technologies has intensified concerns about IP theft.

These advanced models, which power applications like OpenAI’s ChatGPT, require vast amounts of data for training.

However, this data often includes copyrighted material used without proper authorisation.

As AI models ingest and learn from these protected works, the creators are left without compensation or acknowledgment.

The stark reality is that big tech companies, driven by the need for expansive data sets, are effectively appropriating IP for their algorithms' development, exacerbating the problem of IP theft.

What is Story Protocol and Its Vision?

Founded in 2022, Story Protocol is an ambitious project aimed at tokenizing and transforming intellectual property into programmable assets suitable for the AI age.

This Layer 1 blockchain technology allows creators to register their IP on the blockchain, enabling them to track its use, secure their rights, and ensure they receive compensation whenever their creations are utilised.

In an era where AI can easily reproduce and manipulate original content, Story Protocol's mission is crucial.

As Zhao elaborated:

"AIs might put your recommendations, photos, and IPs in their answers, but they aren't going to give you anything. Why would anyone continue to create if no one is going to compensate for the work?"

This sentiment emphasises the pressing issue facing creators today: the risk of IP theft as AI increasingly scrapes the internet for data without appropriate compensation to the original creators.

Lee further explained the dual benefit of Story Protocol, stating:

"Story will ensure a sustainable and flourishing path for the internet's creativity that benefits both creators and AI, without any intermediaries."

Technological Innovations and the Mainnet Launch

Story Protocol's mainnet launch is anticipated later this year, constructed using the Cosmos SDK, ensuring full compatibility with the Ethereum Virtual Machine (EVM).

More information will be announced during Korea Blockchain Week in September

This strategic development aims to enhance IP management through advanced features like cheap graph traversal and a proof-of-creativity protocol, which collectively allow for easy licensing and automatic royalty payments.

Zhao emphasised these improvements, noting:

"There are a significant number of improvements we've made to optimise for IP, such as cheap graph traversal and the proof of creativity protocol as well as the programmable IP license."

By turning static IP into programmable IP, Story Protocol is opening new avenues for creators to monetize their work effectively, providing a robust infrastructure to manage the complexities of modern IP.

Building the Future of IP in a New AI Covenant

PIP Labs' vision is to provide the necessary infrastructure to navigate the challenges and opportunities presented by AI.

Over 200 teams, encompassing more than 20 million IPs, are already building on the Story Protocol across various sectors, including AI, fashion, and storytelling.

For instance, Ablo, an AI fashion design tool backed by Accel, Polychain, and Pantera, leverages Story Protocol to allow users to customise and remix fashion using AI.

Similarly, Sekai, an AI storytelling platform, utilises Story to foster collaborative content creation between creators and fans, making storytelling more interactive and engaging.

Highlighting the project's ambition, Chris Dixon, founder and managing partner at a16z crypto, remarked:

"PIP Labs is building the necessary infrastructure for a new covenant in the AI age. Blockchains are perfectly suited for large-scale economic coordination, and Story's platform ensures creators are compensated for their IP feeding the AI systems."

The Need for a Decentralised IP System

Olaf Carlson-Wee, founder and CEO of Polychain Capital, drew a parallel between Story Protocol and the transformative impact of Bitcoin on finance.

Carlson-Wee stated:

"What Bitcoin did for money and finance, Story is doing for content and IP."

He expressed concern over the increasing monopoly power of big tech companies and the need for a decentralised intellectual property system that returns the ownership of data and IP to the people.

Carlson-Wee's comments resonate with the broader mission of Story Protocol to decentralise IP management, empowering individual creators by leveraging blockchain technology to protect and monetize their creations in a transparent and efficient manner.

Meet the Visionaries Behind Story Protocol

The Story Protocol team brings together a powerhouse of seasoned entrepreneurs and innovators, each with a rich background in consumer technology, generative AI, and Web3 infrastructure.

Spearheaded by visionaries Seung Yoon Lee, Jason Levy, and Jason Zhao, this dynamic trio is set to transform the landscape of digital IP.

Seung Yoon Lee, Co-Founder and CEO

Seung Yoon Lee, also known as S.Y. Lee, is the CEO and Co-founder of Story Protocol.

