Back in 2022, the Senate requested the U.S. Copyright Office and the United States Patent and Trademark Office (USPTO) conduct a joint study to determine if the current intellectual property laws needed updating to address non-fungible tokens (NFTs). The resulting joint report looking into the legal framework has just been released.
As background, NFTs serve as digital certificates of authenticity. They can confer ownership of a collectible (such as art, music, sneakers, baseball cards, etc.) and the chain of title is preserved on the blockchain. This means tracking and authenticating collectible goods is streamlined. This is especially valuable to artists who can possibly make a profit each time the NFT is transferred from one buyer to another and mitigates the risk of counterfeit goods.
While these are positive outcomes of NFTs, the Copyright Office
and USPTO note in their study that there is "widespread
concern that NFT buyers and sellers do not know what IP rights are
implicated in the creation, marketing and transfer of NFTs and that
NFTs may be used to facilitate copyright or trademark
infringement." With the decentralized nature of blockchain
networks, it's difficult for IP owners to enforce their rights
if misused in the metaverse. The report continues stating,
"While some individual NFT platforms have developed protocols
to help trademark owners enforce their rights, there is no
centralized authority that requires all platforms to do so.
...There are also no cross-platform mechanisms to allow trademark
owners to identify and take down infringing content, settle
trademark-related disputes involving blockchain-based domain names,
or confirm that sellers own the trademark rights associated with
the assets they offer."
Despite raising these concerns, the study finds that the current
intellectual property laws are sufficient to respond to these
issues. In other words, NFTs may be helpful from a perspective of
authentication and managing the chain of title for collectible
goods, but they may also pose challenges for IP owners in
enforcement actions due to their decentralized nature.
The non-fungible token (NFT) bubble burst quite some time ago, but the US Government has only just published a report looking into the surrounding legal framework. The study, carried out jointly by the US Copyright Office (USCO) and the Patent and Trademark Office (USPTO) following a 2022 request by the Senate, determined that current intellectual property laws are robust enough to deal with copyright or trademark infringement in NFTs. The agencies also determined that although there are some benefits to the tokens, "trademark infringement and misuse is prevalent on NFT marketplaces."
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