EIP-5635 Discussion: NFT Licensing Agreement Standard

Motivation

In general, some creators of NFTs will transfer intellectual property (IP), commercial, and exclusive licensing rights to the individual NFT holders. This enable NFT owners to create artworks and products by themselves. However, currently there isn’t a standardized and clear way in which NFT owners are able to grant others rights of recreating derivative works based on their owned NFT.

This standard allows the NFT owner, knowns as “Licensor”, to have a standardized way to signal a licensing agreement to re-creators, knowns as “Licensee”, in exchange for an agreed payment, known as a “Royalty”. With this licensing agreement, the licensee has the right to recreate relevant dNFTs which clearly declare the authorized agreements. Meanwhile, this declaration should be able to be verified by a creditable decentralized Registry service at any given time. In such way, the licensing royalty payment can be paid to licensors every time dNFT is sold or re-sold as regulated by the agreement. Taking the moment when the dNFT is minted as the cut-off point, the stage before is called the Licensing stage, and the subsequent stage is called the Discovery stage.

This standard defines the Licensing as a loose and optional interface, but the Discovery as a strict and compulsory interface. The reason here is that, no matter how the licensing agreement is licensed via a Registry, the most important thing is that marketplaces and application can adopt a unified interface to discover and verify these agreements.

To be specific, to support standard Discovery,

  1. dNFT must implement authorizedBy() interface to return a list of
  • the credential which represent the authorized licensing agreements .

  • the address of Registry contract which issued the credential.

  1. The credentials can be verified by Registry at any anytime where verification includes:

    • the oNFT contract and ID
    • Licensor
    • validity of license / expiry date
    • date of signature
    • licensing agreement identifier similar to SPDX-License-Identifier: MIT
    • licensing agreement uri
    • type of licensing agreement
      • Non-Exclusive // default
      • Exclusive
      • Sole
    • scopes, e.g. artworks // TODO: in discussion

To implement an practicable Licensing, two recommend options are proposed in the Specification section. The first is that both the licensor and the licensee sign the license agreement at the same time. The second is that the licensor release the licensing agreement first, and then sells the licensing agreement to the licensee through auction or resale. A Registry can also use other mechanism to implement Licensing as long as it can fairly support the validation of licensing agreements following the standard Discovery as mentioned before.

It is worth noting that an infringing dNFT may forge a credential with a faked Registry, where the faked Registry offers a forged verification for the infringing dNFT. In order to avoid this problem, marketplaces/applications must be sure that is a reliable Registry , e.g. which is in a creditable list or double checked by a reliable oracle service.

Without an licensing agreement standard, the NFT ecosystem will lack an effective means to verify whether an NFT derivative work is licensed or not, original NFTs’ owners will not receive ongoing licensed fee they deserve, recreators cannot clearly know ehether they are entitled to perform derivative creations, and NFT marketplaces aren’t able to distinguish licensed derivative works from unauthorised ones so that it is hard to ward off infringements. This will hamper the growth of NFTs, damage the interests of the NTF owners, and demotivate recreators from minting new and innovative derivatives.

Enabling all NFT ecosystem to unify on a single licensing agreement standard will benefit the entire NFT ecosystem.

While this standard focuses on NFTs and compatibility with ERC-721, ERC-1155 and EIP-2981 standards, EIP-56XX does not require compatibility with ERC-721, ERC-1155 and EIP-2981 standards. Any other contract could integrate with EIP-56XX to return licensing agreement information. ERC-56XX is, therefore, a universal licensing agreement standard for many asset types.

The proposal is definitely brilliant! Looking forward to the changes

Appreciate the ideas. Defining licensing interface as optional and discovery interface as compulsory is a good design. Adaptable to more use cases. Wonder if these dNFT can be chained. Like one dNFT based on another dNFT?

Awesome work! Very insightful proposal. This protocol could help regulate the NFT recreation process. Creators who do not own blue chip collections can now get licenses and recreate base on it. Look forward to see all kinds of innovative works enabled by this.

Would love to start working on a draft implementation if you could provide an interface