On November 23, 2022, the U.S. Patent and Trademark Office (“USPTO”) and the Copyright Office issued a joint request for public comment regarding the interplay between non-fungible tokens (NFTs) and intellectual property law and policy issues.
This request for comment comes in response to a June 9, 2022 letter sent by Senators Patrick Leahy (D-VT) and Thom Tillis (R-NC) on behalf of the Senate Committee on the Judiciary, Subcommittee on Intellectual Property to the USPTO and the Copyright Office, which letter requested that the agencies undertake a study of IP law and policy issues relating to NFTs, and more broadly consider “how best to secure [IP] rights for emerging technologies”. The letter requested a reply by July 9 – and completion of this study by no later than June 9, 2023.
In particular, the Senators requested that the joint study “address the following list of non-exclusive factors”, and invited the agencies to add additional topics for review:
(1) What are the current applications of NFTs and their respective IP and IP-related challenges?
(2) What potential future applications of NFTs do you foresee and what are their respective potential IP challenges?
(3) For current and potential future applications of NFTs:
a. How to transfers of rights apply? How does the transfer of an NFT impact the IP rights in the associated asset?
b. How do licensing rights apply? Can and how can IP rights in the associated asset be licensed in an NFT context?
c. In what way does infringement apply? What is the potential infringement analysis where an NFT is associated with an asset covered by third party IP? Or where the underlying asset associated with an NFT is owned by the NFT creator and infringed by another?
d. What intellectual property protection can be afforded? What IP protection can be afforded to the NFT creator? What if the NFT creator is a different person or entity from the creator of the associated asset?
e. How else does 17 U.S.C. § 106 apply?
(4) What are current and potential future uses, internal and external to your agencies, for using NFTs to secure and manage IP rights?
(5) How do current statutory protections for copyright, such as the DMCA, apply to NFT marketplaces and are those protections adequate to address current infringement concerns?
The agencies responded on July 8, confirming their commitment to undertaking such a study and to seeking input from the private sector. (Copies of both letters can be found at the Copyright Office: https://www.copyright.gov/laws/hearings/response-to-june-9-2022-letter.pdf.)
In the November 23 request for public comment in support of the study, the USPTO and Copyright Office identified a series of questions for which they seek input and announced three public roundtables (all virtual) to further discuss these issues and collect feedback, scheduled as follows:
- Patents and NFTs – Tuesday, January 10, 2023 (hosted by the USPTO through Webex)
- Trademarks and NFTs – Thursday, January 12, 2023 (hosted by the USPTO through Webex)
- Copyrights and NFTs – January 18, 2023 (hosted by the Copyright Office by Zoom)
“Study on Non-Fungible Tokens and Related Intellectual Property Law Issues,” 87 Fed. Reg. 71584-71586 (Nov. 23, 2022) (also available in PDF form.) Requests to participate as a panelist during any of these three roundtables must be sent by email to NFTStudySpeakingRequests@uspto.gov no later than December 21, 2022 at 11:59pm ET. Agendas for these roundtables will be published approximately one week in advance on sites the USPTO and the Copyright Office have created to address the study.
The public is welcome to attend and observe these roundtables through livestream connections – but advanced registration is required (through the USPTO and Copyright Office pages dedicated to the NFT Study, linked above). Recorded videos of these sessions will be made available at some point after the roundtables conclude, but there is typically some delay before these recordings are made available after the sessions.
The agencies also seek written feedback on these topics by no later than January 9, 2023. Note also their caution that if you wish to participate in any of the roundtables, you should not make that request in your written comments, but instead send an email with the details requested in the notice.
In their request for public comment, the agencies included a specific definition of NFTs to help focus the analysis and the feedback submitted:
Note Regarding the Use of the Term ”NFT”: Merriam-Webster defines ”non- fungible token” and ”NFT” as ”a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership (as of a specific digital asset and specific rights relating to it).”[FN1] The terms ”NFT” and ”NFTs” in the questions below should be read consistently with this general definition. Accordingly, for purposes of the questions below, the terms ”NFT” and ”NFTs” do not refer to the underlying asset, [FN2] but rather to the unique identifier.
FN1: Merriam-Webster. (n.d.). NFT. Merriam- Webster.com dictionary, available at www.merriam-webster.com/dictionary/NFT.
FN2: The Offices here use the word ”asset” broadly and take no position on its meaning in the context of NFTs in other bodies of law.
Id. at 71585. Commenters are free to divert from this definition, but are requested to provide any alternate definition within their responses, and explain how that different definition is relevant to their responses. Id.
The request for public comment also expanded the list of issues to be considered beyond the initial nine (if you count subparts) the Senators initially requested – to include a long list of questions targeted to the responder’s specific field or industry, such as:
- How NFTs are currently used in particular industries;
- Potential future applications of NFTs in these industries;
- How NFT markets affect the production of materials subject to IP protections;
- How NFTs are used by rights holders of different kinds of IP;
- How NFTs are bought, sold, licensed, or transferred – and how do rights holders exercise control over their IP and enforce their IP rights (including any “digital rights management tools, mechanisms to facilitate payment of royalties, etc.” and technological mechanisms to enforce their contract rights);
- Whether “current IP laws [are] adequate to address the protection and enforcement of IP in the context of NFTs”;
- Whether there are adjustments being made to IP portfolio planning and management in light of the emergence of NFTs;
- How assets associated with NFTs are being protected in foreign jurisdictions; and
- A catch-all request that solicits any additional issues that the responder believes the USPTO and Copyright Offices should consider when conducting this study.
Id. at 71585-71586 (paraphrasing 13 questions plus additional subparts).
For more coverage of the June 9 request, July 8 response and the published request for public comment, see the following news articles (subscription access may be required):
- Bonnie Eslinger, “USPTO, Copyright Office Announce Joint Look Into NFTs,” Law360 (Nov. 22, 2022)
- Hunton Andrews Kurth, “Senators Dive into the World of NFTs, Asking US Patent and Copyright Offices to Consider Questions Regarding Related IP Rights,” National Law Review (June 22, 2022)
- Tiffany Hu, “Sens. Ask USPTO, Copyright Office to Study NFTs’ IP Impact,” Law360 (June 13, 2022).
For more background on NFTs, blockchain and cryptocurrency (i.e., what they are and how they work), the Wall Street Journal has published a number of short videos on these topics, including the following that provide a basic – but still very solid – explanation (subscription access may be required):
- Joanna Stern, “NFTs, Crypto Wallets and More Explained by Putting My Son’s Art on the Blockchain,” WSJ Video, Tech Things with Joanna Stern, Season 1 Episode 97 (Dec. 13, 2001)
- “NFT Art is Transforming the Market and Setting New Records,” WSJ Video, In-Depth Features (Feb. 11, 2022)
- George Downs, “This Car Comes with an NFT (And No, It Isn’t a Bored Ape Picture),” WSJ Video, George Downs, Episode 16 (Feb. 17, 2022).