CIP#xx - Enforce Curve's IP Rights

Proposals
#21

By way of background, I’m an attorney working in the DeFi space and also a veCRV holder so I’m absolutely not biased (pulls tongue from cheek). I’ve worked as an attorney for multinationals in the tech sector for over 20 years so I know my way around this type of issue. Perhaps that makes me more inclined to look at this as a hard-nosed business choice.

I’ve voted in support of the proposal but this is obviously a complex issue that goes beyond the psycho-babble and Deleuzian fever dream that passes for legal analysis in this industry. Full disclosure: I frankly care less about the ideological purity of ETH or DeFi maxis or the laughable spoutings of their libertarian offspring - we’re not going to take on global behemoths and FI titans and win on their turf with that approach. That leaves us with 2 pragmatic options. We either:

  1. desparately hold onto the idea that we are professional revolutionaries in the midst of perpetual revolution. (spoiler alert: Lenin is dead, along with a few others); or

  2. try the more modest approach recommended by the Fabians - gradual, modest reform from within the structure being reformed. Still revolutionary but with a nice haircut and table manners.

If you’re concerned with my reference to far-left theorists to frame this discussion, you’d be well advised to ask why. Who knows, perhaps there are more than a few closet Marxists amongst us. In any case, we can learn something from these thinkers. Like, what really happens after the DeFi revolution is over and the blood has been hosed away? We’re basically left with the same power structures as before, mutated to adapt to the new historical reality. For a recent example, see: Arab Spring, Feb 2011.

Applying all of this to the OP, he accepts the basic tenets of intellectual property law and the traditional legal system. That’s a good start.

If one accepts intellectual property, and, a priori, property and ownership structures, then there is only one legitimate response that keeps an eye on the long-term ramifications. And that is to initiate legal actions to protect that property. Property-Violence: the necessary bedfellows. And if you are hoping for some natty software or smart contract to solve this problem? Nation-states will never allow smart contracts to replace their monopoly on the threat of violence that underpins all litigation and legal enforcement. There is no easy, bloodless, drone strike to solve this problem. We’ll need to get up close and risk having blood on our hands.

This isn’t just about protecting IP against start-ups or competing DeFi platforms - those minnows will die as soon as the pond dries up. It’s about installing boundaries and electric fences to slow down the greybacks who are about to enter this territory, predators who will patent and trademark the living crap out of everything they find, forcing existing DeFi teams to submit. Any aggressive litigation by Curve now will make them think twice. In fact, why not flex some muscle and take down several nonsensical copycats?

If you feel queasy about this, you’re in the wrong game. This isn’t personal - it’s business. While we’re at it, save some money to take on the regulators too. Want to know what shuts them up and makes them think twice? I good spanking in the appellate courts. They’re our regulators. We pay their wages. We scrutinise their actions and budgets. They have limits that are within our reach.

Meanwhile, let’s learn from the large FIs: start taking down some small offenders and build a rep that tells the market: mess with us at your peril. This tip-toeing and dancing around regulators and third parties that is endemic in crypto is not working. It’s time to step up the game.

en bref: We have a war-chest and should use it to protect Curve’s legitimate business interests. That includes IP. Let’s extend our horizons beyond bull and bear markets. It’s time now for some tough business logic to kick in before we get chewed up and spat out by something bigger up the food chain.

5 Likes
#22

Hi Anon-cat/all

Firstly-this response is not legal advice, just commentary from an IP consultant. I am not a solicitor.

One thing to recall here is that copyright relates to expression. If I copy code without permission line by line that is normally infringement. If I look at the output from some code and write a new and different program to create the same output my code will be a new expression and my expression and (as I likely cannot see the original code) it will be my code. (It still might infringe a patent if I execute it though). That is one intangible asset - the copyright.

However IP involves a lot more. I regularly perform IP audis for software companies - software companies have code, proprietary know-how, registered and unregistered trademarks, data, databases, software which incorporates registered or registered computer implemented inventions, contracts, relationships, processes etc. All these assets have value which needs to be managed.

