The information in this article should not be construed as legal advice. If you have questions, please consult an attorney.
NFTs – or non-fungible tokens – have been a trending topic as of late, but what are they exactly and how will they impact the patent industry? In this article, we’ll explain the basics of NFTs, recent developments in NFT patent applications, and why you may want to consider registering your patent illustration as an NFT.
AM Patent Drawings & Graphics can help you take steps to further protect your patent using NFT technology, from inception as a digital illustration to ensuring that it is registered properly on an NFT platform.
What are NFTs?
NFT stands for non-fungible token. They are digital assets that can represent objects such as art, music, videos, and video game items, with each having a unique digital signature built on blockchain technology. NFTs are non-fungible, meaning that they are unique and that no two are exactly alike. Some examples of other non-fungible goods include land and diamonds, which each having their own unique characteristics.
But how are NFTs different from cryptocurrency? NFTs are not to be confused with cryptocurrency such as Bitcoin or Ethereum, even though they are often built on a similar blockchain technology. Cryptocurrency, like most currency, is fungible while NFTs are not. One Bitcoin can be exchanged for one Bitcoin as they are of the same value, but each NFT is unique.
NFTs come in all forms, from NBA video highlights, to memes, to other representations of internet culture. Jack Dorsey, CEO of Twitter, famously sold his first Tweet ever as an NFT for $2.9 million. The world began to take even greater notice of NFTs when auction house Christie’s recently sold a work by the artist known as Beeple for $69 million. The appreciation for this new form of digital transactions is showing in strong market demand.
NFTs are clearly a multimillion-dollar business, with more and more platforms dedicated to buying and selling these digital assets.
NFTs and Patents
While most people are unable to justify spending millions on an NFT for a meme, this technology has barely scratched the surface of more practical applications, particularly in the patent industry.
In the NFT transaction model, there is only one owner of the NFT, indicated by a unique digital signature. Similarly, in the patent world, there is only one rightful owner of a patent. As the holder of an NFT, you can resell your NFT to a buyer, much like an actual patent. When you purchase an NFT of a patent, you obtain all rights in the patent, including the right to sue for infringement.
Blockchain technology, the technology that NFTs are built upon, is well suited to track things that are one-of-a-kind through a series of transactions. The NFT, as a unique digital fingerprint, can be tracked through the blockchain over a series of transactions from owner to owner similar to a cryptocurrency coin. The underlying idea is that the owner of an NFT will be treated like the owner of the “original” item. This concept is similar to patent ownership, as a patent is a unique original legal right held by a single owner.
The patent industry has already recognized the usefulness of NFTs and has rapidly adjusted its sails. In 2019, Nike was granted a patent for “CryptoKicks”, a system for releasing digital versions of physical shoes that could be sold, traded, or stored in a blockchain account. In July 2021, a U.S. patent was the first of its kind to be auctioned as an NFT on OpenSea, an NFT transaction platform. The startup firm IPWe, in collaboration with IBM Corporation, recently announced plans to represent patents as NFTs on the blockchain network, in hopes that tokenization of patents in this manner will allow them to be more easily sold.
With all these exciting potential applications of NFTs in the patent industry, it’s important to note that given its relatively nascent stage, the legal waters of the NFT space is largely uncharted. It is still unclear how certain regulations will affect NFTs, such as whether they are considered securities under U.S. securities laws. It also remains to be seen how courts will address certain use cases of NFTs in copyrights and trademarks.
Our expert team has over 45 years of design patent illustration experience and can help you mint your patent drawing as an NFT. From inception as a digital art asset, to registering it on an NFT platform, we can help bring your patent idea to life and give it the advantage of this cutting-edge technology.
Contact us to take the next step today!