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Rario's Terms of Use imply that Users don't own their NFTs

Rario’s website Terms of Use have this to say,

These underlying Digital Products (i.e., NFTs) are authentic and originally owned by the respective players/ sporting associations/ sports bodies to which Rario has obtained necessary licensing rights.

If Rario states that the NFTs are owned by the cricket players themselves, and Rario has merely taken a license from the cricketers to use those NFTs on their apps and platforms, then it is a clear indication of Rario viewing such NFTs as third party merchandize available for sale on their platforms.

Further, Rario’s website Terms of Use also go on to say,

Digital Products, including Cards issued by Rario, are accessible and usable only in a closed loop set of authorised applications, including but not limited to Site, App, smart contracts, Digital Product Wallets, and games (“Platform”)”; and

The Digital Product Wallet and the Cards stored therein can only be used in connection with Services and not for any transactions outside of the Services.

This suggests that Rario’s NFTs are not universally compatible. This also means that even if a user purchases the NFTs, the possession of those NFTs cannot be said to be one hundred percent with the users. Had it been so, then the users would have the ability to host and display the NFTs on any third party wallet or platform. However, as seen from above provisions, clearly that’s not the case as the scope of use of NFTs is limited by the platforms that Rario has authorized.

Interestingly, Rario’s website Terms of Use also say,

You understand and agree that access to your Rario account is limited solely to you, and it is not transferable. You agree that you will not sell, rent, lease, transfer, or grant access to your Rario account to any person without prior written permission from Rario.” and

The Digital Product Wallet shall be maintained solely by Rario and all rights pertaining to the Digital Product Wallet shall vest exclusively with Rario.

This implies that users of Rario’s platform do not own either the account or anything stored in it. This means that, in a bankruptcy case, Rario’s consumers will be unable to claim property interest in the NFTs, and the value of those assets will be commingled with rest of Rario's assets for liquidation to firstly its secured creditors, then its unsecured creditors, with anything remaining for users becoming a near improbability.

What all of this means is that the NFTs made available on Rario’s platforms are not made available as digital collectibles in the true sense of the word, because the users can never claim ownership or even possession in them. To be available as a digital product in its true sense, it should be capable of ownership which is demonstrated most clearly through means of controlling possession to the exclusion of others.

For e.g. a copy of the book Harry Potter and Philosopher’s Stone can be owned by an individual without owning the copyright in the content. This ownership is most clearly evidenced by the possession of the book’s copy with the buyer. This possession allows the individual to sell the book as a used copy without any restrictions from the author or the publisher. Thus, an important indicator of ownership is sole and exclusive possession by depriving the first buyer/publisher, as well ability to deprive oneself of such possession by having the right and the ability to sell it to other buyers.

In contrast, what we see, as per Rario’s terms of use is that:

1. The NFTs are stated to be originally owned by the players, sporting associations and sports bodies. This means that the NFTs itself is owned by them, in addition to their personal attributes used on them.

2. The NFTs are closed loop, i.e., they can be used only within a limited number of authorised apps, and therefore cannot be used, stored, hosted or displayed in any independent third party wallet further diluting any possibility of user determined usage. This means that users cannot claim a sense of ownership because neither can they control possession by choosing to display it on any independent third party wallet, nor can they deprive themselves of possession by selling it to others outside of the closed loop ecosystem.

3. The NFTs can only be used in connection with Rario platform’s services, and not outside of it. This is just another aspect of such digital products being closed loop in nature.

4. User accounts are not owned by the users, meaning thereby that users enjoy only the ability to access and use the account and the contents inside of it. It is not clear from the website terms of use whether the digital wallet is also deemed to be included within the Rario account. One could safely presume to be the case because one cannot access the digital wallet without accessing Rario’s account. Additionally, one cannot use the digital wallet independently as the same is part of a closed loop platform ecosystem.

Important Disclaimer: The information provided herein this article is our interpretation and understanding of the law. The legal analysis presented hereinabove is not given for application to any specific set of facts or circumstances peculiar to you or your organization. You may rely on the the write-up for your peculiar facts or circumstances at your sole risk only. We will not be liable, answerable or responsible to you under any client-privilege relationship.


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