So there is a lot more than copyright for Curve and other DAOs (and other crypto firms) to consider.

As to the is Curve a security question that is a separate regulatory question and the answer will be yes or no.

But if the question is should crypto companies protect their IP in my opinion the short answer is yes, if you are a for profit organisation.

The choice to enforce is a different question. Does Curve have budget for that? Victory is not certain and litigation investors are like VCs - choosy. They will certainly want clarity on who owns any infringed code - is that known?

For profit companies are constituted to make profit. It is OK to be non-profit but most companies and their investors are looking to profit. So it is important to look after the intangible assets otherwise they will leak out. There are ways to stop leakage.

Happy to discuss IP issues with any crypto DAO or firm looking to sort out its IP strategy.

This looks like a good discussion.

3 Likes
#23

I appreciate your enthusiasm and your big picture vision of what we will ultimately be up against. In some way this conversation is more about how we prepare Curve to protect itself in the future as it attempts to establish itself against legacy finance and potentially hostile governments. Saddle is a nonissue by comparison, but useful to manifest discussion and train us how we should respond when the stakes really get high.

So, given your background in law and in DeFi, do you have anything tangible to share about this specific case? Some questions I have:

  1. Can you determine that, based on public code, that the accusation against Saddle is valid and a case can be made?
  2. Will a court recognize Curve despite no regulation, legal status, or legal precedent for handling DAOs?
  3. In what jurisdiction would a case be brought forth?
  4. What outcomes would Curve hope to achieve with a case?
  5. What’s the likelihood of getting favorable outcome from a court?
4 Likes
#24

Hi Wormhole and Daimon,

Glad to see someone else with a similar background to myself join the conversation Daimon - maybe you’ll connect with Lex DAO too? Tomorrow’s my first time joining that call so hoping this is a topic of discussion.

Regarding the questions, I think some of them are quite debatable right now and have some dependencies:

  1. For purposes of the legal discussion, one must assume that Charlie’s copying claim is true. I’m not an expert and really you don’t want the lawyers opining on that. But “copying” is not the same thing as “valid and a case can be made” and to be honest, probably nothing in the public record is sufficient to answer “valid and a case can be made.” That will probably require discovery of the people who did the copying and experts.
  2. Pursuing the claim likely requires the Curve IP starting to live within some sort of legal entity somewhere on earth. Lots of the Twitter discussion tends to focus on US legal structures, but that’s not required, Curve could set up any number of legal entities (i.e. corporation, foundation, trust, verein, etc.) in any number of countries to satisfy this part. My first-impression view is that a non-US either not-for-profit corporation or trust for the benefit of the veCRV holders would likely be the best path, but there are a lot of factors to weigh before making that decision and it needs a decent amount of investigation and evaluation.
  3. Probably a case would be brought at least initially in the U.S. District Court for the Northern District of California as it seems Saddle is based in silicon valley.
  4. Excellent question - generally your options are money damages or injunctive relief (a court order to stop infringing) or both. One potential option is that Curve could seek to force Saddle to pay a license fee, which would create something like Curve’s other partnerships.
  5. Way too early (and dependent on stuff mentioned above and lots of other stuff) to know. But to Daimon’s point, even trying sends a very strong message to the world that discourages the next potential pirate.
2 Likes
#25

I am not a lawyer and not sure how this fits into the picture but Wyoming recently passed a bill that lets DAOs be recognized as LLCs:

https://www.wyoleg.gov/Legislation/2021/SF0038

might be worth exploring?

1 Like
#26

@hydrosam Before I comment on the specifics, I just need to be clear that this is not legal advice. I’m commenting purely for my own personal amusement and for what I hope is some measure of entertainment for others.

  1. Can you determine that, based on public code, that the accusation against Saddle is valid and a case can be made?

Rather than comment on any specific example, let’s look at a hypothetical copyright infringer of Curve’s IP which is the only thing I’m interested in. We need to establish and agree an approach for what will likely be a recurring problem. All comments below relate to such a hypothetical case.

