The metaverse and non-fungible tokens (NFTs) were at the center of trademark discussions in 2022 and continue to be a newsworthy topic into 2023. Increased interest in this space has had ripple effects across the intellectual property (IP) ecosystem, including with patent and trademark offices (PTOs) and copyright offices.
In response to significant interest in NFTs, Clarivate™ collaborated with two IP leaders on the forefront of these emerging technologies to explore blockchain, NFTs and their brand implications. It was an honor to work with Marc Trachtenberg of Greenberg Traurig and Courtney Ferri of WeWork to provide a high-level background and deeper analysis of the IP opportunities and challenges in this space.
Read the paper: NFTs: Brand protection in the age of blockchain
Blockchain and NFT overview
Increased adoption of blockchain technology has brought about the rise of NFTs, which continue to gain popularity. Assisted by the recent launch of Blur, a new NFT marketplace, NFTs saw $946 million trading volume in January 2023.
While the volume of NFT trades is increasing, there is still general market confusion around NFTs, Web3 and blockchain technology. Within our recent paper, we provide an easy-to-understand primer for the trademark professional, defining blockchain technology and two of its highest-profile applications: cryptocurrency and NFTs. While cryptocurrency is fungible and interchangeable, NFTs are unique digital assets commonly used for buying and selling digital art, music and other types of creative content.
NFTs and IP creators
With the help of blockchain technology, NFTs can be traced back to their original creator, which helps to protect intellectual property rights and prevent unauthorized use of creative content.
This is particularly powerful for artists and content creators who may struggle to protect their work in the digital age.
NFTs also have the potential to create new revenue streams for artists and content creators. Using smart contracts connected to NFTs, creators can earn royalties every time their works are resold on the secondary market.
However, blockchain functions can have prohibitively high transaction fees and the energy-intensive process of mining cryptocurrency can make proof-of-work-based blockchains, like Bitcoin, less attractive.
IP challenges in NFTs
NFT buyers should use caution:
Purchasing an NFT does not necessarily convey IP rights in the underlying work and both the law and market economics in this space continue to evolve
Further, because there is no central enforcement authority for NFTs, problems compound when the underlying content is infringing, illegal, or otherwise problematic and immutably distributed across all nodes in a network.
This issue stems from the nature of blockchain being an immutable form of distributed ledger system. Blockchain-based domain names are of particular concern to trademark owners since WHOIS is purely optional and traditional ICANN-based remedies, like the UDRP, do not apply.
For trademark professionals looking to expand their practice into blockchain, NFTs and Web3, a key first step is understanding the fundamentals. NFT and blockchain technology have the potential to transform the creative economy and create new opportunities for artists and content creators. However, there are also practical and legal challenges associated with NFTs and it is important to address these issues to ensure that the benefits of this technology can be fully realized.
Click here to download the whitepaper and learn more.
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