The Rise of NFTs and Brands’ Quest to Protect Their Intellectual Property

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NFTs – unique, non-functioning tokens created in relation to a specific digital asset – have attracted a lot of attention lately, but in reality they have been around since about 2014. The once fringe movement burst into the mainstream in 2021. because NFTs now translate into money. For example, CryptoPunks NFTs were released for free several years ago, but by 2021 some were selling for over $10 million each. In another milestone, Beeple (known in the physical world as Mike Winkelmann) last year sold an NFT called Everydays: The First 5,000 Days by Christie’s for a whopping $69 million, making him the third most expensive living artist in the world. And this is just the beginning.

As with any fast-growing space that involves big names and a lot of money, nefarious opportunists are attracted. In a remarkably short time, fake NFTs have sprung up, tricking many unsuspecting consumers and cashing in on the intellectual property of both brands and artists.

Brands and the Growing NFT Infringement Problem

Businesses and individuals are still trying to figure out how to use NFTs to promote their brands. After years of being dismissed as unimportant, the current momentum behind NFTs surprised a number of people. The effect is that someone else takes advantage of their assets, as in the case of Hermes with a Birkin bag or Nike’s battle with StockX, and many NFT buyers don’t realize what “real” is, or in the case of a brand, what is sanctioned or approved by that brand.

Several companies have filed lawsuits to protect their brands from co-opting by NFT creators, and more are sure to follow, but today there is no clear legal precedent against counterfeiters or those who infringe a brand’s intellectual property. to grab. The only immediate option is to request removal of infringing NFTs from marketplaces so they can’t be sold – and this is very difficult to do as it means brands have to track hundreds, if not thousands, of NFTs that may be infringing on their rights. IP rights. Most organizations have no way of monitoring all the NFTs that are made and sold every day – it’s a huge ecosystem. This makes “bad” NFTs take over.

Leading NFT marketplace OpenSea recently announced that at least 80% of the NFTs it hosts “were pirated works, fake collections, and spam.” While OpenSea tries to minimize the severity of the problem, it has only been able to enforce enforcement against 3,500 NFT collections each week, or about 0.175 percent of the 2 million total collections. This is not even a drop in the ocean. And when bad NFTs run rampant, they can effectively weaken a person’s or brand’s control over their image, assets, and overall value.

Types of NFT Intellectual Property Infringement

There are a number of ways in which intellectual property is being infringed in the NFT landscape today. Here are some of the most common:

Counterfeit NFTs: If one brand makes its own NFTs, others are likely to want to issue more identical NFTs to confuse consumers and take advantage of fake creations. Since this is likely to happen most often in the collectibles realm, it is important for legitimate NFT projects to consider how consumers can gain the confidence that they are buying the real thing. NFTs, in which case an infringer could create a copyright-infringing work and then create an NFT and offer it for sale. In this case, the rights owner can ask the trading venue to remove the NFT from the sale, as an infringement.

Platforms such as Opensea and Rarible indicate that they comply with laws such as copyright, money laundering and fraud. In this case, they will remove the NFT from their platform, but the NFT will continue to exist on the blockchain and can be traded elsewhere.

Fake and Replica NFT Stores: By copying legit NFT trading platforms like OpenSea and Rarible, buyers can be tricked into giving their personal information and possibly money to a platform that looks exactly like a known and legit platform. The scam is underway, with these platforms preying on unsuspecting people eager to buy their first NFTs. Impersonation: In early 2021, Banksy-style NFTs were selling for $900,000. Given Banksy’s anonymity, buyers weren’t sure if this was the real Banksy or someone impersonating him. It turned out to be the latter. Domain names such as and were registered, enabling further scams in the future.

What can be done

Unfortunately, we have only reached the tip of the iceberg. Preventing one NFT creator from plagiarizing or falsifying another NFT creator’s work is incredibly difficult, as NFT creation does not automatically protect the work in a meaningful way. Likewise, there are currently no laws specifically dedicated to NFTs, so until things like Hermes and Nike’s are settled, there’s no legal precedent to stop.

There is also the matter of ownership. Suppose an artist working on a Marvel movie or a Star Wars creation turned some of their work into an NFT. The artist made it, but the MCU or Disney probably wouldn’t approve of such a move. The artist would most likely be hit with a copyright infringement lawsuit. But again, copyright infringement can be vague in the NFT world; the law is unwilling to deal with NFTs. To counter this, companies may need to change the way they work. For example, in the not too distant future, expect employment contracts to evolve to explicitly describe who can do what in terms of developing and selling an NFT and who owns the rights to specific digital assets and intellectual property.

Outside of such contracts, brands can take advantage of new, emerging platforms that use AI to spot fake NFTs. These systems analyze text and images to discover even the slightest resemblance of their copyrighted works to the digital work. Such platforms give brands the chance to quickly and easily view NFT listings on a wide variety of marketplaces to identify those violating their rights. Armed with quality data, infringing listings can be removed before an unsuspecting consumer tries to buy a counterfeit NFT.

In addition, brands need to communicate with consumers to let them know exactly where to buy one of their NFTs. By restricting distribution to certain sites, artists and brands maintain some semblance of control. It just gets a little tricky if an NFT buyer later decides that he or she wants to sell or trade that infringing asset.

The NFT space is evolving rapidly and as you can see it is full of complexities. As more regulation, guidance and protection is introduced, artists, collectors and brands will be able to enjoy this new medium in unexpected ways. It may just take some growing pains to get there.

Mark Lee is the CEO and founder of MarqVision.

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