So, does it matter if we have a iron-clad case against the infringer? And why discuss that here in full view of everyone? My point is simple: any suggestion that copyright has been infringed should be met with an immediate response.

The correct approach is to immediately send a cease and desist and prepare for interlocutory relief. We can worry ourselves about the merits of the case while we are taking the urgent action necessary.

  1. Will a court recognize Curve despite no regulation, legal status, or legal precedent for handling DAOs?

We only need to find one person who can claim legitimate rights over the IP in question. Based on the GitHub repository, that currently falls to @iamdefinitelyahuman

Failing that, I see no reason why the veCRV stakeholders couldn’t file as a class even if that’s on a basis that’s beyond potential IP claims.

There are lots of intermediary steps to take that will definitely make an impact:

  • Curve raises the issue with GitHub and requests closure of the relevant repo along with the accounts of any devs involved for breaching GitHub’s (read Microsoft’s) Acceptable Use Policy:

  • Curve could also issue cease and desist on the host of the infringer. Their terms of use make it relatively simple to alert them of the issues and force a shutting down of the account (see for example cl 6.2 here. The infringer might relocate but if they’re thinking of running a multi-million DeFi platform and keep going offline or moving to sketchy jurisdictions, their users will start thinking twice about the platform. Very few users are going to interact with the smart contracts directly - ultimately, this is about liquidity and trade volume. Without that, they’re dead.

  • If the infringer has just started and is thinking of listing on a CEX, then even the possibility of messy litigation will definitely make the CEX nervous and potentially put the infringer on a blacklist.

  • Then approach Medium and ask for their Medium account to be shut down.

  • Send formal notices to Discord and Telegram and request closure of the channels as they would likely be in breach of Acceptable Use Terms.

Where does this leave the infringer: no CEX on the horizon - disrupted social media channels - website offline - uncertain roadmap - peeved community - buh bye… :wave:

Apologies for the gory details - this is how the sausage is made. Actually, this is how corporate chess is played - small tactical victories over many years that produce network effects and coalesce into an overwhelming advantage.

For clarification I should add here that litigation isn’t my main interest and I can’t wait till we see the back of the securities issues in this space. My main focus is protecting the long-term viability of DeFi projects as well as exploring the exciting stuff (for me, anyway) that is coming including likely mergers, acquisitions and strategic partnerships, DeFi as a Service, commoditised/retail DeFi products, interfaces into trad-fi etc etc.

  1. In what jurisdiction would a case be brought forth?

It depends on a number of factors such as where the infringer is located. It’s surprisingly easy to solve this problem because there are 2 classes of potential infringers:

A. Pure scammers who will happily steal code and then vanish once they’ve rugged their investors.

B. “Legitimate” operators who want to build a business and be around for a long time and either messed up or pushed their luck a bit too far.

Class B projects are easy to deal with. You simply pick off the devs who are publicly known. Or if the project is incorporated, you go after the company (and the devs too for good measure).

Side benefit: good devs will quickly re-align to projects that want to do the right thing rather than expose themselves to litigation and personal damages suits.

But that’s down the road. For now, we simply need appropriate representation, a plaintiff and we’re ready to initiate action.

  1. What outcomes would Curve hope to achieve with a case?

Please refer to my original post.

  1. What’s the likelihood of getting favorable outcome from a court?

I won’t comment on that here as we’re talking hypotheticals. This is about protecting legitimate business interests and IP by exercising all legal rights available to Curve.

5 Likes
#27

Few questions:
What’s the risk of retaliatory SLAP suits.
If we have an avenue for litigation, does that not open CurveDAO up to receiving litigation?

Does the DAO own the IP or individuals?

If the DAO owns the IP, then how does a fork work? Will both the implementations of the DAO have IP rights post fork? How is that decided?

1 Like
#28

These are good points.

