What do William Shatner, Snoop Dogg, Mark Cuban, Tom Brady, and the patent owners have in common? They all create non-fungible tokens (“NFT”) and convert assets into tokens represented on the blockchain.
Patent owners use NFTs to manage patent ownership and licenses. Many of these NFTs incorporate self-executive contracts that give buyers all rights to the contract, including the right to sue for infringement.
This new technology offers many opportunities to monetize patented assets while raising regulatory and privacy concerns.
Definition of NFT
Non-fungible tokens like Bitcoin and other cryptocurrencies are assets hosted on the blockchain, a public ledger that records transactions. NFTs differ from substitutable tokens such as Bitcoin and other cryptocurrencies in that they are unique assets that cannot be exchanged or split. Since one Bitcoin (or another cryptocurrency) has exactly the same value as another Bitcoin, alternative tokens like cryptocurrencies can be exchanged for other cryptocurrencies. NFTs, on the other hand, are similar to trading cards. Each NFT is completely different from another NFT. For example, NFTs can be anything digital, such as digital art or music. A well-known example of an NFT was created by Twitter founder Jack Dorsey. Dorsey created an NFT from his first Twitter post. He converted the still image of the first tweet into a digital file stored on the blockchain and sold it for over $ 2.9 million.
Patent market NFT
Patent owners are now tokenizing patents as NFTs by creating NFTs to manage patent ownership and licenses.Recently, Jack Fonss and his technical consulting firm True Return Systems were on the list. US Pat. No. 10,025,797 on NFT Marketplace OpenSea.. The Fonss and TrueReturn systems initially required 2,250 Ethereum (“ETH”). It’s worth about $ 9 million (if listed). Currently, the patent is listed at 1,250 ETH, which is currently worth about $ 3.7 million.
IBM has also recently taken steps to trade patents as NFTs. IBM is affiliated with IPwe Create a platform using IBM Blockchain. The IPwe platform allows members of the patent community to use, trade, buy, license, fund, sell, and commercialize patents.
Some players in the patent field believe that tokenizing patent assets makes it easier to sell, trade, commercialize, or otherwise monetize patents. Many also believe that tokenization increases transparency, making transactions simpler and more cost-effective. They also state that NFTs can offer the opportunity for split ownership of patent assets and allow small investors to purchase parts of their patents as NFTs. Tokenization of patent assets may also provide a means for patent owners to raise litigation funds.
Also, because blockchain data cannot be deleted, this technology can help automate the method of collecting royalties and keep a record of revenue associated with various patent assets.
Patent tokenization can also help collect data on prior art or patent families. For example, many patents are subject to post-grant procedures such as inter partes review (IPR), reissue, or reexamination. Tokenization may help collect and maintain data related to the prior art submitted and reviewed in these various procedures.
Potential issues with tokenization of patent assets
There are some potential concerns about representing patented assets as NFTs. For example, title chains are very important for patent assets. If patented assets are freely traded or hampered through blockchain technology, how would these transactions be represented in different IP offices? In the United States, if the assignment, grant, or assignment of a U.S. patent is not recorded with the United States Patent and Trademark Office within three months of the assignment date or before the next assignment date, the previously unrecorded assignment will be void. increase. For subsequent purchasers or mortgagees. 35 USC § 261. Therefore, the transfer of patent assets on the blockchain may be invalid if it is not recorded in the relevant IP office.
Since NFT technology is still in its infancy, there are few laws and regulations dealing with NFT technology. Therefore, there is a significant risk in transferring a patent as an NFT until further development of technology and law.
Privacy is another concern when using NFTs to manage patented assets. The confidentiality of royalty streams, license terms, and patent purchase arrangements is often paramount in patent transactions. Since NFT technology is new and rarely tested, it is unclear how the blockchain platform will handle confidentiality issues.
Finally, there are concerns about whether partial sales of NFTs (including patents) are eligible for security interests and can be classified as investment products subject to SEC regulations.
Trading patents as an NFT is an innovative concept, and it would be interesting to see if this concept proves to be a viable solution for long-term management of patent assets. ..