NFTs Present Opportunities and Challenges for IP Rights Holders | PRO Insight

Bobby Ghajar and Marcus Peterson
·1-min read

Non-Fungible Tokens (“NFTs”) are a relatively recent technology garnering significant attention as a way for copyright and trademark owners to exploit and protect their rights. While developed several years ago, interest in NFTs has increased in just the past few weeks as big names make splashy transactions for millions of dollars using NFTs. But as with any new technology, its adoption raises several questions that implicate intellectual property rights. What Are NFTs? NFTs are based on blockchain technology, like cryptocurrency (e.g., Bitcoin), that allow users to buy, sell and trade them completely digitally. Like cryptocurrency, information about the ownership of the NFT is stored on the blockchain, making it nearly impossible to create counterfeits or to illicitly transfer NFTs outside of approved exchanges. Unlike cryptocurrency, though, each NFT is unique, is not interchangeable, and rises or falls in value independently of each other. They are thus seen more as collectibles. Because each is unique, they can derive value based on digital scarcity, as well as proof of ownership and authenticity. NFTs were first developed in 2017 and saw early use in collectible digital art and online video games. In gaming, the game publisher could reward players with unique prizes, in-game...

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