Non-fungible tokens (NFT) have been around since 2014 but have recently enjoyed increased popularity. Just four months ago, Christie’s auction house sold its first pure digital work for $69 million, setting the record for the highest-paid NFT.
What is an NFT? It is the latest cryptocurrency phenomenon. NFTs transform digital works of art and other collectibles into one-of-a-kind, verifiable assets that are easy to trade on the blockchain. It’s the trifecta for a collector: a digital asset plus certificate of authenticity plus legal rights all rolled into one. Buying an NFT is purchasing a hacker-resistant, public proof of ownership over a digital asset. However, when you buy an NFT, you are not getting the copyright or trademark but buying the property rights.
NFTs are the newest wave of transformation in the e-commerce revolution. Copyright piracy, trademark counterfeiting. and patent infringement are illegal practices that have become significant problems with the evolution of e-commerce and are continuing to escalate. While the internet has provided innumerable opportunities for legitimate businesses to grow and reach consumers globally, it has also allowed counterfeiters’ the ability to increase their operations worldwide.
In addition to counterfeits, illegal downloading of creative works is an everyday occurrence. Since it involves a nontangible, it is believed to be a victimless crime, but it significantly costs the artist. When in office, President Barak Obama claimed, “We’re going to aggressively protect our intellectual property… our single greatest asset is the innovation and the ingenuity and creativity of the American people… it is essential to our prosperity.”
NFT creates a digital object of intellectual property, and its use on the blockchain has little legal precedence, but it is. However, it is being hailed as a means to have greater control of a person’s or business’s IP rights. NFT is a new way to create a digital object of intellectual property, vastly different from traditional copyright registration. The “thing” is really a unique string of code encrypted with the artist’s unforgeable signature and uniquely identified on the blockchain. The immutable information contained in NFTs makes it harder for someone to dispute the origin of a piece of music, artwork, or design. NFTs are unique and not mutually interchangeable, which means no two NFTs are the same, making it nearly impossible to counterfeit. It’s a one-of-a-kind piece of code stored and protected on a shared public exchange. When registered on the blockchain, the NFT is registered globally, not in only one jurisdiction.
The evidence backing the process completed over NFTs means every contribution is recorded. The blockchain is a vast, decentralized network of ledgers that records every transaction, and with the embedded code, artists are ensured to receive royalties on all future sales of their art.
Although they are new and have the prospect to be probability of being more sturdy, NFTs have not been proven to be foolproof. Enlisting the experience and talent of an IP attorney experienced intellectual property attorneys to ensure your IP rights are legally protected is still the most reliable strategy the verified path to follow.
The IP attorneys at Ference law are your can serve as your trusted IP counsel. Call them now at 412-741-8400.