How brands are protecting their intellectual property in the face of the rise of NFTs

While NFTs have already demonstrated their usefulness for certain brands, their growth also leads to abuses in respect of intellectual property.

As with any booming industry, whenever big names and big money are at stake, bad opportunists flood in. In an extremely short period of time, NFT counterfeits have emerged, luring many unsuspecting consumers and profiting from the intellectual property of brands and artists.

Brands face the growing problem of counterfeit NFTs

Many companies and artists are still trying to figure out how to use NFTs to promote their brand image. However, the current dynamics of NFTs have taken major brands by surprise. As a result, it is others who benefit from their wealth. Many NFT buyers are unaware of what is “real”, that is, in the case of a brand, what is certified or endorsed by the brand.

Several companies have already filed lawsuits in an attempt to protect their brands from being co-opted by NFT creators, and many more are sure to follow. However, today there is no clear case law that makes it possible to take measures against counterfeiters or, in general, those who violate intellectual property of a brand. The only immediate remedy is to require the offending NFTs to be removed from the markets to prevent their sale; a very difficult outcome to achieve as brands find themselves forced to monitor hundreds or even thousands of NFTs that may infringe their intellectual property rights.

Most companies cannot afford to monitor all NFTs created and sold on a daily basis as this represents a massive ecosystem. This is why “fake” NFTs are taking over. And when they spread, they can have the effect of weakening a person’s or a brand’s control over its image, assets and overall value.

Types of intellectual property infringement of NFTs

There are different ways to infringe on IP in the NFT landscape today. Among the most common:

  • Counterfeit NFTs: If a brand produces its own NFTs, it is likely that third parties will seek to issue other identical tokens to confuse consumers and profit from the creation of these counterfeits.
  • Infringing NFTs applicable to a work: Even in the event that a brand does not produce its own NFTs, an infringer can create an infringing work, then create an NFT and put it up for sale on a trading platform. The rights holder may ask the platform to withdraw this NFT from sale, accusing it of infringement. But even if the platform removed the NFT in question, it would still exist on the blockchain and could be traded elsewhere.
  • Fake and Copy NFT Stores: On sites that mimic legitimate NFT exchanges, buyers can be tricked into sharing their personal information and potentially paying funds into a perfect copy of a reputable marketplace. It’s a scam, preying on unsuspecting victims who are quick to buy their first NFTs.
  • Identity theft: this is the case, for example, with artists who work under the cover of anonymity or who receive little media coverage. Then it is difficult for buyers to know whether it is the real artist or a fraud. In addition, if the works are offered on fake sites whose registered domain names include the name of the artist.

A practice to oversee

It is therefore extremely difficult to prevent an NFT creator from plagiarizing or infringing on another’s work, as the creation of an NFT does not automatically and substantially protect it. As no specific legislation currently governs NFTs, until the cases are adjudicated, there will be no case law to address this.

There is also the issue of ownership. However, the notion of copyright infringement can be ambiguous in the world of NFTs, for which legislation is not ready. To address this, companies may need to change the way they do business. In the near future, expect employment contracts to evolve to explicitly specify who can do what in terms of developing and selling an NFT and who owns the rights to specific digital assets as well as intellectual property. .

In addition to contracts of this type, brands can use new emerging platforms that use AI to spot fake NFTs. These systems analyze text and images to detect even the slightest similarity between copyrighted works and a digital work. These platforms give brands the ability to quickly and easily review NFT catalogs across a wide range of markets to identify infringers. With good data, counterfeit NFTs can be removed before an overly gullible consumer tries to purchase them.

Additionally, brands can communicate with consumers to let them know exactly where they can purchase one of their NFTs. By limiting distribution to certain sites, artists and brands maintain a means of control. The problem becomes more complex if an NFT buyer later decides to sell or trade a counterfeit.

The world of NFTs is changing rapidly and, as we can see, it is full of new complexities. With more regulations, guidelines and protections in place, artists, collectors and brands will be able to reap the unprecedented benefits of this new medium.

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