Patents and Trademarks, Copyright Offices Search Commentary on NFTs

The US Patent and Trademark Office and the Copyright Office are seeking public comments in connection with a joint study they are conducting regarding “intellectual property rights and policy issues relating to non-fungible tokens (‘NFTs’).” The offices said in a recently published notice that they are seeking public comment on these matters from now until January 9 to assist in their work on “IP policy related to NFTs” – which they describe using the Merriam-Webster definition : a unique digital identifier that cannot be copied, replaced or subdivided, which is recorded in a blockchain, and which is used to certify authenticity and ownership (as of a specific digital asset and specific rights associated with it – and “in the conduct of the study .”

In the call for public comments, the USPTO and Copyright Office set 13 points (see them in full below), primarily asking commenters to list “the current use of NFTs in your field or industry, including the types of assets linked to with NFTs (e.g. digital assets, physical goods, services); and potential future applications of NFTs in your field or industry, including the types of assets that may be associated with NFTs ( e.g. digital assets, physical goods, services).” In an additional industry-specific inquiry, the Office asks: “How and to what extent copyrights, trademarks and patents are relied upon, or expected to be relied upon, in your field or industry to: (a) protect assets associated with NFTs ; (b) combat infringement related to NFT-related assets offered by third parties; and (c) ensure the availability of appropriate reuse of NFT-related assets.”

Similarly, they are also interested in how and to what extent NFTs are used by or can be used by IP rights holders to document: the authenticity of an asset; and a seller’s right to offer an asset for sale, and to transfer any relevant or necessary IP rights relating to an asset, among other things.

When looking at challenges and opportunities that come with the introduction/use of NFTs, the offices want to know about “any IP-related challenges or opportunities related to NFTs or NFT markets”, as well as “if, how and in which extent to which NFTs are used by, can be used by, or present challenges or opportunities for IP rights to: acquire rights, transfer or license rights and enforce those rights.

And in a question that will probably draw some Hermes v. Rothschild and Nike v. StockX references, the offices ask commenters to “describe any IP-related impacts they in your field or industry have experienced in connection with the actual or intended use of NFTs,” including “any legal disputes that have arisen … and the outcome of such disputes.” And beyond that, they seek comment on whether “applicable IP laws [are] sufficient to address the protection and enforcement of IP in the context of NFTs,” and if not, what are the “gaps in current IP laws” and what “legislation should be considered to address these issues.”

The questions follow an announcement by the US Copyright Office and the USPTO this summer that they confirmed they would conduct a joint effort to investigate issues related to NFTs amid growing questions – and legal disputes – centered on the new technology. The offices’ announcement in July came after Senators Patrick Leahy and Thom Tillis, who serve respectively as chairman and ranking member of the Judiciary Subcommittee on Intellectual Property, made a formal request that the two offices launch a joint initiative to help the subcommittee understand “how NFTs fit into the world of intellectual property rights,” including how those rights look today and how they may evolve in the future.

Questions for public comment

In the release on Wednesday, the office states that it “solicits comments from members of the public on any questions relevant to the subject of this study and is particularly interested in answers to the following questions.”

1. Please describe: (one) Current use of NFTs in your field or industry, including the types of assets associated with NFTs ( e.g. digital assets, physical goods, services); and (b) Potential future applications of NFTs in your field or industry, including the types of assets that may be associated with NFTs ( e.g. digital assets, physical goods, services).

2. Please describe any IP-related challenges or opportunities related to NFTs or NFT markets.

3. Please describe how NFT markets affect the production of materials subject to IP protection.

4. Please describe whether, how and to what extent NFTs are used by or may be used by IP rights holders (including those holding trademarks, patents and/or copyrights) to document: (one) The authenticity of an asset; (b) Seller’s ownership of or authority to sell an asset; (c) Seller’s authority to transfer any relevant or necessary IP rights relating to an asset; and (d) Any restrictions related to IP rights around the sale, or the buyer’s use, of an asset.

5. Please describe whether, how and to what extent NFTs pose challenges to IP licensees, or those selling assets using NFTs, with respect to the activities described in question 4 above.

6. Please describe whether, how and to what extent NFTs are used by, can be used by, or present challenges or opportunities for IP rights holders (including those holding trademarks, patents and/or copyrights) to: (one) Obtain their IP rights; (b) Transfer or license your IP rights; (c) Exercise overall control and administration of their IP rights ( e.g. digital rights management tools, mechanisms to facilitate the payment of royalties, etc.); and (d) Enforce their IP rights, including any mechanisms that may mitigate infringement or help ensure compliance with contractual terms related to the sale of an asset.

7. Please describe how and to what extent copyrights, trademarks and patents are relied upon, or expected to be relied upon, in your field or industry to: (one) Protect assets linked to NFTs; (b) Combating infringement related to NFT-related assets offered by third parties; and (c) Ensure the availability of appropriate reuse of NFT-related assets.

8. Are current IP laws adequate to address the protection and enforcement of IP in the context of NFTs? If not, please explain why, including any gaps in current IP laws, and describe any legislation you believe should be considered to address these issues.

9. Please describe any IP-related impacts that those in your field or industry have experienced in connection with the actual or intended use of NFTs. Where relevant, please describe any legal disputes that have arisen in the following contexts and the outcome of such disputes, including references to relevant legal proceedings: (one) The relationship between the transfer of an NFT and the ownership of IP rights in the associated asset; (b) Licensing of IP rights in the asset associated with an NFT; (c) Infringement claims when either: (i) an NFT is linked to an asset in which another party has IP rights, or (ii) IP rights in the asset linked to an NFT are owned by the NFT creator; (d) The type and/or extent of IP protection granted to the NFT creator, including when that party is not the creator of the associated asset; and (e) The application of one or more of the exclusive rights under 17 USC 106 to transactions involving NFTs.

10. Please describe any instances you have observed where a party has sent or received: (one) A notice of alleged copyright infringement, counter-notice, or material misrepresentation, pursuant to 17 USC 512, in connection with an NFT; and (b) Other IP-related legal claims seeking the removal or restoration of NFT-related material.

For each such case, please describe the nature and outcome of that claim or process, including whether the material was ultimately removed and, if so, whether the material subsequently reappeared. If a violation or 17 USC 512(f) action was filed, please provide citations to the court docket and any relevant judicial decisions.

11. Please describe the extent to which adjustments are being made to IP portfolio planning and management in light of the rise of NFTs.

12. Describe any experiences with seeking IP protection for, or use of, assets related to NFTs in foreign jurisdictions.

1. 3. Please identify any additional IP issues related to NFTs that you believe the Office should consider in conducting this study.