I agree that once we create a surface to launch attacks, we have a surface to receive attacks. But that risk is the same for every established business and Curve Finance is well past the point of being able to hide away. Noting its market presence, social media, TVL, volumes, airdrops, existence of founders and investors and employees, underlying infrastructure etc, there is a lot of surface to attack. Better to own those risks and manage them rather than goofing about and pretending that we’re still in hobbyist territory.

It’s also worth remembering that, whether we like it or not, Curve has investors who will definitely want to protect their investment (30% of 3.03B CRV tokens not worth fighting for?). I’m wondering where they are in all this? :face_with_raised_eyebrow:

The GitHub account that publishes the code is the account that would appear to have an obvious interest in the Curve code. There might be other code and libraries that isn’t published on GitHub but which is important to the operation of Curve (the front end might be one example). I am not aware of the DAO being registered as a legal entity anywhere so you have to look back to the individuals who developed the code and who those individuals are employed by to do that development.

There may also be confidential licensing, or even assigment, arrangements for the Curve code which mean that the IP is owned by unknown third parties. If that is the case here, then it’s up to those third parties to take up the challenge. It would be good if the Curve leads could chime in here.

As for forks - I’m not sure which type you are referring to: code forks of the DAO or forks at the consensus layer? In any event, one still needs to apply first principles of intelletual property rights to the Curve code and forks don’t circumvent that task.

1 Like
#29

I would vote for obtaining what’s formally called a “Legal Opinion Letter” from competent counsel about the proposal. This should then be posted publicly and a vote from there.

One idea for someone to consider for this Opinion Letter is https://otonomos.com
I’ve been following them for some time but haven’t had a reason to hire them.

1 Like
#30

@roberto I am qualified to do a detailed analysis but I would not offer one for public consumption (nor should any other lawyer) for the simple reason that doing so would (i) invalidate attorney-client privilege and (ii) telegraph any weaknesses in one’s own case.

Legal advice in these situations would have to address potential weaknesses in one’s own position as it’s important for a client to have that information in order to assess all the options as well as the risk of launching legal action.

That’s the main reason I stuck to hypothetical examples in my earlier post.

Also, you don’t need a detailed legal advice to raise concerns with an infringer. All we need is the person being infringed to confirm that they would like the situation addressed and either reaching out to the infringing party themselves or engaging a lawyer to do so.

Unless @iamdefinitelyahuman (or whoever claims to be the IP owner) or one of the Curve management team decide to take action, I’m not sure there is much more for the community to do, even if a vote is taken. It’s very possible they don’t agree with OP that any action should be taken here.

1 Like
#31

Hi Daimon,

I think we’re about to the point where it makes sense to move something forward to a DAO vote since this is now one of the most-engaged posts ever on the Cure governance forum (currently 6th but almost 5th in number of views, 10th and rising in the number of replies.)

I don’t think some of the facts related to the IP are fully understood right now, so I think the following course of action would be best to get the ball rolling:

  1. A US-licensed lawyer or firm interview the Curve Core team members who have a connection to (a) how Curve was established, (b) who wrote what code, under what agreements, and when, and (c) what (if any) written agreements were executed with third parties related to IP. As part of that interview, the lawyer/firm would execute basic representation agreements with each team member limited to their involvement in Curve and waiving conflicts between and amongst Curve members.

  2. On that basis, the lawyer/firm should make a recommendation to the Curve Core team members as to whether it would be in the best interests of Curve’s ability to protect its IP for Curve to change/formalize its legal circumstance (i.e. incorporate, found a trust to own the IP, etc.) or take other actions (i.e. execute IP assignment/license agreements, etc.). Since that recommendation would only be made to the Curve Core team members who participated in the interviews, privilege would be maintained.

  3. Assuming the Curve Core team members wished to proceed with any of those recommendations, they could, if they felt it appropriate, sponsor a DAO vote to ratify those actions and give a general explanation as to why they supported them. The lawyer mentioned in the items above could help them craft those public statements in a way that would clearly convey the proposal and its costs/benefits without affecting the confidentiality of the legal advice given in the points above. Should Curve decide to create a legal entity, the retention agreements mentioned in #1 above could be modified (or pre-written to contemplate) transitioning it over to the legal entity.

