USPTO and United States Copyright Office to Conduct Joint Study on Intellectual Property Rights and Policy Issues Related to NFTs | Skadden, Arps, Slate, Meagher & Flom LLP

On November 23, 2022, the US Patent and Trademark Office (USPTO) and the US Copyright Office issued a Federal Register Notice (Notice) announcing the offices’ joint study of intellectual property rights (IP) issues related to non-fungible tokens (NFTs). In connection with the joint study, the USPTO and the Copyright Office are seeking public comment and will host three public roundtable meetings over the next two months.

Public comment

According to the announcement, the USPTO and the Copyright Office would like all comments during the public comment period regarding IP issues related to NFTs. In addition, the announcement lists a number of targeted topics and questions that are of particular interest to the two offices. Such topics and questions usually relate to:

• IP challenges or opportunities presented by NFTs and NFT-related markets;
• information on whether current IP laws are adequate to protect and enforce IP in the NFT context;
• information on whether, how and to what extent NFTs are used or may be used by IP rights holders; and
• any adjustments to IP portfolio planning and management due to the emergence of NFTs.

Two areas of particular note concern issues surrounding (i) whether any license rights and restrictions attached to an NFT “travel” with that NFT upon subsequent sale or transfer and (ii) NFT royalty payments. While the proposed public comment topics and questions do not directly address the first issue, a number of the listed topics and questions generally address the challenges IP licensees may face when attempting to communicate license terms to prospective purchasers. In addition, the payment of royalties on primary and secondary sales of NFTs has been an area of ​​increased focus within the NFTs sector, as an increasing number of marketplaces have either stopped complying with NFTs royalty payment requirements or have reconsidered their approach to issuance. In that regard, one of the proposed topics for comment regarding IP rights holders is specifically “overall control and management of their IP rights (e.g., digital rights management tools, mechanisms to facilitate the payment of royalties, etc.)

To promote consistency among responses, the USPTO and Copyright Office provide Merriam Webster’s definition for the term “NFT”: “a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded on a blockchain, and that is used to certify the authenticity and ownership (as of a specific digital asset and specific rights associated with it).”¹ The Offices make clear that, for the proposed public comment questions, the use of “NFT” should be read in accordance with this definition, and accordingly the term “NFT” refers to the unique identifier and not the underlying asset. To the extent commenters prefer to use a different definition of “NFT” when submitting their response, they may do so, provided they state their preferred definition and explain how it is relevant to their response.

The entire list of topics and questions can be found here.² Comments must be received through the federal eRulemaking portal by 11:59 PM ET on January 9, 2023.

Public round tables

The joint study will also include the following three public roundtables in January 2023:

• “Patents and NFTs” January 10;
• “Trademarks and NFTs” January 12; and
• “Copyright and NFTs” 18 January.

Each roundtable will be conducted virtually and live streamed to members of the public who register. Video recordings and transcripts of the roundtables will be posted on the USPTO and Copyright Office websites.

The USPTO and Copyright Office state that they aim to invite panelists who have a diversity of perspectives on the designated topic for each roundtable. Requests to serve as a panelist on one or more of the roundtables must be received by email by 11:59 PM ET on December 21, 2022, but the USPTO and Copyright Office have also indicated that they may invite individuals and entities that have not submitted a request. Submission of written comments during the public comment period is not a prerequisite for acting as a panelist at a round table discussion.

Important takeaways

The notice follows a letter sent by Sens. Patrick Leahy (D-VT) and Thom Tillis (R-NC) to the USPTO and Copyright Office in June of this year, requesting that the two offices conduct a joint study to evaluate the intersection of IP and NFT by June 2023.³ While the impact of the study remains to be seen, it marks an important step in addressing IP issues related to NFTs, while highlighting the importance of public input on the subject. The study comes after a year of uptick in companies filing trademark applications for activities related to NFTs and should provide further clarity for those companies engaging in the NFT space.

Associate Shannon N. Morgan assisted in the preparation of this client notice.

_______________

1 See Study on Nonfungible Tokens and Related Intangible Legal Issues and Merriam-Webster.

2

3 See two US senators request studies of intellectual property rights related to NFTs.