US copyright and trademark offices release a joint study on NFT impact on IP rights

As interest in nonfungible tokens (NFTs) grows, the United States Patent and Trademark Office and the United States Copyright Office plan to undertake a study into their impact on intellectual property rights.

The investigation of NFTs follows a request from Senators Patrick Leahy and Thom Tillis in June for a thorough assessment of the possible implications of the emerging asset class for intellectual property rights.

The two departments have agreed to conduct the study in collaboration with Leahy and Tillis, holding early conversations to develop a strategy that will include consultations with various stakeholders knowledgeable about the NFT ecosystem.

Senators Thom Tillis (R-NC) and Patrick Leahy (D-VT) had urged that the USPTO and Copyright Office collaborate on the investigation last month. The two senators, who are the highest-ranking members of the Senate’s intellectual property subcommittee, have asked the two agencies to investigate how IP rights connected to NFTs already exist and how they are expected to evolve in the future. They suggested that the two organisations conduct the study by July 2023.

Among the questions posed by the two legislators were:

  • How do transfers of rights apply? How does the transfer of an NFT impact the IP rights in the associated asset?
  • How do licensing rights apply? Can and how can IP rights in the associated asset be licensed in an NFT context?
  • What intellectual property protection can be afforded? What IP protection can be afforded to the NFT creator? What if the NFT creator is a different person or entity from the creator of the associated asset?

The two offices have officially verified that the study will be conducted. They also stated that they would involve additional NFT industry players as well as the two legislators.

Despite just being available (or at least in the mainstream) for a few years, NFTs have been at the centre of numerous IP-related legal quarrels. The most notable case involves Nike, the world’s largest athletic apparel manufacturer, which has been pursuing popular online sneaker reseller StockX. According to its lawsuit, the latter launched an NFT series based on Nike’s sneakers, which amounted to willfully selling counterfeits.