NFTs: A new frontier
for intellectual property
Inspire July 2022
Non-fungible Tokens (NFTs) are digital tokens on a blockchain
which may reference an asset such as a digital piece of artwork 1 .

8 NFTs have opened novel ways
for brand owners to interact with
consumers, as well as generate new
streams of revenue. The NBA has
been very successful in creating an
NFT marketplace, now valued at over
US$1 billion, where fans can buy and
sell digital collectible cards, called
‘moments’ from recent seasons 2 .

NFTs and the assets associated with
them have a complex interaction
with traditional intellectual property
law. For instance, trade mark
infringement may occur where an
NFT incorporates a sign identical or
similar to a registered trade mark.

One example of this is the recent
Hermès action against Mason
Rothschild regarding the ‘MetaBirkins’
NFTs, alleging trade mark infringement
of its famous BIRKIN mark 3 . Virtual
artworks inspired by the brand’s famous
Birkin bags were sold with prices
reaching up to 9.9 ETH (Ethereum,
worth approximately AU$53,000).

Another recent Court case in China
involved copyright infringement arising
from the creation of an NFT using a
cartoon picture from the series “Fat
Tiger” by artist Ma Qianli. The lawsuit
was filed against the company which
operates the marketplace NFTCN
where the NFT was offered for sale.

The Chinese Court ruled that NFTCN
was at fault for failing to check if
the user who created the NFT was
the owner of the artwork and held
that the marketplace contributorily
infringed the artist’s rights. The
defendant was ordered to destroy
the infringing NFT digital work by
sending it to an inaccessible address
– known as ‘burning’ the NFT.

While it is still early days for the
Court enforcement of intellectual
property rights in relation to NFTs,
there are steps that a business can
take to monitor and assert its rights
in the online world.

Keeping a watch
OpenSea, the largest NFT platform,
has admitted that more than 80% of
NFTs created for free on its platform
were either plagiarized from other
artists, or spam 4 . It is therefore
important to become familiar with
and monitor the top global NFT
marketplaces including OpenSea,
Rarible, Mintable, and AtomicHub.

Access to viewing NFTs on these
platforms is public, and monitoring
can be handled in-house.

There are also third-party platforms
that offer monitoring services. These
providers can analyse text as well
as images to spot any resemblance
with copyright works. Once
identified, infringing listings may be
removed before a consumer tries to
purchase them.

Using take down procedures
Most of the large NFT marketplaces
have take down procedures,
allowing brand owners to report
infringement of their IP rights.

Bored Ape Yacht Club NFTs have
been popular amongst celebrities
such as Paris Hilton and Jimmy
Fallon. In December 2021, two
NFT collections selling mirrored
but otherwise identical versions
of high-priced Bored Ape Yacht
Club avatars, were released by
third parties PHAYC, and Phunky
Ape Yacht Club. Soon thereafter,
both projects were banned from
OpenSea for violating its copyright
infringement rules.

It is worth noting however that
removal from one platform will not
prevent an infringer from re-listing
the same NFT on another market,
just like an advertisement de-listed
on eBay could re-appear
on AliExpress.

F or more information about what NFTs are, you can refer to our previous article:
https://www.pof.com.au/nfts-the-vapourware-of-blockchain-technology/ 2
NBA Top Shot : https://nbatopshot.com/
3 https://www.pof.com.au/perplexing-polarising-and-a-collective-delusion-nfts-are-back-in-
the-spotlight-again/ 4
https://twitter.com/opensea/status/1486843204062236676?s=20&t=xlszZIc2Qlz2m8xx9Z5FaA 5
https://www.nytimes.com/2022/05/26/style/nike-nft-sneaker.html Image source: https://www.instagram.com/metabirkins/?hl=en
Reviewing your trade mark
portfolio Brand owners should consider
extending their trademark portfolio
to cover downloadable media files
authenticated by NFTs in Class 9.

Word marks but also important
figurative marks should be protected.

A search conducted on IP Australia’s
trade mark database shows that
there are currently more than 300
pending trade marks covering NFTs
including: > RALPH LAUREN
> PENFOLDS;
> ( The logo for the South
Sydney District Rugby
League Football Club)
Securing additional trade marks
specifically covering these goods may
allow a brand owner to be well placed
to tackle infringing content online.

Conclusion NFTs provide a new opportunity
for people all around the world to
convert their artwork, collectibles,
and other original creations into
revenue-generating digital property.

They can also be an effective
marketing tool to extend product
lines into digital worlds. (Nike has
recently successfully started selling
its first collection of virtual shoes 5 )
Like the early days of the internet,
we may have only scratched the
surface of the possible applications
of these tools. No doubt we will also
see many more ways intellectual
property rights may be violated in
the NFT landscape in the future.

1 Marine Guillou | Principal
LLM (Edinburgh University)
marine.guillou@pof.com.au