Non-fungible tokens (NFTs) are increasingly being leveraged by companies and individuals seeking to interact with customers while aiming to benefit from the value offered by digital artworks. Most entities are therefore increasingly focusing on trademarks to protect the products despite NFTs being in their infancy stage.
According to data acquired by Finbold, in 2021, NFT related trademarks in the United States stood at 1,263, representing a 421 fold growth from the 2020’s three filings. In 2021, the highest trademark filing was recorded in December at 407, while January had zero trademarks.
In general, the filing accelerated over the last six months, surging 552.17% between August 2021 and January 2022. Notably, the United States Patent and Trademark Office (USPTO) received the highest ever filings in January at 450. The figure translates to about 15 filings per day. Data on NFT trademarks applications is provided by USPTO-licensed trademark and patent attorney Michael Kondoudis (The Law Office of Michael E. Kondoudis).
Why brands are rushing to file NFT trademarks
The trademark application emerges when the NFT scene is attracting curiosity, excitement, skepticism, and enthusiasm over the potential prospects. The filings point to companies and individuals’ greater need to enter the blockchain space to protect their brands, banking on the sector’s potential.
The need to file trademarks has been necessitated by several factors, including the goal to root out fake duplicates that have been on the rise. For instance, OpenSean, an NFT marketplace, revealed that many minted collectibles on the platforms were plagiarised works, fake collections, or spam.
Generally, the trademarks will enable most brands to make money from the intellectual property without physical goods. Overall, if brands fail to protect against fraud, it might have lasting effects since consumers might feel defrauded if counterfeits end up hitting the market.
Amid the rush to file trademarks, some already established brands are leading the way, seeking to expand their reach into the space. For instance, leading brands like Victoria Secret has filed four trademark applications for digital collectibles and media developed through blockchain technology, alongside online clothes and media for use in the virtual world.
The prospects in the virtual world have also seen fast-food chain McDonald’s (NYSE: MCD) file 12 trademark applications for a virtual restaurant in the metaverse. Elsewhere, the New York Stock Exchange (NYSE) filed a new trademark for several crypto products, including non-fungible tokens (NFTs).
In this line, virtual worlds like the metaverse offer marketing opportunities for companies to provide customers with personalized and interactive experiences. Consumers can, therefore, easily engage with brands as avatars in real-time. Consequently, brands get a chance to understand their customers and help develop lasting relationships.
Legal implications of NFT trademarks
Notably, the increasing entry of companies in NFTs means that trademark attorneys are getting opportunities to assist the companies in navigating emerging uses of NFTs in an international and competitive landscape.
Although brands are seeking to get the legal perspective right, there are still crucial questions emerging. For instance, there is a debate whether specific tokens violate certain trademark laws. Additionally, it is unclear on the punitive measure in case of illegal duplication of an already trademarked NFT related product.
Despite most entities warming up to the NFT marketplace, there are also associated risks to be considered. There is a need to remain mindful regarding significant regulatory and compliance. Therefore, companies joining the space must factor in the downside risks that might arise by associating with this exciting technology.