Non-fungible tokens (NFT) are units of data stored on a digital ledger or blockchain. This unit of data can represent a real-world object, like a piece of art or video. The owner of the NFT can then trade or sell it, similar to how one would handle a tangible item.
Will concerns about intellectual property violations and NFTs be an issue?
They already are. Two new lawsuits are trying to figure out the tricky legal issue of trademark protections when it comes to the use of NFTs.
But how does the owner protect their interests in these tokens? That’s a question that both Nike and Hermes are trying to figure out in the courts in two cases that involve allegations a competitor made a digital version of a trademark protected item. Nike has accused StockX of making digital versions of its trademark protected shoes and Hermes has filed suit against Rothschild for allegedly misappropriating its iconic Birkin bags. In the Hermes example the group claims Rothschild made an NFT that has the Birkin’s likeness and sells this NFT as a “MetaBirkin.”
How can companies protect their interests when dealing with new tech like NFTs?
The first option is often a cease-and-desist letter. This was the path Hermes chose when it sent Rothschild a cease and desist. It proved fairly successful, as Rothschild has since removed the MetaBirkin from its offerings.
The second, highlighted by the Nike case, is more aggressive. In that case Nike and StockX have taken their case to court, with StockX arguing their digital appropriation of Nike merchandise falls into the category of “fair use” and is thus legally permissible.
What’s a business owner to do?
Like any other form of intellectual property, it is a good idea to make sure to file for protections with the United States Patent and Trademark Protection Office (USPTO). Without registration, it is difficult to fight back against a competitor that attempts to steal your IP.