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Can NFTs be used to protect Intellectual Property?

Can NFTs be used to protect Intellectual Property?
Richard Doan

10 min


Can NFTs be used to protect Intellectual Property?

A token is a unique digital currency. It can be an.jpg,.gif,.mp3 or any other type of digital media. You can display, collect and trade them, making them a digital asset.

A typical type of nonfungible token (NFT) is an item created using a computer program called Solidity, which is run on the Ethereum network. These items have verified provenance and authentication.

You can own and ensure the authenticity of these collectibles, so they're a great investment. They've already surpassed $2 billion in sales during the first quarter of 2021.

NFTs transactions operate similarly to digital currencies on the blockchain. You can identify them by their unique identification code and trace the sale of NFTs down through the entire network.

They're not just proof of ownership but also an exclusive way to buy something.

Before now, They could copy any digital object without restrictions. However, creating tokens as nonfungible tokens (NFT) allows you to create original copies of your own.

The NFT space

It can be original. What matters is whether it's scarce. With digital art, there's no proof of its origin.

With NFTs, if you still think that digital work isn't necessarily an asset, then consider this: A famous artist called "Beeple" sold his digital collages at Christie's for more than $69Million.

Christie's is the first major art gallery to offer digital artwork with a unique NFT (nonfungible token) and accept cryptocurrencies.

People delivered a unique piece of art to the buyer and encrypted NFT uniquely identified by the blockchain. Another good use case for NFTs is Nyan Cat. By 2020, the average cost of one Nyan Cat NFT was $3K.

NFTs are becoming increasingly popular outside of the realm of digital artwork. They often represent products you haven't thought of as a thing before: For example, the NBA's Top Shot allows fans to "collect and trade" officially licensed NBA and WNBAs NFTs that feature video clips from basketball games—and even offer rewards for collecting them!

For instance, when LeBron James dunks, his dunk video sells for hundreds of thousands of dollars, even though anyone can watch it online. Similarly, Twitter CEO Jack Dorsey's s first tweet (which reads "Just Setting Up My Twttr") was sold at auction for $2 million.

Many new ideas and applications seem likely to appear soon.

The public interest in nonfungible tokens (NFTs) has also led to commercial auction sites dedicated to NFTs, such as Auctions and Openshares.

OpenSea is the world's first and largest NTF marketplace. On there, you can create a wallet, buy and trade NFTs, and collect them into collections.

Copyright vs. NFT Ownership

In the digital age, it is common for people to use works of authorship without ever having purchased a physical copy of those works. Many people do not even know whether they own a particular piece of media, such as music, movies, books, etc., because they have never bought one. Knowledge about what constitutes ownership of a given work of art could lead to clarity over how ownership of a work of art relates to the blockchain technology behind cryptocurrencies like Bitcoin and Ethereum.

The most commonly cited examples of works of art that fall into this category include songs recorded onto CDs, videos stored on DVDs, and books stored on paper. However, the concept of ownership extends beyond just tangible objects. As we will discuss later, there are several ways in which creators of works of art can transfer ownership of their creations to others.

Trademarks and NFTs

The way we think about intellectual property today is changing rapidly. As the world becomes increasingly digitized, there are now many different ways you might wish to interact with brands, including via physical objects such as collectibles, fashion accessories, and art. These items can be tangible representations of digital assets and smart contracts, enabling ownership transfers. In addition, it is possible to embed information into physical products that you can use to identify those products and track their movements over time. This combination of properties makes physical objects well-suited to represent intangible assets.

One example is the use of blockchain technology to create unique tokens that act as a representation of something else. For instance, a virtual currency could be represented by a blockchain token rather than stored in a database somewhere. A second example is a creation of what are known as "nonfungible tokens," or NFTs. An NFT represents something we cannot share with others, such as a ticket to a concert or artwork.

In this article, we explore the relationship between trademarks and NFTs, focusing on the potential risks associated with the latter. We discuss the implications of having NFTs that contain trademarks and how NFTs themselves can become trademarks. Finally, we examine how companies can benefit from the rise of NFTs while ensuring that their brands remain protected.

Patents and NFTs

Nike has obtained a patent for "generating digital cryptographic assets," which allows a buyer of a shoe or clothing item to ensure that their shoes or clothes are authentic while enjoying a digital collectible version in their wallet. This is one of several recent patents related to blockchain technology that we have seen recently.

In general, blockchain patents continue showing accelerating growth. As of July 2018, over 4,500 active patents had been filed with the United States Patent Office, according to data from the Intellectual Property Research Institute.

If you are a blockchain inventor, you should consider whether what you do qualifies for patent protection. To determine if something is patentable, you should consult a patent attorney.

While obtaining patents for blockchain-based inventions might be difficult, it is possible. A patent application needs to include a description of how the invention works, why it is important, and how it differs from the prior art. Once the application is submitted to the US Patent & Trademark Office, the applicant receives a fee based on the novelty, utility, and non-obviously of the invention. The patent process typically takes about 12 months to complete.

Licensed Brands and NFTs

The NBA has been one of the most successful sports leagues in recent history. However, it has sometimes been challenging for fans to follow along. Fans could watch games on TV, but there was little else to do while watching the game. Now, thanks to blockchain technology, fans can play the game itself.

In June 2018, the NBA announced that it had partnered with Dapper Labs to develop a mobile app called NBA Top Shot. This app allows players to use virtual currency to purchase and trade digital collectible items featuring real-life footage of NBA talent.

While the NBA isn't the first major league sports organization to embrace blockchain technology, it's taking advantage of everything it offers.

