A new blockchain system allows users to rent out their NFTs for “social signaling,” but others find the idea absurd.
The newly launched on the Ethereum mainnet, reNFT allows users to “rent out” non-fungible assets like CryptoPunks. To put this in perspective, a year ago the idea of someone paying millions for a digital “Cryptopunk” seemed whack. Now, hordes are clamoring to rent them.
While the new service is conceptually intriguing, it raises fundamental questions in the NFT space: Why buy or rent when you can copy and paste?
Here’s how renting NFTs works
CryptoPunk owners make a deal. For a limited amount of time up to 99 days, the tenant rights protocol grants sole authorization to display the CryptoPunk as your Avatar. At least that’s how it is explained on the CryptoPunk.rent FAQ section, and you’ll need a Metamask wallet to view it. The idea is that tenants may use their rented punk as an avatar on Twitter, Discord, or NFT marketplaces, along with other social media platforms.
This means reNFT has built a licensing service where users can borrow and show punk avatars for a price. There was no mention of attorney fees but can this be far off?
Which brings us back to the copy and paste option. Since users can just save a CryptoPunk avatar as a picture file and upload it to other social media platforms, why pay for it?
Copying other people’s NFTs constitutes stealing, according to CryptoPunk.rent. No Cryptopunks can be saved as Avatars with a right-click. “It’s called stealing,” as asserted in the FAQ section.
JPEG Property Rights
Traditional copyright regulations limit the rights of CryptoPunks owners. Because when you buy tangible artwork, you receive a physical canvas to hang on your wall and enjoy. But you don’t obtain the image’s intellectual property rights, which normally go to the original painter. Ownership of an NFT does not necessarily indicate ownership of the underlying intellectual property rights, according to Daniel Healy of Anderson Kill.
“There is a distinction between the CryptoPunk picture creator (who retains the copyrights) and the NFT buyer/owner (who would own the token and a copy of the image). We all know that buying a painting does not give you the rights to reproduce it,” Healy added.
Copyright ownership belongs to the author unless a signed agreement assigns it to another person or entity, such as a publisher. Thus, the CryptoPunks’ intellectual property belongs to the NFTs’ developers, in this example, blockchain firm Larva Labs. To block certain uses of their artworks, individuals have legal rights, Healy explains
“The owners probably paid the programmers to produce the graphics and/or set up copyright ownership in Larva Labs. In either situation, Larva Labs would own the copyrights to the images used to sell the NFTs. “Unless the NFT purchase agreement contained a copyright assignment.”
Healy emphasized that the rights of NFT customers are unclear unless explicitly stated in the purchase agreement.
Theft is theft
“It is taking or theft of intellectual property, as most IP attorneys would put it. There is already a market for non-licensed photos and audio. They’ve long used YouTube to discover infringers. That’s literally stealing,” Healy asserted.
With NFT sales so high, I would expect owners to prosecute infringers,” he concluded. “The question is if the copyright holders pursue them. They may need to [pursue] to keep market value.” Copyright violations are illegal copying for either party, and owners can sue for statutory damages.
CryptoPunk buyers/holders can probably loan or rent out their picture and token, just like a painting owner might let someone else exhibit their replica. They couldn’t rent or loan additional copies unless they bought copyrights.
CryptoPunk.rent asks lenders to “refrain from utilizing their own punk on [social] platforms” while tenants have rights to a punk. It’s possible that the renter’s rights are limited to the NFT purchaser’s rights. “I’m not sure I could entirely rule out commercial use, but I’m not sure I could,” said Healy.