Innovative licensing framework leveraging the new opportunities of blockchain technology to ensure the seamless assignment and transfer of IP rights with a simple blockchain transaction.
Licensing rights embedded in a transferable blockchain token (NFT)
Customizable licensing terms can be embedded into different NFTs.
Technology as a transfer layer for legal rights, rather than an enforcement system.
In short, the Token-Bound License is a legal-tech that allows seamless IP transfer and rights management via blockchain.
The Token-Bound License is a specialized IP license leveraging the blockchain infrastructure to create digital certificates of rights associated with a blockchain token (NFT). Thanks to our Web 2.5 solution (link), the token-bound license can subsist as an invisible layer in the blockchain backend, allowing users to benefit from the transparency and security of blockchain technology without any hindrance or constraint from a UX standpoint. Content creators can thus license their works through the issuance of FTs, each embedding a particular set of licensing terms—such as different types of commercial uses, or the ability to create derivative works, and the conditions for doing so.
Whenever a NFT is transferred from one owner to another, the rights and obligations defined in the license automatically transfer to the new owner without any additional steps required. The blockchain ledger is the authoritative source of these digital certificates, establishing an immutable link between the licensed content and the licensing terms, and ensuring that the current holder of the NFT is the legal beneficiary of the license.
The token-bound license distinguishes itself from traditional IP right management systems on at least two levels:
The Token-Bound License is designed to work within existing legal frameworks, leveraging copyright law to stipulate the conditions under which people are allowed to use, modify, and communicate the licensed works to the public.
While the Token-Bound License is associated with a particular NFT, its validity does not depend on the legal status of NFTs themselves; it operates like any other public license, where rights transfer according to the terms embedded in the license. Specifically, as a general public license (like the majority of open source and Creative Commons licenses), the Token-Bound License is structured in such a way as to ensure that the beneficiary of the license must be the current holder of the token that the license has been associated with. Therefore, when the token is transferred, the rights associated with the license are also transferred seamlessly to the new token holder. This ensures that the license terms are always tied to the token, making the transfer of rights automatic and inherent to the system itself, regardless of whether a blockchain transaction is explicitly recognized by local or international legal frameworks as a contractual transaction. In other words, the token itself isn't the contract—it's the license embedded within it that matters. Even if a jurisdiction does not provide legal recognition for the NFT or blockchain transaction, the license’s terms can still be enforced through traditional legal channels, supported by blockchain as proof.
It should be noted that, just like with any other license, the Token-Bound license operates as a descriptive layer of rights, meaning the enforcement of those rights still relies on traditional legal mechanisms. In particular, because the Token-Bound license operates within the framework of copyright law, disputes over IP rights would still be handled in traditional courts based on the governing law of where the alleged copyright infringement has taken place.
The key benefit of the Token-Bound license is that, in cases of dispute, the token acts as proof of ownership, and the associated blockchain transactions can be regarded as strong evidence in legal proceedings. Indeed, given that the Token-Bound License is incorporated within a blockchain token, the blockchain ledger serves as a verifiable time-stamped record of licensed rights. This can contribute to increased transparency and traceability, but does as such not replace the enforcement mechanisms of established legal frameworks.
Similarly, in the event of a dispute over the interpretation or obligations associated with the Token-Bound license, traditional legal mechanisms apply. The blockchain ledger provides evidence of IP ownership and licensing terms, but legal interpretation and enforcement must be managed through established judicial systems. The Token-Bound License does not include a built-in arbitration mechanism, so disputes would be handled by national courts based on applicable laws. To address potential gaps, implementing an independent arbitration framework or governance body for resolving disputes could be a consideration for the future.
Artists and creators need a reliable way to manage the IP in their work, while ensuring that licensing terms are clear and accessible to everyone, and can be easily transferred from one person to another.
The token-bound license provides a solution by linking licenses directly to NFTs for the issuance of digital certificates enabling creators to precisely define how their content can be used and adapted by others. By aligning with blockchain standards, it ensures that licensing terms are clear and compatible with future technological advancements.
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