If we had told you 20 years ago that a personal post on your social media could be worth millions of Euros, you would’ve thought we were crazy! Fast forward to October 2021 and that craziness became reality with an NFT of the very first Tweet posted by Twitter co‑founder Jack Dorsey being sold for a staggering $2.9 million¹.
However, NFTs are not so new. In fact, they have been around since the early 2010s, but they only started gaining popularity in the crypto community in 2017 when a company, Dapper Labs, started selling NFTs linked to unique digital cat cartoons known as CryptoKitties and people couldn’t get enough of the cute digital little kitties.
Since then, NFTs have steadily grown in popularity, challenging our perception of art, fashion, reality, ownership, and intellectual property rights. More recently, we have seen record prices being reached for NFTs linked to various assets. In addition to Jack Dorsey’s Tweet, a couple of the most well-known ones include:
- Beeple’s digital art work, Everydays: The First 5,000 Days sold for a record US$69 million by Christie’s auction house.
- NBA Top Shot crossed the US$500 million mark, making it the biggest NFT marketplace as at the date of publication.
- One purchase of a second Bored Ape by Bieber was bought for $470 million2.
With some of the big brands tentatively exploring the opportunities offered by the digital space, we explore whether NFTs present new opportunities or more threats for brands in the future?
What is an NFT?
Let’s start with the basics – what is an NFT?
NFT stands for “non-fungible token” and is a unique digital item stored on a public digital ledger (a blockchain), which provides a certificate of ownership to a particular individual.
They are digital assets that represent real-world objects like art, music, in-game items and videos. NFTs are composed of software code in the form of a so-called “smart contract”. It is the smart contract that contains details of the underlying digital or physical asset(s) to which the NFT relates, and also the rules and rights that attach to the NFT (for example, a rule that the original creator of the NFT gets paid a percentage of any subsequent resale value).
The value in an NFT is derived from it being “non-fungible”, meaning that the token cannot be replaced with an identical token (giving its inherent scarcity). This is also the reason why they are often viewed as digital investments and not just internet memorabilia.
What does that mean for me as a brand owner?
With all the opportunities that NFTs present for a brand owner, there is also the inevitable opportunity for misuse of a brand owner’s intellectual property (IP) rights through minting of unauthorised NFTs.
Opportunities:
With the digital landscape evolving at a fast pace and the arrival of the metaverse, NFTs offer an opportunity to strengthen brand recognition on channels where many brands typically had no significant presence. As such, NFTs can provide another tool for brands to interact with the next generation of consumers as well as the opportunity to monetise a company’s IP.
Threats:
However, there is a growing market of unauthorised or counterfeit NFTs, with creators simply copying the IP of brands, artists, and/or celebrities. If left unchecked, unauthorised NFTs can quickly cause irreparable damage to a brand’s image, reputation, and status. In addition, the anonymity of sellers can also easily mislead consumers into purchasing these unauthorised NFTs.
Lastly, such threats are heightened by the fact that many NFT platforms have not established formal policies to prevent these trademark and copyright abuses, giving bad actors almost free reign to do as they wish.
What can brand owners do to enforce their IP rights in this space?
While this is still fairly new territory for brand owners, there are certain steps that a business can take to monitor and enforce its intellectual property rights on this new playground. These include:
- Register & extend the protection of trademarks and designs to cover virtual / NFT products and services (e.g. in classes 9, 35 and 41)
- Ensure any licensing agreement sufficiently protects your trademarks & copyrights in the virtual world
- Register & monitor blockchain names with extensions related to the metaverse or similar to your brand
- Monitor the use of your brands by third parties on virtual platforms
- Train staff that unlicensed use of IP – be that in an NFT or otherwise – is not permitted.
Our infographic nicely summarises the over-arching topics that we’ve discussed here today. Click on the image to view it in a larger format.
BRANDIT is looking into this topic with great interest and will be exploring our own options in this space (e.g., buying land, NFTS) in order to educate brand owners on these risks and opportunities.
In the meantime, if you would like to learn more about how we can protect your brand from unauthorised NFTs, please contact one of our experts here.
1) https://www.cnbc.com/2021/03/22/twitter-ceo-jack-dorseys-first-tweet-nft-sells-for-2point9-million.html
2) https://cryptopotato.com/justin-bieber-buys-another-bored-ape-nft-pays-470k-worth-of-eth/
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