NFTs copyright infringements

We discussed works of copyright, including artwork.

Two kinds of infringements might occur an infraction of the reproduction right and an infraction of the communication right.

However, this isn't all. Consider what you get when purchasing an NFT. When purchasing an NFT of a piece of artwork, what you're buying is not the artwork itself.

An NFT is metadata that links it to the original digital asset, not the actual image/video/audio files themselves. You own the private key(s) you used to mint them, which you can transfer.

You could also argue that making metadata for a digital file isn't necessarily a "reproductive" act.

For example, when creating an NFT that includes the digital version of a book, it could argue that the creator is communicating something to a new audience not envisaged by the author. On the other hand, creating an NTF that links to an existing copyrighted asset (e.g., a movie) would be considered a different act.

You don't necessarily need to give up any rights when selling digital assets on a decentralized marketplace. Although some sellers might include a transfer of copyrights, this is only sometimes the case.

You can buy an item from the game and still need to be able to sell it or display it commercially.

NFTs trademark infringements

If someone else makes an NFT tied to an asset you own but doesn't give you credit for it, they could infringe on your trademark rights by selling their version of the NFT.

If the trademark covers NFT items, it might be easier to prove trademark infringement.

Even if he doesn't, you can argue that using the same or similar marks unfairly takes advantage of the owners' reputations, even if the goods aren't similar.

Many questions still need to be answered, and there is no one trademark protection technique for NFTs, their marketplaces, or virtual worlds featuring NFTs.

As NFTs become more popular, more trademark filings are related to them.

For example, in 2021, e.l.f Cosmetics, Inc. filed an application for trademark protection at the USPTO.

They want to register "Crypto Cosmetics" under international classes 9 in connection with NTFS (nonfungible tokens) that feature collectible images, audio/video, and digital art.

It also includes NFTs (nonfungible tokens) that use blockchain technology. They took existing e.l.f beauty product lines and made them into collectibles by dipping them in digital gold. Fans can now buy animated representations of their favorite eLF beauty product lines.

NFT Risks

The concept of nonfungible tokens (NFTs), where each token represents something unique, is still relatively new. While blockchain technology has been around since 2009, NFTs are relatively new, having emerged out of video game communities. In fact, some early examples of NFTs date back to 2011. However, most people started paying attention to NFTs in 2017, when Ethereum introduced ERC721 tokens. These tokens allow you to represent anything digital — such as virtual items or collectibles — on the blockchain.

While many use cases for NFTs exist, the biggest problem facing the industry today is uncertainty about how much value NFTs will hold. For example, while plenty of games offer players the ability to purchase virtual goods, only some sell those goods directly to consumers. Instead, retailers buy large quantities of virtual goods and resell them to customers. As a result, the actual value of the item is determined by the market rather than the item's creator.

With NFTs, however, the situation changes. If a developer creates a virtual good, it doesn't matter whether anyone ever purchases it; the developer gets paid regardless. This makes NFTs different than traditional currencies because governments or banks don't back them. Instead, they are backed by the value held within the network.

As a result, an individual NFT's value entirely depends upon the number of copies that exist. While this sounds great, it also introduces several risks:

  1. The total supply of NFTs is limited. Once the maximum number of NFTs is reached, the remaining NFTs will plummet.
  2. The value of an existing NFT can only be increased by increasing the number of copies.
  3. The cost of creating additional copies of an NFT is high. For instance, a developer must pay a fee to mint a particular NFT.
  4. The process of transferring ownership of an NFT is irrevocable.

Because of these risks, many investors seem hesitant to invest in NFTs. But the potential upside is enormous. Imagine being able to trade physical items online in a way similar to how we trade stocks today. With NFTs, you can trade physical items in real life.

NFT and counterfeits

They perform like guarantees of a digital work's authenticity.

But can they be counterfeits? You can easily find DIY NFT tutorials online and even minting equipment. This means that practically anyone can create their own NFTs and put them on the blockchain.

It doesn't matter who wrote the data; the question is whether the claims made by the miner are necessarily true.

Scammers can use these tactics to profit from people's IP and goodwill. There has already been evidence of people selling counterfeit goods, people listing their copyrighted content for sale, and even works in public domains.

Artists already face situations where they need help to control how their artwork is used after it has been created. For example, artists may be surprised when someone uses their art for commercial purposes without consent.

Since the artist claimed she wasn't involved with NFT, her fans thought she was scamming them. When it was revealed that the scammer had been trying to get his money back for months, whether it was a publicity stunt by the artist or not, NFT scammers are real.

If you tackle this problem, consider looking for ways to address the underlying issues at the platforms' levels.

Online Brand Protection

New forms of digital tokens (NFTs) are emerging. There are platforms for creating them, brands are using them, and the public is interested in them.

Just like any other asset, IP rights need to be protected.

You can use online marketplaces and platforms to protect your brands from infringement.

We're in here for you when it comes to fighting online abuse. We offer an all-inclusive approach to protecting your business from cyber-attacks and staying one step ahead of the newest trends and threats.

We strive for a proactive approach to protecting our client's brands online. With our superior brand protection service, we achieve an impressive 90% success rating.


Artists, brands, and creators interested in leveraging blockchain technology should consider the following points before diving into the world of digital collectibles:

  • Do your research. Understand what type of token you want to launch, how much you wish to raise, and how much you intend to profit from it.
  • Be cautious about investing too much in one project. You could lose your investment if the team behind the project goes under.
  • Never risk anything that you are unwilling to lose. This includes your reputation, your brand, and your IP.
  • Always keep your eyes open for scams. If something sounds too good to be true, it probably is.

November 17, 2022

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