Previously, he founded and led Radish, a mobile serialised fiction app acquired by Kakao Entertainment for $440 million in 2021.

Lee’s Socials: X, Linkedin

Following this, Lee served as Kakao's Global Strategy Officer, overseeing major investments and acquisitions, including Wuxiaworld.

He is also a Venture Partner at Hashed, a prominent venture fund, and has been recognized as a Forbes 30 Under 30 Asia All Star and Asia Society’s Asia 21 Young Leader.

Notably, Lee was the first Asian President of the Oxford Union.

Jason Levy, Co-Founder and Advisor

Jason Levy is the Co-founder and Advisor at Story Protocol.

Previously, he was COO at Story Protocol, where he played a key role in building the company’s IP blockchain.

Levy’s Socials: X, Linkedin

Before this, Levy was Director at Pocket Gems, where he led the content team for Episode, a leading mobile storytelling platform.

He also founded Worlds Between Worlds, a mobile entertainment startup, which he led until its closure.

Levy’s earlier career includes roles as a financial analyst at Apple and as a senior product manager intern at Amazon.

He holds an MBA from Stanford and a dual degree in Economics and Creative Writing from USC.

Jason Zhao, Co-Founder and Head of Protocol

Jason Zhao is the Head of Protocol and Co-founder of Story Protocol.

Previously, he worked as a Product Manager at DeepMind, where he focused on implementing Google’s AI models for industrial and enterprise use.

Zhao’s Socials: X, Linkedin

Zhao is also an active angel investor in frontier technology startups and served as the founding Editor in Chief of Stanford Rewired.

He was a Design Fellow at IDEO and created and taught a course at Stanford’s d.school. He holds both a Bachelor’s in Philosophy and a Master’s in Computer Science from Stanford University.

The project's strategic partnerships with top investors like a16z crypto, Endeavor, Samsung Next, and Hashed further bolster its credibility and resources.

PIP Labs' ambition is to lead a new era of open and collaborative IP, ensuring that the value of creative work is recognized and appropriately compensated in the digital age.

Legal Battles and Industry Backlash

The New York Times, in a significant move last year, sued Microsoft and OpenAI for allegedly misusing the newspaper’s intellectual property.

The lawsuit, seeking damages, highlighted instances where GPT-4 produced altered versions of the Times' original content.

Microsoft, a key player with a $13 billion investment in OpenAI and a potential 49% stake, dismissed the claims as “unsubstantiated” and accused the lawsuit of promoting “doomsday futurology.”

Microsoft’s lawyers argued that using such content “does not supplant the market for the works, it teaches the models language.”

However, when approached for comments on these developments, Microsoft remained silent.

The Need for Quality IP and Sustainable AI Growth

Lee emphasises on the necessity of quality IP to sustain AI advancements during an interview with CNBC. He also warned that without proper compensation for the publishers and creators who contribute vast amounts of data, AI firms are risking their long-term success.

“You need great IP going into AI to have sustainable growth in AI. Without great human-created data, AI models are not going to be able to train themselves and improve themselves.”

Future Plans and Community Engagement

In preparation for the mainnet launch, PIP Labs is actively expanding its team, aiming to hire around 20 new employees across various functions, including engineering, marketing, and regional roles in APAC.

This expansion showcases the firm's commitment to scaling its operations and enhancing its ecosystem's capabilities.

Furthermore, PIP Labs plans to host a series of events for IP developers starting in September, providing a platform for collaboration, innovation, and community engagement.

These events will offer opportunities for developers, creators, and visionaries to explore the possibilities of Story Protocol, contribute to its growth, and shape the future of IP in the AI era.

Transforming IP Protection for the AI Era

Story Protocol is poised to redefine the landscape of intellectual property management in the age of AI.

By offering a decentralised, blockchain-based framework for securing and monetizing creative works, it addresses the pressing issue of IP theft exacerbated by generative AI technologies.

With strong endorsements from industry leaders like Lucaz Nets, founder of Pudgy Penguins, and robust support from investors and partners, Story Protocol stands at the forefront of a pivotal shift in how intellectual property is protected and valued.

As AI continues to evolve, Story Protocol’s innovative approach promises not only to safeguard creators' rights but also to set a new standard for the intersection of technology and creativity.