The World Economic Forum (WEF) states that non-fungible token (NFT) adoption is transforming various industries – including financial services, consumer goods, and gaming. However, the WEF also notes that there are still many future challenges to consider. Regulation is a key concern, and many of the most important trademark law questions remain unanswered. In addition, the NFT market has plummeted in recent years. NFTs once worth millions are now selling for hundreds, and in 2024 the vast majority of these assets reached a market value of zero. How can companies navigate this complex regulatory landscape? Is NFT adoption still a worthwhile endeavor? How can company leaders address trademark law issues with NFTs? An experienced trademark lawyer in Louisiana may be able to help companies answer these questions. Contact Business Law Group today at (504) 446-6506 to continue this discussion in more detail. 

How Do NFTs Work?

Like cryptocurrencies, NFTs exist on blockchains – publicly accessible ledgers with high levels of anonymity. Both NFTs and cryptocurrencies feature “tokens” – identification codes that aid in encryption. The tokens exist on their blockchain, while the “assets” exist elsewhere. In the case of NFTs, that asset is usually a piece of art. Two crypto tokens (such as bitcoins) are identical and interchangeable – and they exist on the same blockchain. However, two different NFTs are not interchangeable – even if they exist on the same blockchain and appear identical. This non-interchangeability is why these tokens are called “non-fungible.”

For example, two different dollar bills minted by the U.S. Treasury are fungible because you can exchange one for the other. Two different original paintings, however, are “non-fungible” because their values are not identical – even if they were created by the same artist. 

Trademark Law and Business Applications for NFTs

The uniqueness of NFTs creates interesting implications for trademark law. With the rise of this technology, artists can sell one-of-a-kind digital copies of their work online. This may help address unlicensed copying of photographs, videos, designs, and so on. With NFT technology, artists can ensure that only one of these digital copies is “authentic.” 

Aside from art, individuals and companies can tokenize many other assets. These might include real estate, loyalty programs, and trading cards. NFTs can also denote an ownership stake in a company, and some believe that the blockchain may eventually replace existing ledgers for stock ownership in Louisiana. Even fine wine can be authenticated by NFTs, potentially reducing counterfeiting. Many consumers want to determine dates and geographic origins tied to specific goods – and NFTs can help achieve this goal. For example, an NFT connected with a bottle of olive oil might help a consumer determine when and where the olives were harvested. NFTs still have utility beyond investing. 

Can You Trademark an NFT?

It is possible to trademark an NFT. These trademark strategies should focus on elements of the work itself rather than the metadata. A company might trademark names, designs, and similar characteristics of the NFT. This might be the name of a specific collection of NFTs, or it might be the artwork associated with an individual NFT. This may prevent other NFT creators from minting and selling “knock-off” versions of artwork and tricking customers into purchasing inauthentic products. 

Can an NFT Infringe Upon Your Intellectual Property Rights?

Since the rise of NFTs, major brands have sued NFT companies for infringing upon their intellectual property rights. For example, sneaker companies have sued entities for minting NFTs with protected branding. Some cases have involved “virtual sneakers” that are identical to real-life sneakers with intellectual property protections. Some of the entities that minted these virtual sneakers had no connection with the real-life shoe brand – and they did not have permission to use the various logos and trademarks. If a company encounters this type of intellectual property violation in Louisiana, they may be justified in taking legal action – and the Business Law Group may be able to assist. 

What Is the Status of NFTs Under Louisiana Trademark Law?

When NFTs first appeared, their “status” in trademark law was not clearly defined. When faced with accusations of intellectual property infringement, NFT companies initially attempted various defense strategies. They argued that someone who owns an NFT does not own the art/work itself, but rather the metadata file. Since the metadata file is simply a string of numbers, the NFT companies argued that there was no “reproduction” of the work as defined under existing trademark law. Some argued that an NFT could not even be defined as an “adaptation.” 

However, these issues are not as unclear as they once were. A 2024 paper published by the University of Georgia suggests that federal trademark laws apply to NFTs – and the ambiguity regarding the legal status of metadata should no longer be an issue. The paper cited a recent lawsuit between a high-fashion handbag company and an individual who created NFT versions of these handbags. In this case, the court found that consumers were likely to become confused about the connection between the NFT creator and the handbag company. Perhaps most importantly, the court “connected the dots” between the non-fungible token (the string of numbers) and the actual image of the handbag. In other words, the court viewed both the metadata and the artwork as one, singular product. This precedent suggests that NFT creators can no longer argue that ownership only applies to the metadata and not the actual work. 

Are New NFT Trademark Laws Coming?

In 2024, the United States Patent and Trademark Office (USPTO) published a Report to Congress entitled “Non-Fungible Tokens and Intellectual Property.” In this report, the USPTO suggested that it might be too early to create new NFT trademark laws due to rapid changes in the industry. They also raised the possibility of self-regulation in the NFT industry. This report implies that existing trademark laws may be sufficient to govern NFTs and that clarifying how existing laws apply to NFTs could be more helpful than creating new legislation. 

Contact Business Law Group Today

The potential applications of NFTs vary depending on numerous factors. These might include the type of business, competition, and specific trademark law questions. Although online research may provide basic insights into this complex topic, an experienced business lawyer in Louisiana could potentially offer more personalized guidance. Business Law Group may be able to shed further light on NFT applications, trademark law questions, and other related subjects. Consider calling (504) 446-6506 to begin this discussion today.