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

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NFTs – unique, non-fungible tokens created in relation to specific digital assets – have attracted a lot of attention recently, but in reality, they have been around since 2014. The one-time fringe movement broke into the mainstream in 2021 as NFTs now translate into money. For example, many years ago CryptoPunks NFTs were released for free, but by 2021, some were selling for more than $ 10 million each. In another milestone, Beeple (known in the physical world as Mike Winkleman) sold the name NFT. Daily: First 5,000 days Christie’s grossed 69 million last year, making her the world’s third most expensive live artist. And this is just the beginning.

Like any growing space involving big names and big money, nefarious opportunists gravitate. In a remarkably short time, fake NFTs have come out, deceiving many unsuspecting consumers and alienating the intellectual property of brands and artists alike.

Brands and the growing NFT violation problem

Companies and individuals are still trying to figure out how to use NFTs to promote their brand. After years of being dismissed as inconsistent, the current pace behind NFTs has taken many by surprise. The effect has been that someone else is profiting from their assets, such as the case of Hermes with a Birkin bag or Nike’s fight with StockX, and many NFT buyers have no idea what is “real” or in the case of a brand, what is approved by that brand or Has been approved.

Some companies have sued NFT makers to prevent their brand from being co-opted, and more are guaranteed to follow, but today there is no clear legal precedent to crack down on counterfeiters or those who infringe the brand’s intellectual property. The only immediate solution is to request the removal of infringing NFTs from the marketplace so that they cannot be sold – and this is very difficult to do because it means that brands will have to track hundreds, if not thousands, of NFTs that violate their IP rights. Can. Most organizations have no way of overseeing all the NFTs that are created and sold every day – it’s a huge ecosystem. Because of this, “bad” NFTs are taking over.

Leading NFT marketplace OpenCy recently announced that at least 80% of the NFTs it hosts were “certain works, fake collections and spam.” While OpenSea is trying to reduce the severity of the problem, it is only able to take action against 3,500 NFT collections per week or about 0.175 percent of its 2 million total collections. Not even a drop in this bucket. And when bad NFTs run rampant, they can effectively undermine control over a person or brand’s image, assets, and overall value.

Types of NFT intellectual property infringement

Intellectual property is being violated in many ways in the NFT landscape today. Here are some of the most common:

  • Fake NFTs: If a brand mints its own NFTs, it is likely that others will issue further. Same NFTs to confuse customers and take advantage of false creations. Given that this is most likely to happen in the consolidation space, it is important for legitimate NFT projects to consider how consumers can gain confidence that they are buying the real thing.
  • Infringing NFTs including copyrighted work: The brand will not be able to produce its own NFT, in which case the infringer may create a copyright infringement and then offer it for sale to create an NFT. In this case, the rights owner may ask the trading platform to remove the NFT from the sale, as a violation.

Platforms such as Opensea and Rarible state that they comply with laws such as copyright, money laundering and fraud. In this case, they would remove NFT from their platform but NFT would still exist on the blockchain and could be traded elsewhere.

  • Fake and replica NFT stores: By imitating legitimate NFT trading platforms such as OpenSea and Rarible, buyers may be tricked into giving away their personal information and potentially funded platforms that look exactly like the well-known and legitimate platforms. Controversy continues with these platforms hunting down unsuspecting people eager to buy their first NFTs.
  • Hypocrisy: In early 2021, Banksy-style NFTs sold for $ 900,000. Given Banksy’s anonymity, buyers weren’t sure if this was a real Banksy or someone pretending to be. It turned out to be the latter. Domain names such as and were registered, which could lead to more scams in the future.

What can be done

Unfortunately, we have just reached the top of the iceberg. It is extremely difficult to prevent an NFT creator from stealing or copying the work of another NFT creator, although NFT creation does not automatically protect the work in any meaningful way. Likewise, there are currently no laws specifically dedicated to NFTs, so there is no legal presumption to close until cases like Hermes’ and Nike’s are settled.

There is also the question of ownership. Suppose an artist working on a Marvel movie or a Star Wars creation turned some of his work into NFT. The artist created it, but neither MCU nor Disney will likely favor such a move. The artist may be sued for copyright infringement. But, again, copyright infringement can be obscure in the NFT world; The law is not ready to deal with NFTs. In order to reciprocate, companies have to change how they work. In the very distant future, for example, expect an employment agreement to be developed to clearly define who can do what in terms of the development and sale of NFTs and who owns certain digital assets and intellectual property rights.

Outside of such contracts, brands can use new, emerging platforms that use AI to detect fake NFTs. These systems analyze text and images to find the most minute resemblance of their copyrighted works to digital work. Such platforms allow brands to quickly and easily review NFT listings across a wide range of marketplaces to identify violators of their rights. Equipped with quality data, infringing listings can be removed before an unsuspecting consumer attempts to purchase a fake NFT.

In addition, brands should communicate with consumers so that they know exactly where to buy one of their NFTs. By restricting distribution on certain sites, artists and brands maintain some similarity of control. This becomes a little difficult if the NFT buyer later decides that he wants to sell or trade the infringing property.

NFT space is evolving rapidly, and as you can see, it is maturing with complexities. As more regulation, guidance and security is put in place, artists, collectors and brands will be able to enjoy this new medium unexpectedly. It may take only a little bit of increasing pain to get there.

Mark Lee is the CEO and founder of MarkVision,


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