IP infringement is rampant in NFTs, but new laws are not needed: US government report

There is currently no need to change US intellectual property (IP) laws, even though piracy and IP infringement are common in non-financial token (NFT) marketplaces, according to a US government report.

On March 12, the US Copyright Office and the US Patent and Trademark Office (USPTO) completed a joint study focusing on IP law and policy implications for NFTs.

He notes that NFT technology cannot prevent unauthorized copying and claims that “trademark infringement and abuse are rampant in NFT marketplaces.”

“Furthermore, trademark enforcement efforts are complicated by the decentralized and anonymous nature of NFT platforms and the decentralized nature of the blockchain networks on which NFTs are stored.”

Despite the findings, the agencies do not believe changes to IP laws are “necessary or useful at this time.”

“As long as the NFT contains or links to a copy of an unauthorized copyrighted work, the creation or transaction of an NFT is subject to copyright law in the same way as any other unauthorized reproduction or display,” the report said.

It noted that there are existing enforcement tools to address NFT-related violations, as with other online violations.

Cathy Vidal, Secretary General of Intellectual Property and USPTO Director, said NFTs “provide unique opportunities for inventors to exercise their IP rights, but also create new challenges to keep their work safe.”

Consumer confusion has also been raised about IP rights and the legal status of smart contracts. However, it was concluded that these concerns would be better addressed through education and consumer protection rather than changes in IP law.

Related: What Are Some Ways to Avoid IP Infringements in the NFT Space?

He said there are no specific proposals to use NFTs or blockchain technology in US patent and trademark registrations, but their potential will continue to be explored.

The study and report was prepared in 2022 after a request from the US Senate Judiciary Committee's IP Subcommittee.

NFT markets have yet to recover despite the rise in the price of Ether (ETH) this week. Floor prices for some high-end collections continued to decline, and sales volume data showed a week-on-week decline of nearly 22%.

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