What You Need to Know About NFT Trademark Infringement

Non-fungible tokens, also known as NFTs, have become increasingly popular in recent years—taking off through support and interest from celebrities, entrepreneurs, and digital art enthusiasts. As we move deeper and deeper into the digital age and the world of trading digital assets such as cryptocurrencies becomes the norm, it’s essential to understand the legality of a digital marketplace.

While this world continues to develop further daily, cases of stealing, mining, and trademark infringement have become regular occurrences. And often, legal recourse may be a gray area for regaining trademark rights for your NFT.

So, in order to understand this ever-evolving market, let’s break down the nature of an NFT.

What Makes NFTs Unique?

The nature of an NFT being “non-fungible” means that it doesn’t necessarily have to be exchanged for something of equal value. Therefore, NFT owners and creators can essentially charge whatever they want for ownership of an NFT. These are genuinely seen as pieces of art where one’s own perception determines value. Because of this, ownership of an NFT can be incredibly valuable, sometimes comparable to owning a renowned piece of artwork.

Even more, something that adds to the uniqueness of NFTs is that they’re purchased through blockchain, like Ethereum. While the value of Ethereum constantly fluctuates, generally, one Ethereum is worth about $1,300. And, at the cheapest, an NFT will likely be valued at around one Ethereum.

So, let’s say you purchase an NFT, and in one way or another, your trademark rights are infringed upon—most likely through hacking or data leaking. What does this mean for you? Let’s explore some implications that come from NFT trademark infringement.

First, you need to address what NFTs are commonly used for. Since an NFT is a digital piece of art, they’re often used for creative purposes such as commercial entertainment, product design, and development into pop culture symbols.

If you were planning to use your NFT to draft an idea for a show or even create merchandise out of it—suddenly, you don’t own the rights to that particular piece and, therefore, cannot use it to generate profit. This can be a significant issue considering the amount of time for research and development that you’ve undergone, as well as your digital art being stolen and used for someone else’s gain.

Consider the case of Seth Green, who was using his “Bored Ape” NFT to create a new series. Once his trademark was stolen, he described the incident as his beloved character essentially being kidnapped from his control. In more traditional terms, this situation could equate to a valuable family heirloom being stolen from your dresser and held for a ransom that you’d likely have to pay.

Lowered Value

Just like any product in this world, there will be knock-offs and generic brands that can be sold for cheaper. The same situation applies to the world of NFTs. Essentially, someone can look at an absurdly high-valued NFT, create a near duplicate, copy the intellectual property, and sell it for much cheaper than the cost of the original piece.

Unlike a painting, which requires an immense amount of talent and time to produce, NFTs can be easily copied through digital programs, and almost anyone with some digital design chops could recreate a popular NFT down to a T. So, what does this mean?

Well, if your NFT has been duplicated to create a generic version, and is valued much lower than your original version NFT, then the value of your original NFT will suddenly plummet. Considering how expensive NFTs can be, this is a significant issue. Because the price point of NFTs has a lot of volatility, scammers and stealers can manipulate the market, which in turn could cost you hundreds of thousands of dollars in lost value.

What Can Be Done?

Legal action for trademark infringement of an NFT is viable but is also a tricky path to follow. As the laws around digital assets continue to develop and evolve, legal recourse will be confusing and easily disputed. You can likely sue for this infringement, but it will be a costly and time-consuming process.

The best thing you can do to avoid dealing with this major headache is to make sure that you’re taking the necessary steps to secure and protect your NFT. More and more, NFT owners and creators are using technology like software wallets that allow you to store your NFT offline in a digital wallet.

While this can be a useful method, it may only work if you keep your NFT totally private. For instance, if you are advertising a new creative idea with your NFT, anyone seeing the NFT can create a knock-off.

The best thing you can do is to keep a close eye on your NFT and constantly monitor this market to ensure that no one is creating knock-offs. The earlier you catch a duplicate, the better chance you will have at recovering your trademark, and you can avoid shelling out your cash and time to deal with scammers and stealers.

Reach out today for a consultation.


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