The rise of NFTs and brands’ quests to protect their intellectual properties

NFT — Unique and irreplaceable tokens created in connection with certain digital assets — have received a lot of attention lately, but in reality they have been around since around 2014. Due to NFT, the former fringe movement became mainstream in 2021. Convert to money now. For example, the CryptoPunks NFT was released for free a few years ago, but by 2021, some had sold for over $ 10 million each. At another milestone, Beeple (known in the physical world as Mike Winkelmann) Daily: First 5,000 days Christie’s became the world’s third most expensive living artist for a whopping $ 69 million last year. And this is just the beginning.

Malicious opportunists are attracted, as are the fast-growing spaces that include big names and big money. In a very short time, Counterfeit NFT It has ridiculed many unprotected consumers and has begun to use the intellectual property of brands and artists as well.

Brand and expanding NFT infringement issues

Companies and individuals are looking for ways to promote their brands using NFTs. The current momentum behind NFTs has surprised many after being dismissed as trivial for years. As a result, someone else is profiting from their assets, such as the Hermes Birkin bag or the fight against Nike’s StockX, and many NFT buyers understand what it’s like to be “real” or branded. I have not. , Approved or approved by the brand.

Some companies have filed proceedings to protect their brands from being adopted by NFT creators, and while it is certain that more will follow, today they infringe on counterfeiters and the intellectual property of their brands. There is no clear legal precedent to crack down on a person. The only immediate measure is to remove the infringing NFT from the market so that it cannot be sold. This is very difficult to do because it requires tracking hundreds, if not thousands, of NFTs that the brand may be infringing on IP rights. Most organizations have no way to monitor all NFTs created and sold daily. This is a large ecosystem. For this reason, the “bad” NFT is taking over.

Recent major NFT marketplaces OpenSea announcement At least 80% of the NFTs it hosts were “plagiarized works, fake collections, spam.”in the meantime High seas Is trying to minimize the severity of the problem, but was able to enforce only 3,500 NFT collections each week, or about 0.175% of the 2 million collections. This is not even a drop in a bucket. And when bad NFTs are rampant, they can effectively weaken personal or brand control over their image, assets, and overall value.

Types of NFT Intellectual Property Infringement

In today’s NFT situation, there are several ways in which intellectual property is being compromised. The most common ones are:

• Counterfeit NFT: If a brand creates its own NFT, other brands may consider issuing more. Same NFTs to confuse consumers and benefit from false creations. Given that this is most likely to occur in the field of collectibles, consider how a legitimate NFT project can give consumers confidence that they are buying the real thing. Is important.

• Infringing copyrights, including copyrighted works NFT: Brands cannot create their own NFTs. In that case, the infringer can create an infringing work, create an NFT, and sell it. In this case, the rights owner can ask the trading platform to remove the NFT from the sale as an infringement.

Platforms like Opensea and Rarible say they comply with laws such as copyright, money laundering, and fraud. In this case, we will remove the NFT from the platform, but the NFT will be on the blockchain and may be traded elsewhere.

• Fake and replica NFT stores: Copying legitimate NFT trading platforms such as OpenSea and Rarible can trick buyers into providing personal information and potentially funding to platforms that look exactly like well-known and legitimate platforms. .. The downside is that they are eager to buy the first NFT on these platforms that prey on unsuspecting people.

• Impersonation: In early 2021, Banksy-style NFTs sold for $ 900,000. Given Banksy’s anonymity, buyers didn’t know if this was real Banksy or someone impersonating him. It turned out to be the latter.The domain name was registered as follows bankynft.com When bankynfts.comCreates the possibility of further fraud in the future.

What can you do

Unfortunately, I just hit the tip of the iceberg. It is very difficult to prevent one NFT author from stealing or forging the work of another NFT author, as creating an NFT does not automatically protect the work in a meaningful way. Similarly, there are currently no NFT-specific laws, so there is no legal precedent to crack down on cases like Hermes and Nike until they are resolved.

There is also the issue of ownership. Suppose an artist working on a Marvel movie or a Star Wars movie turns part of it into an NFT. Created by the artist, MCUs and Disney will not be kind to such movements. Artists are very likely to be slapped in copyright infringement proceedings. But again, piracy can be ambiguous in the NFT world. The law is not ready to deal with NFTs. To counter that, businesses may have to change the way they work. For example, in the not too distant future, employment contracts may evolve to clearly explain who can do what with respect to the development and sale of NFTs, and who owns the rights to specific digital and intellectual property. Expected.

Other than such contracts, brands can take advantage of a new new platform that uses AI to find fake NFTs. These systems analyze text and images to find even the finest similarities in copyrighted works of digital works. Such platforms allow brands to quickly and easily review NFT lists in a wide range of markets to identify infringing ones. With quality data, unsuspecting consumers can remove the infringing list before trying to buy a counterfeit NFT.

In addition, brands need to communicate with consumers and know exactly where to buy one of the NFTs. By limiting distribution to specific sites, artists and brands maintain some degree of management similarity. If the NFT buyer later decides that he wants to sell or trade the infringing asset, he should be a little careful.

NFT spaces are evolving rapidly, and as you can see, they are full of complexity. With more regulations, guidance and protection in place, artists, collectors and brands will be able to enjoy this new media in unexpected ways. You may need growing pain to get there.

Mark Lee is the CEO and founder of Marq Vision...