Once those items above are done, then the next step would be related to any actual IP assertion activity. I would recommend those questions be tabled for now until the above happens (or doesn’t) as it’s in my view entirely derivative of the occurrence of the items mentioned above.

Final point: I think should any lawyer(s)/firm(s) be interested in taking on the tasks mentioned above, we should have an open opportunity for them to present their credentials and offers and let the community either by DAO vote or forum consensus or other mechanism be involved in the selection (provided of course that the Curve Core team members all consent).

Thoughts?

1 Like
#32

I’m still waiting to see if the IP owners or Curve leadership team step in here to comment.

While there might still be claims available to those of us who have investments in Curve (I’d need to think about that more), the primary party to protect the IP would be the IP owner/s.

We have argued the case in this thread so it’s up to them to decide how best to proceed (if at all).

1 Like
#33

Good point @Daimon that a legal opinion letter should not be for public consumption as it would also point out the weakness in the potential case.

I do think the DAO vote should be if Curve should obtain an opinion letter, but I think the leadership would have to make the call on if they want to burden/opportunity of pursuing any legal action. (Legal action could be as simple as a cease and desist letter. The opinion letter would likely discuss several options.)

2 Likes
#34

@michwill is the founder of Curve and creator of the stableswap invariant. If this is true that the IP rights are with him, and the DAO doesn’t have claim to the IP, then the DAO is really a bystander in this situation.

This seems reasonable, given that the DAO can’t take direct action anyways

1 Like
#35

I think this is now well summarised. In short does the IP owner wish to assess and/or act? Certainly a practicing lawyer could help in this regard.
There is a wider question - and that is does Curve wish to manage its IP and intangible assets going forward. This is where IP consultants come in to help companies with the practical side of using, creating and managing intangibles in a business. Certainly I am such a consultant and would be happy to help but of course there are other IP consultants one could use too. Good IP consultants will have previously developed, used, managed and commercialised a wide range of complex innovative intangibles within businesses on an international scale.
So yes consider action and the benefits of taking it but more importantly consider how to run the business for optimal benefit in line with your corporate goals.

1 Like
#36

This will also set an important precedent in DAO’s and DeFi that decentralization does not mean that VC’s get to steal from communities.

this is really good idea.

1 Like
#37

I do agree with @hydrosam , and there are valid points to protect Curve IP. And i think it is a right direction. However, we need to discuss how we going to implement the IP rights we have in the past and future.

So the proposal i have is

  1. Make sure our github Licenses are well written and consult with a lawyer if necessary ,
  2. if our licenses have been indicates we have the right copyrights, then we need to setup a procedures when if there is suspicious project steal our IP, what’s the procedures of protecting rights. i cam imagine there is cost involved. and sometimes lawyer fees are more expensive than the compensation
#38

legal due diligence will be long. And this proposal will lose validity. Only my opinion, but It all makes a lot of sense

#39

This has been quite a discussion and I’d like to thank everyone for their positive input (even those who oppose Curve asserting any IP rights at all).

As I see it, the first step is to bring some more clarity to the exact state of Curve’s IP. Who owns it? What is it? What agreements already exist which affect it (i.e. licenses from others, OSS licenses, etc)?

That inquiry is challenging on a forum as @Daimon has ably pointed out on this forum and others have pointed out in discussions on Twitter because of concerns related to maintaining attorney client privilege and not hurting Curve’s position should litigation become necessary.

I’ve given this quite some thought and discussed with some other lawyers in the field. As such, I have the following proposal:

Those of you who have engaged with me online can readily see that lawyering is not my day job. Nevertheless I’m a member of the bar in the State of Florida and maintain the legal structure of a law firm for various activities. As such, while aggressive civil litigation is not my forte, I can at least protect conversations between myself and client(s) and myself and other attorneys associated for a matter behind the veil of privilege.

However, to do so, people have to be one’s client. As far as I’ve been able to discern from the other lawyers online who have engaged in this matter, none of them seem interested in taking on a group of clients who aren’t 100% identified and who aren’t likely to pay.

