1. Conceptual Foundation 

These are the foundational concepts essential to understanding IPTs: 

• Intellectual Property (IP): Rights to exclude others from the creations of the mind, such as scientific inventions, designs, artistic works, and symbols in commerce. 
• Research & Development (R&D) Data: Findings, statistics, and other data gathered from scientific research. R&D data can be highly valuable and is often linked to IP.
• Non-Fungible Tokens (NFTs): Unique digital assets stored on a blockchain. Each NFT carries unique value and specific information.  
• IP-NFTs: pools of IP and R&D data rights attached to NFTs.  
• IP Pools: pools of IP rights held by different owners to facilitate the licensing process, reduce risks of IP infringement, and encourage collaboration among innovators.
• IPTs: IP pool memberships. The rights and responsibilities of the holders of IPTs are governed by adhesion contracts, e.g. this one: IPT Membership Agreement. 
• Adhesion contracts: Legal agreements that attach to users of applications (e.g. terms of service and privacy policies) and token holders (e.g. the CryptoPunks Terms and the Milady Viral Public License)
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2. Tokenizing IPTs

2.1 Minting an IP-NFT

The initial step is minting an IP-NFT on mint.molecule.to. Minting attaches a legal contract, such as a sponsored research agreement that grants rights to IP and R&D data from scientific research, to an NFT. This IP-NFT denotes ownership of the IP rights on Ethereum. 

2.2 Minting IPTs using the IP-NFT

The next step is minting IPTs using the IP-NFT. The IP-NFT holder calls the Tokenizer smart contract, which confirms IP-NFT ownership and allows the owner to mint IPTs, fungible tokens unique to their parent IP-NFT creating IP pools.  

2.3 IPT Membership Agreement

The IPT Membership Agreement is an adhesion contract that defines the rights and responsibilities of IPT token holders in the IP pool: 

• Governance: Token holders have the right to participate in the governance of the IP-NFT and its development. This includes voting on proposed licenses and use of proceeds from the IP-NFT. 
• Access to Intellectual Property: Token holders can govern access permissions to relevant data and other IP or future IP arising from the development of the IP-NFT. 

• Duty of Care: Token holders have a Duty of Care to honor, support, and adhere to the terms and conditions of the IPT Agreement, including any governance agreement made pursuant to it.
• Confidentiality: Token holders must not, without consent, use or disclose any confidential information or IP for any purpose or attempt to sell or register any Confidential Information, IP, or R&D data rights developed through their participation in the token holder group.
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3. Legal Considerations and Best Practices 

3.1 Governance 

Holders of IPTs control the licensing function, thus governing the terms upon which IP and R&D data gets distributed. 

3.2 Compliance with IPT Membership Agreement 

Token holders encounter and agree to the terms of the IPT Membership Agreement so that it adheres to them at various stages: at the point of purchasing IPTs in the genesis sale, when voting on governance decisions, etc.  

3.3 Dealing with Malfeasance 

In the event of a malicious actor, the IP-NFT owner and IPT holders can challenge the actor's right to receive any license or proceeds due to their failure to uphold a reasonable duty of care. 

3.4 Seeking Legal Advice 

Legal advice should be sought before engaging in the creation of IPTs and governance of IP-NFTs. This is a complex and evolving area of law with potential legal liabilities if handled incorrectly. For example, depending on how IPTs are sold, the seller may need to exclude US participants, limit the amount raised, limit the number of participants, register, and publish a prospectus or have a private placement memorandum.  

3.5 Securities Law Best Practices

• Know the Law: Despite their design as IP governance tokens without the hallmarks of securities, courts could still find that a sale of IPTs is a securities transaction depending on how the sale is marketed, so any prospective tokenizer and seller of IPTs should follow the relevant securities laws in any jurisdiction where they offer the tokens, engaging experienced legal counsel to help navigate the complexities. 
• Prospectus and Disclosure: If the IPT sale is considered a securities transaction or IPTs considered asset tokens, then the seller may need to prepare a prospectus, whitepaper, or similar disclosure document. The best practice is to prepare a whitepaper anyway, which should provide comprehensive, accurate, and transparent information about the token, its rights, and the risks involved. 
• Offering Exemptions: In certain jurisdictions, there are exemptions that allow people to offer tokens under exemptions that permit offerings without registering them or publishing a prospectus. For example, in Switzerland, a token issuer can make an offering to fewer than 500 investors or with a total value of less than $8 million in 12 months without triggering a requirement to publish a prospectus. In the United States, generally all token sales could be considered securities offerings no matter the token type, so people funding research with IPTs should comply with the not-touching-US requirements of Regulation S, the offering size, marketing, and character of buyer requirements of Regulation D, and any other regulation applicable, e.g. Regulation A+.   
• Anti-Money Laundering (AML) and Know Your Customer (KYC) Regulations: Token sellers should comply with AML and KYC regulations to prevent illegal activities. 

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Always seek legal advice before proceeding with a token sale. This list is not exhaustive and does not constitute legal advice.