Larva Labs Prepares for Potential NFT Copyright Infringement Lawsuit?

Larva Labs is facing backlash concerning the authenticity of Punks, stemming from its failed V1 CryptoPunks project and its newly launched V2 CrytoPunks.

Confusion has spread throughout the CryptoPunks community, as those who still attribute value to the failed V1 CryptoPunks, have launched a community-wrapped project to keep it alive, delegitimizing the V2 CryptoPunks collection, and potentially infringing upon the brand’s overall copyright.

The community-wrapped project, dubbed V1 Punks, according to the design studio is a potential infringement issue that appears to be causing consumer confusion and dilution to Larva Labs’ CryptoPunks brand – a major factor in any copyright infringement action.

Larva Labs, the creator of the iconic CryptoPunks NFT collection, which has been widely considered to be a household project throughout the industry, has faced criticism from its CryptoPunks community, with mixed messages surrounding V1 CrytoPunks and a community-backed project, V1 Punks.

In a Discord post published earlier this week, Matt Hall, one of the core developers at Larva Labs, shared that he would be “taking appropriate steps” in the coming days as it pertains to the alleged copyright infringement of “both the art and the CryptoPunks name” referring to the CryptoPunks V1 collection.

What happened with CryptoPunks V1?

Back in 2017, Larva Labs launched its CryptoPunks V1 NFT collection, where it distributed 10,000 CryptoPunks. However, one fatal glitch in the governing smart contract allows for NFT buyers to withdraw their Ether (ETH) after their purchase, leaving the seller completely empty-handed. In other words, the buyers were inadvertently committing theft.

Following the discovery, Larva Labs quickly disassociated from the collection, and launched CryptoPunks V2, which also had a fixed supply of 10,000 images.

However, the issue within the CryptoPunks community lies between the legitimacy and authenticity as between CryptoPunks V1 and CryptoPunks V2 – and most recently, a new set of algorithmically generated Punks known as “V1 Punks” which differ only by a pink background.

Undoubtedly confused, the community has presented a number of mixed reactions on distributed 10,000 CryptoPunks V1.

V1 Punks are not real CryptoPunks, says Larva Labs

The decommissioned CryptoPunks, thanks to OpenSea’s ban, have now been wrapped through a community-made smart contract and re-issued on the Ethereum blockchain, known as V1 Punks, distinguishable only by one color as compared to their V2 counterparts. This is an attempt to delegitimize the failed V1 CryptoPunks project, while delegitimizing the V2 collection.

The community-wrapped Punks were essentially born out of the originally flawed V1 CryptoPunks smart contract, with the community recognizing them as OG.

And how does Larva Labs feel?

While having sold some V1 Punks themselves, it also claims that these are not the real CryptoPunks and that a copyright infringement suit will be coming forward. A mistake made, admitted Larva Labs co-founder Matt Hall in his Discord post. Larva Labs had initially desired to communicate its disdain of the project by getting rid of the V1 CryptoPunks and expressed as such.

Instead, the communication elicited negative responses from the CryptoPunks’ community.

How does the IP work?

Another question NFT holders have concerns the intellectual property (IP) and the parameters by which holders are able to use their NFTs for commercial purposes.

Larva Labs hasn’t clarified whether or how much IP rights are conferred upon the owners. This is in stark contrast with the Bored Ape Yacht Club, an NFT collection created by Yuga Labs. Owners of these NFTs may use the purchased images for merchandise and branding.

Hall has indicated that Larva Labs is turning to litigation to prevent the community from taking advantage of its IP.

“We originally didn’t go after the V1 project for copyright infringement of both the art and the CryptoPunks name because we didn’t want to give it any additional attention, but now CryptoPunks owners have called for us to take action, and we agree with them.”

The future of V1 CryptoPunks

The near future could see Larva Labs issue a DMCA notice against OpenSea and LooksRare, or take action against the smart contract that wraps V1 Punks.

Some collectors see the Wrapped V1 CryptoPunks as accruing value in the future. They also can be sold as relics, with their ages driving up their prices.

Mark Buchanan, a Managing Partner at Meta4 Capital, a company that owns V1 CryptoPunks, suggests that Larva Labs is trying to “police secondary markets for an asset” that has “already been claimed.” He opines that collectibles like comic books that were recalled due to errors often found a place on secondary markets.

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