Within certain constraints related to the scope of services, I am.

My proposal would be that the DAO would encourage the leadership of Curve and any related persons to jointly agree to be represented by my mini law firm just for the purposes of reviewing documents and doing confidential interviews and creation of a confidential memo outlining the state of the IP involved in Curve. This memo could be shared confidentially with other firms in the future who might consider representing Curve in litigation or other matters to help Curve defend its rights, but almost certainly could not be shared publicly. It’s a long way from a lawsuit, but it would be a solid start.

So I’ve posted a draft of what the representation agreement might be here: https://drive.google.com/file/d/17ndOwzWyX1pRhirshHCxW0fovmW0f9qR/view?usp=sharing your comments are welcome, but just know some parts of the language are mandated by Florida Bar rules (or strongly recommended by various administrative decisions). Obviously the DAO can’t force any of the Curve leadership to join up, it would be up to them (presumably guided by DAO perspectives at least) to individually decide to participate. If they won’t (either with me or some other), then this probably cannot go forward.

My understanding of the rules of the Florida Bar are that I’m not generally allowed to advance a client costs, but I am allowed to make my fee contingent. This is going to take a lot of work, and I can only guess as to whether Curve DAO might think that work is worthy of compensation in the future. As such, I’ll track my time, and when it’s done, I’ll present it as a grant request like any other. If Curve DAO approves, cool. If not, at least it will have been an interesting project for me personally and professionally.

Finally, I’d like to open this up: are you a lawyer who thinks you’d do a better job? If so, please post your offer (I might even support it over my own!) Are you a lawyer who thinks I’ll need help and wants to associate to make my one-man firm a duo for this project? Post!

2 Likes
#40

I won’t be able to represent Curve in any US proceedings obviously but I can still help review your analysis from an IP perspective and implement the strategy I proposed earlier if you want to team up on this.

The advisory tasks and pre-litigation remediation (sending cease and desists, contacting various third parties) shouldn’t be done on a contingency basis - that’s solid work that benefits Curve (assuming the IP owners reveal themselves and agree to proceed).

I do have some questions about the retainer as it appears to make each client jointly liable for the legal fees incurred by the class. Maybe someone out there with deep pockets will sign that. I can’t. The retainer also appears to be contingent only on whether the DAO approves payment - 2 obvious problems come to mind: (i) that type of contingency is unusual and from my quick review of the Florida Bar Rules, doesn’t appear to be a legitimate basis for contingency; and (ii) the retainer is silent on who is liable for fees after the DAO approves payment. It begs the obvious question - why are the individual clients liable for payment at all if the DAO is going to pay?

If you’re representing a class of Curve investors (or the DAO itself, in whatever legal form it is represented by), it would make more sense for the fees to be payable via grant request. The request should also flush out whether there is any support from the leadership team at Curve.

I’d like to see clear milestones and estimates in the fee structure. On this, a rough estimate could be Stage 1: 6-8 hours to get instructions from the Curve team and dig into the IP position of the infringer, Stage 2: about 4-6 hours to research and prepare an advice with the options (as I’m the client here, I’m expecting a short, punchy advice), Stage 3: an average of 2-3 hours per third party to get instructions, investigate best approach and issue the various cease and desist letters as well as any corro with the third party requesting closure of the infringer’s accounts. Stage 4: Assuming we require litigation, estimates get harder to develop because there are more variables. Happy to hear your thoughts on this.

Getting back to the main hurdle here because I understand that Curve is many things to many people and some folk must be scratching their heads at this thread. There are those who believe that Curve (and other community focused DeFi platforms) is a grand social experiment, an anarcho-syndicalist takeover of traditional finance. It may well be. There are others who view Curve as little more than a speculative investment. Or simply a highly sophisticated web of bytecode modules moving magic money about. It’s all those things. But it’s also, let’s not forget, a business. And the business of Curve requires some old-school leadership and grit.

Where is that?