Decoding Story Protocol: IP Assets, IP Accounts, and Programmable IP Licensing (PIL)

Story Protocol is revolutionizing the way intellectual property (IP) is registered, licensed, and commercialized on the blockchain. With a unique system of IP Assets, IP Accounts, and Programmable IP Licensing (PIL), creators can seamlessly bring their real-world or digital IP to the decentralized web, maximizing both its protection and flexibility. Today we will discuss everything IP since it is the asset of focus on Story and here’s how it works.

IP Assets

At the core of Story Protocol is the concept of IP Assets, which are intellectual property represented as NFTs with an ERC-721 token standard. These assets can be any kind of creative work, from visual art and music to inventions, AI models and yes—even a dance you create. Each IP Asset is minted and registered as an NFT, which means it’s uniquely identifiable, transferable, and verifiable on the chain.

What sets Story apart is its real-world relevance: IP Assets have a duality, functioning both as web3-native tokens and as representations of actual, real-world intellectual property. This makes them more tangible and enforceable compared to traditional digital-only assets.

IP Accounts

Each IP Asset is linked to an IP Account, which is based on a modified ERC-6551 contract. This account manages permissions, stores metadata, and ensures that the asset's usage and ownership rules are enforced according to programmable logic. The IP Account acts as the central hub for all actions related to the IP, including licensing, royalties, and transfers.

Programmable IP License (PIL)

The Programmable IP License (PIL) is a key feature of Story Protocol, allowing creators to set customizable terms for licensing their IP Assets. This is the programmable logic that IP Accounts refer to for instruction. PIL is comparable to YC’s SAFE agreements but in the realm of intellectual property.

For those who don’t know, YC SAFE agreements are standardized frameworks Y Combinator encourages start-ups to adopt to structure equity and ownership within their companies. The PIL operates as a universal license that ensures legal and enforceable protection of assets both onchain and offchain

The PIL is a programmable contract that autonomously enforces licensing terms. This provides transparency and efficiency, enabling easy and permissionless licensing of IP. This stuff is usually encoded in complex legal language which is hard for the average individual creator of today to understand and utilize effectively without being backed by expensive legal teams.

Whether you're a crypto project or a traditional company, you can leverage PIL to commercialize your IP assets with minimal friction. Much like how fiat currency backs USDC, PIL backs IP on-chain, creating a secure framework for licensing.

License Tags

You can add tags to your IP license to further categorize and add abilities to the select IP asset. There are options to include territory, channels of distribution, expiration, derivatives, derivative limitations, content standards, irrevocable tags, attribution, and commercial use.

Some of these tags are self-explanatory while others have different sub-settings they refer to. The territory tag refers to where the licensed IP can be utilized; in the PIL the default setting is global. When it comes to the channels of distribution, it refers to television, video games, physical consumer products, etc. The expiration tag defines how long the license will be valid for, and if it is not tagged, the license will be perpetual by default. When an IP Licensor tags the license as "Irrevocable," it means that the license cannot be taken back or canceled once it's granted, except in cases where revoking it is necessary to comply with the law. This tag essentially locks in the rights granted to the licensee, ensuring that they can rely on those rights for the duration of the license. If the IP Licensor doesn't use the irrevocable tag, they retain the ability to revoke the license under certain conditions, such as if the licensee seriously breaks the rules of the license agreement.

Now the Attribution tag is closely related to the derivatives and commercial use tags. The Attribution tag ensures proper credit is given for the IP Asset. When used, it requires you to name the IP Licensor and potentially other specified parties as creators whenever you use the IP Asset.

You may need to include a link to the original asset for any derivative works and acknowledge that they're based on the original. The IP Licensor might also set specific crediting rules you must follow. However, if there's no Attribution tag, you're not obligated to provide credit when using the IP Asset or creating derivatives from it.

A derivative includes adaptations, modifications, or remixes to create new works based on the original IP Asset. If this tag is present, you may need to provide attribution, seek approval from the IP Licensor, or share revenues generated from your derivative works. The IP Licensor can impose limitations on how many derivative works you can create. For example, they might specify a maximum number of adaptations or limit certain categories of derivatives. These limitations help maintain control over how their original work is used and adapted which can be important to the creator in a variety of ways. Other tags that are involved in controlling how the IP is used are content standards. These standards may prohibit hate speech, inform users if the content suits certain ages, and restrict associations with drugs, weapons, or pornography. If these standards are not tagged, you still must comply with applicable laws and the overall terms of the license.

The Commercial Use tag determines whether you can use the IP Asset for commercial purposes. If the IP Licensor has tagged "Commercial-Use," you're allowed to use the IP Asset for both commercial and non-commercial personal use during the license term. The specific conditions depend on the subtag used. For instance, "Allowed" permits unrestricted commercial use, while "Allowed-But-Only-for-Certain-Commercializers" limits commercial use to specific categories of licensees. "Allowed-With-Attribution" requires you to credit the IP Licensor, and "Allowed-With-Revenue-Share" or "Allowed-With-Revenue-Ceiling" involve specific financial arrangements. It's important to note that this tag only covers commercial use of the IP Asset itself; the "Derivatives" tag must also be present for commercial use of derivative works. If there's no "Commercial-Use" tag, you're limited to non-commercial, personal use of the IP Asset.
There is a lot of information commercial-wise when it comes to the revenue structures that can come from the Programmable IP licenses that we can save for another time.

Conclusion

Story aims to tap into the illiquid market of IP and make it liquid. With tools like IP Assets, IP Accounts, and the Programmable IP License (PIL), it bridges the gap between traditional intellectual property and on-chain IP, offering creators a powerful and flexible way to control and monetize their work. Story Protocol makes it easier than ever to mint, protect, and license IP assets—whether they be creative works, inventions, or even a unique dance!

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