The US Copyright Office and the US Patent and Trademark Office (USPTO) have announced that they will collaborate on a joint study of intellectual property rights (IP) issues related to non-fungible tokens (NFT). This study was requested by Senators Patrick Leahy and Thom Tillis in June. An NFT is not in itself a form of IP under current law. It is a blockchain token that can be used to represent ownership of something like a piece of art. Merriam-Webster defines “NFT” as “a unique digital identifier that cannot be copied, replaced, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership (as of a specific digital asset and specific rights attached to it)» An NFT is thus similar to a receipt, and NFTs can be bought and sold. A work of art to which an NFT relates may be protected under IP legislation, but is a separate and distinct legal object. As Coindesk explained,
Jack Dorsey sold his first ever tweet as an NFT to a buyer named Sina Estavi. While Estavi owns the non-fungible token associated with the tweet, Dorsey retains the copyright, meaning Estavi cannot print the tweet on T-shirts or sell other merchandise without Dorsey’s permission.
Also,
if an NFT project does not specify its IP license, it is safest for a buyer to assume that they do not own the intellectual property rights and that their use of the NFT is limited to personal use only. Under a personal license, buyers may only use the NFT artwork for non-commercial purposes. For example, a collector can use NFT as their profile picture on social media or display the art in their home using a digital frame. But holders cannot use their assets to make money, such as selling prints of the artwork or using the artwork to create a spin-off book series.
NFTs first appeared in 2015 and became particularly popular in 2021 – and very lucrative for some. As the New York Times reported in March 2021,
Artist Mike Winkelmann, also known as Beeple, has just sold an NFT for a record $69.3 million, the third highest price achieved by a living artist. The sale, at Christie’s, of the purely digital work was the strongest indication yet that NFTs, or “non-fungible tokens”, have taken the art market by storm, making the leap from specialist websites to the top auction houses. Beeple, a newcomer to the art world who first heard about NFTs five months ago, is the most high-profile artist to cash in on the huge boom in sales of these much-hyped but poorly understood items.
NFT prices are highly volatile. The value of the NFT market grew by 299 percent in 2020, when it was valued at over $250 million. But as Bloomberg noted in September, the NFT market’s trading volume fell 97% from its peak in January. As Decrypt recently reported,
Crypto prices are down across the board this week due to news of FTX’s liquidity crisis and alleged mismanagement of client funds – and the market turmoil may extend into the NFT world as well. Popular Ethereum project Bored Ape Yacht Club is seeing declining prices as ETH falls and owners potentially panic sell their valuable NFTs. According to NFT Price Floor data, the cheapest available Bored Ape Yacht Club NFT on the market (ie the “floor price”) is listed for 57.5 ETH at the time of writing, or approximately $76,400. Measured in ETH, that’s a drop of 7% in the last 24 hours. But in USD terms, given the declining value of ETH (which is down 13% this week), it has fallen almost 24% in the last 24 hours.
The USPTO/Copyright Office notice seeks written responses from the public to various questions about NFTs, such as:
1. Please describe: a. Current use of NFTs in your field or industry, including the types of assets associated with NFTs (eg digital assets, physical goods, services); and b. Potential future applications of NFTs in your field or industry, including types of assets that may be associated with NFTs (eg digital assets, physical goods, services). 2. Describe any IP-related challenges or opportunities related to NFTs or NFT markets. 3. Describe how NFT markets affect the production of materials subject to IP protection.
Comments must be received by January 9, 2023. As the Federal Register explains,
comments must be submitted through the Federal eRulemaking Portal at www.regulations.gov. To submit comments through the portal, enter docket number PTO–C–2022–0035 on the home page and click “Search.” The site will provide a search results page that lists all documents associated with this docket. Find a reference to this request for information and click the ”Comment Now!” icon, complete the required fields and type or attach your comments. Attachments to electronic comments will be accepted in ADOBE® portable document format (PDF) or MICROSOFT WORD® format. Because comments will be posted for public review, information that the submitter does not wish to be made public, such as address or telephone number, should not be included.
The Copyright Office and the USPTO also plan to hold live online public roundtables on the issue in January, on the following dates:
• Patents: Tuesday, January 10, 2023 • Trademarks: Thursday, January 12, 2023 • Copyright: Wednesday, January 18, 2023
As the Copyright Office notes,
Members of the public interested in participating as panelists in one or more of the roundtable sessions may submit a request to do so by email to [email protected] This request must include name, professional affiliation and contact information and indicate the roundtables they wish to speak at. Requests must be received by 21 December 2022.
Additional information about these roundtables and instructions for registering to view them will be posted on joint-study-intellectual-property-rightsand-non-fungible-tokens. Additional information about the Copyright Roundtables and instructions for registering to view it will be posted on the Roundtables will also be videotaped and transcribed, and copies of the recordings and transcripts will be available on the above-mentioned USPTO and Copyright Office websites. More details are in the Federal Register.
