NFT Projects and IP Rights

NFT (non-fungible token) projects are digital assets that use blockchain technology to represent unique and non-interchangeable items such as art, music, or collectibles. NFT projects require specific legal services to protect their intellectual property (IP) rights at different stages of their business. In this article, we will discuss the different stages of an NFT project’s business and the relevant IP legal services that they require.

I. Pre-launch stage:

In the pre-launch stage, NFT projects require legal services to ensure that they have the necessary rights to the assets they plan to tokenize. This involves reviewing and securing the ownership of the underlying assets, clearing any third-party rights, and protecting their IP rights. The legal services required at this stage include:

A. Copyright And Trademark Searches:

Before launching an NFT project, it is essential to conduct thorough searches for existing copyrights and trademarks that could infringe the project’s rights. This can help avoid potential infringement claims and protect the project’s IP rights. Relevant case law in this stage includes the case of Rogers v. Koons, which established that even slight alterations to a copyrighted work can be considered infringement if the new work is substantially similar to the original.

B. IP Licensing:

If the NFT project plans to use third-party IP assets, it is essential to secure proper licensing agreements to avoid potential infringement claims. IP licensing agreements should clearly define the rights and obligations of the parties involved, such as the duration of the license and the permitted uses of the licensed assets. Relevant case law in this stage includes the case of Wolkoff v. Gagosian Gallery, Inc., which established that the destruction of a building that featured street art without the artist’s permission constituted copyright infringement.

II. Post-launch stage:

In the post-launch stage, NFT projects require legal services to protect their IP rights and prevent infringement by third parties. The legal services required at this stage include:

A. IP Registration:

To protect the NFT project’s IP rights, it is important to register relevant copyrights, trademarks, or patents with the relevant authorities. This can help deter potential infringers and establish the project’s ownershIP of the IP. Relevant case law in this stage includes the case of Star Athletica, LLC v. Varsity Brands, Inc., which established that certain decorative elements on clothing can be eligible for copyright protection.

B. DMCA Takedown Notices:

If the NFT project’s IP rights are infringed upon, the Digital Millennium Copyright Act (DMCA) allows them to send takedown notices to the infringing party’s internet service provider or hosting service. This can help remove the infringing content from the internet and prevent further infringement. Relevant case law in this stage includes the case of Lenz v. Universal Music Corp., which established that copyright owners must consider fair use before sending DMCA takedown notices.

III. Growth stage:

In the growth stage, NFT projects require legal services to expand their IP rights and secure new revenue streams. The legal services required at this stage include:

A. IP Transactions:

As NFT projects grow, they may engage in transactions such as licensing, selling, or acquiring IP assets. Legal services such as due diligence, drafting and negotiating agreements, and IP valuations may be required to ensure the legality and fairness of the transactions. Relevant case law in this stage includes the case of Vernor v. Autodesk, Inc., which established that software users are licensees rather than owners of the software and therefore do not have the right to resell it.

B. IP Enforcement:

As NFT projects expand, they may encounter more instances of IP infringement. Legal services such as cease-and-desist letters, litigation, and alternative dispute resolution may be required to enforce their IP rights and seek damages. Relevant case law in this stage includes the case of Apple Inc. v. Samsung Electronics Co., which established that design elements can be protected under trade dress and that a plaintiff must prove that the defendant’s infringing product causes consumer confusion.

In conclusion, NFT projects require specific legal IP services to protect their intellectual property rights at different stages of their business. Pre-launch services include copyright and trademark searches and IP licensing. Post-launch services include IP registration and DMCA takedown notices. Growth stage services include IP transactions and enforcement. It is crucial for NFT projects to engage legal counsel to ensure compliance with IP laws and mitigate legal risks throughout the different stages of their business.