Intellectual property rights are an integral part of economic activity because they provide inventors and creators with legal protection that adheres to the rule of law and incentives to obtain the exclusive right to profit from an invention. “US IP-intensive industries accounted for
1 percent of domestic economic activity in 2019,” reports the US Patent and Trademark Office. Although the costs associated with fraud and piracy are challenging to measure and detect, counterfeit trade accounts for 6.8 percent of non-EU imports, according to 2016 OECD data.
Non-Fungible Tokens (NFTs) or digital assets used to verify ownership with NFC functionality can significantly reduce fraud and strengthen IP protection since the sequence of operations associated with an asset can be traced using an immutable and public ledger or a permissionless blockchain.
“Even though blockchain technology has been present since the 1990s, processing power availability has been a limiting factor… but no longer! Patent and trademark offices should look at blockchain as a way to preserve intellectual property, especially as an opportunity to encourage entrepreneurship among startups and smaller organizations that do not have the same resources to pay for patents and trademarks,” said Michael Dorner.
President of the International Card Manufacturers Association and CEO of VariusSystems:
“NFTs provide immense promise for IP licensors, licensees, and regulators, thanks largely to the transparency that blockchains enable. For example, if a person wants to license intellectual property rights, an NFT-based system could allow them to obtain a license simply by hitting the NFT that matches that license while completing all the necessary paperwork. Given the fragmented and black-box nature of today’s IP system, this efficiency improvement offers a promising solution,” said Jacob Robinson, host of the Code of Code podcast.
The legal world set an IP-agnostic precedent for the platform, meaning blockchain innovations can be tied to existing legislation. That said, little case law has yet to resolve or control major IP issues on the blockchain. However, it is increasingly recognized that violations are common.
“Most NFT art projects…do not provide real ownership of the underlying content,” Alex Thorn, head of research at Galaxy Digital, said in a recent report. “We looked over all of the NFT collections’ licenses. In all but one, the issuers offer the NFT buyer a usage license with trading rights ranging from permissive to very restrictive. In many cases, issuers are less interested in this issue, either directly or through their marketing content, ignoring the widespread misconception that you “own art,” according to the report.
IP is clearly articulated and enforced for NFT holders before the decentralized vision of web3 is unlikely. “When purchasing an NFT or digital asset in the metaverse, the buyer frequently receives commercial use rights that let them exploit the image for profit and give them ownership of the NFT IP. Owners are typically prohibited from utilizing trademarks connected to that NFT, although it can be misleading, “explained Natalie Reboot, the founder of Moonlite Projector Toy.
VeeFriends is an example of an NFT project that not only has IP behind it, but also explains to owners what they get when they buy NFT. VeeFriends was born, built, and formed primarily on NFT technology to build an audience and a community of owners; according to Andy Krainak, president of VeeFriends, “it is nevertheless supported by copyright and trademarks like other prominent and traditional IPs.” VeeFriends is an IP company, and we think that letting people experience the brand at events is a crucial element of who we are as a company, Krainak said.
VeeFriends Original Collection – Born in 2021 and developed around fictional, designed, and created characters. Gary Vaynerchuk – Contains 10,255 NFTs and another iteration had 55,555 cheaper NFTs in April 2022. Recently, the company’s CEO, Gary Vaynerchuk, appointed Sivan Nadler and MyLinh Chau as vice presidents to lead the strategy and production experience of VeeFriends. And an events department dedicated to creating custom events that deliver value to the VeeFriends community and partners through meaningful experiences – both in person and virtually.
VeeFriends’ foundation and ownership of NFTs is intended to unlock owner/owner access and utility through events, digital and physical collectibles, and other means, according to Krainak. “We used NFT technology as the foundation for VeeFriends because of the inherent benefits and use cases blockchain technology offers,” he added.
“Especially with NFCs, NFTs offer important protection for brands to prevent fraud and copying,” Dorner continued.
NFTs can track IP even better than traditional approaches because they label ideas at the most granular level. Federal agencies that oversee patents and trademarks have played an essential role in economic development. But they are still centralized units that can experience congestion and labor shortages, among other things. In contrast, NFTs are published on the blockchain, meaning their content is publicly displayed on a decentralized, immutable digital ledger.