Decentralized Collaboration Through Private Ordering

This Article is the first in legal scholarship to set forth the theory of decentralized collaboration and to demonstrate, by an empirical study of the Top 25 NFT projects, its application by startups that have employed a new, more innovative approach to creative production. Decentralized collaboration refers to the creative activities among various unrelated actors, who are involved in creating a shared project of content production through a decentralized, asynchronous process open to the public. Utilizing a combination of smart contracts that create non-fungible tokens (NFTs) recorded on blockchain and intellectual property (IP) licenses setting forth rights for the NFT owners to use associated content, such as visual characters, a substantial majority of the NFT projects have adopted a far more permissive approach to IP licensing that facilitates decentralized collaboration by granting the NFT owners the right to commercialize the artworks, including by making derivative works. Under this arrangement, the NFT owner who commercializes the artwork and engages in decentralized collaboration gets to keep all the profits derived. At the same time, most of the Top 25 NFT projects still impose some restrictions, such as a prohibition against using the project’s trademarks to prevent the potential abandonment of trademark rights. This innovative approach to creative production—in which startups enlist their customers to become cocreators, who receive commercial rights to monetize the artwork identified by NFTs—is a dramatic change from the traditional All Rights Reserved approach of the major media industries. Proponents of this more permissive approach believe it has greater potential for empowering creators and maximizing the Internet for creativity. The economic downturn, however, poses formidable challenges for all businesses, not just NFT startups