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  • J Huang and S Pettigrove

US reports on IP implications for NFTs

The United States Patent and Trademark Office (USPTO) and the US Copyright Office have issued a report examining applications of non-fungible tokens (NFTs), intellectual property laws and challenges associated with NFTs, and potential ways to use NFTs to secure and manage intellectual property rights.

The report, entitled Non Fungible Tokens and Intellectual Property, was issued after a study requested by two US senators. Through three public roundtables, the USPTO and the Copyright Office received input from a broad spectrum of commenters, including creators, brand owners, innovators, entrepreneurs, technologists, academics, industry associations, and intellectual property practitioners.

The feedback received included a diversity of views about the opportunities and intellectual property challenges associated with NFTs.

NFTs and copyright

The report says some artists saw promise in the potential to use NFTs to obtain royalty payments on downstream sales. However, this will depend on various licensing terms incorporated within the NFTs:

As U.S. copyright law does not expressly provide for such remuneration, these opportunities depend on the code underlying the NFTs and the rules of the platforms on which they’re sold rather than any statutory entitlement.

Meanwhile, others expressed concerns about forms of copyright infringement associated with NFTs. The report says certain features of NFTs—such as typically pseudonymous ownership and decentralised storage—can raise challenges to enforcing a copyright (and similarly to trademark and patent rights). However, the report says these are not new problems in the online space, and existing laws should be sufficient to protect copyright owners.

NFT and trademarks

The report says NFT technology and blockchain networks present new opportunities for trademark owners to

build their brands, reach new consumers with interactive products and services, document the provenance of products, and manage trademark rights.

However, the report says there is a prevalence of trademark infringement associated with NFT marketplaces, although

some NFT platforms have developed protocols to help trademark owners enforce their rights...

The report points out that the lack of central authority to require all platforms to implement similar protocols, decentralised and anonymous nature of some NFT platforms, and the immutability of blockchain transactions all add to the difficulty in enforcing trademark rights.

Nevertheless, the report says most commenters disfavored new, NFT-specific laws to address trademark infringement both because NFT technology is still evolving rapidly and because many federal court cases involving these issues are still pending and will likely provide answers regarding whether existing trademark laws are sufficient.

NFT and patents

The report says blockchain technology and NFTs can play a role in supporting management, transfer, and licensing of patent rights. However, it says some commenters were concerned about identifying bad actors on NFT platforms and correcting inaccurate or fraudulent information stored on blockchain networks.

Commenters also had diverse views as to whether designs associated with NFTs can meet the requirements for design patent protection.

The report identifies possible uses of NFTs in patents, but recent fluctuations in value and uncertainty in the markets for NFTs make predictions about the adoption of NFT technology difficult.

In conclusion, the report found that current intellectual property laws are adequate to deal with intellectual property right infringements for now. Moreover, it is concerned that NFT-specific legislation would be premature at this time and could impede the development of new NFT applications, given the evolving nature of the technology. It appears that the US authorities will take a "wait and see" position on changes to intellectual property laws and IP registration practices.

Written by J Huang and S Pettigrove


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