The world is atwitter about NFTs! Partially because they are not aware about what it is and why its buzzing the internet world. Let us help you demist!

 

 

 

 

NFTs (non-fungible tokens) are unique cryptographic tokens that exist on a blockchain and cannot be replicated. NFTs ideal for establishing and tracking ownership of both natively digital and tokenized physical assets. In world of CTRL+C and CTRL+V, NFTs allow us to distinguish original digital assets from copies, transforming purely digital content into unique, verifiable assets people can also value differently and exchange with confidence.

 

 

 

 

As an NFT becomes minted, smart contract programming facilitates and records transfers of the NFT between buyers and sellers. The smart contract code defines the rules applicable to the NFT (e.g., terms of purchase, resale terms, etc.) and self-executes the transfer of NFT ownership when its criteria for doing so is met. This creates an advantage for buyers and sellers because it creates a secure, efficient marketplace with simplified transfers and verifiable chains of title.

 

 

 

 

While an NFT cannot be duplicated, others could attempt minting new NFTs for copies of the original asset to create confusion and profit off the original brand.

 

 

So, Can NFTs be used to protect against counterfeiting? Because the NFTs themselves cannot be duplicated, we can use them to fight counterfeiting. NFTs carry ability to fight counterfeiting stems from the ability to distinguish original digital copies from subsequent copies. This allows buyers to verify digital and tokenized physical assets, using the blockchain.

 

 

 

 

NFTs may be subject to IP protections, including copyright, design patent, and trademark rights. As such, NFT sellers/buyers should pay attention to what IP rights are part and parcel with the NFT.

 

 

Most NFTs licenses grants the NFT buyer the license to use, copy, and display the NFT ONLY. If the NFT is sold, that does NOT mean the copyright ownership automatically transfers with the sale. This implies that unless there is an assignment of copyright in the NFT contract, the copyright generally remains with the owner. Any royalties that may come from the work later will belong to the owner of the copyright. NFT ownership of the same work does not give any such rights.

 

 

While most NFT creators restrict commercial use, more expansive rights can be given to NFT owners that may include copyright. Brand owners must also consider extending their trademark registrations to cover uses that includes NFTs.

 

 

To conclude, I would suggest brand owners to look beyond trademark and copyright protection. They should consider protecting their work against counterfeits or infringement using design patents. Design patents are valuable because, unlike other intellectual property protections, they entitle owners to all of an infringer’s profits rather than the portion of profits attributable to the use of the design.