The US Government says IP infringement is all over NFT marketplaces'

The non-fungible token (NFT) bubble burst quite some time ago, but the US Government has only just published a report looking into the surrounding legal framework. The study, carried out jointly by the US Copyright Office (USCO) and the Patent and Trademark Office (USPTO) following a 2022 request by the Senate, determined that current intellectual property laws are robust enough to deal with copyright or trademark infringement in NFTs. The agencies also determined that although there are some benefits to the tokens, "trademark infringement and misuse is prevalent on NFT marketplaces."

As a reminder, an NFT is a digital certificate of authenticity conferring ownership of a collectible, such as an artwork or piece of music. It's effectively a verified link to a piece of media which may or may not live on the blockchain, but whoever owns the destination of an NFT's URL can change the media it points to at any time. In one notable case in 2021, Signal founder Moxie Marlinspike created an NFT that he promised would appear to be a poop emoji when someone bought it.

The offices noted that NFTs and associated smart contracts can aid trademark owners in managing, licensing and transferring IP rights. Those who weighed in on the issue in public comments pointed out that NFTs can help artists make money from future sales of their work too. That's not inherently a bad thing, even if a large swath of NFT art is butt-ugly.

However, the study noted "widespread concern that NFT buyers and sellers do not know what IP rights are implicated in the creation, marketing and transfer of NFTs and that NFTs may be used to facilitate copyright or trademark infringement."

The report notes that the decentralized nature of NFTs and blockchain networks complicates any attempts to enforce trademarks. "While some individual NFT platforms have developed protocols to help trademark owners enforce their rights, there is no centralized authority that requires all platforms to do so," the report reads. "There are also no cross-platform mechanisms to allow trademark owners to identify and take down infringing content, settle trademark-related disputes involving blockchain-based domain names, or confirm that sellers own the trademark rights associated with the assets they offer."

With all of that in mind, the offices said that educating the public about NFTs could help ensure a better understanding and awareness of the tokens and how they work. Still, they recommended in their report to Congress that the current use of NFTs doesn't require changes to current IP laws. They also noted that "incorporating NFTs into their registration and recordation practices is not necessary or advisable at this time." In other words, they don't think they should have to deal with NFTs either.

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