What is NFT?
Non-fungible tokens (NFTs) is lately attracting the tech-savvy generation’s attention, but it still limited to a small group of people. The lack of knowledge regarding NFTs creates a gloomy idea regarding their functionality and legality, so this article aims to provide a clear idea about NFTs and the registration of trademark relevant to them.
A non-fungible token, or NFT, is a digital asset built on the blockchain that only represents blockchain ownership. Thanks to them, we can tokenise things like works of art, collectables, and real estate. The Ethereum blockchain secures asset ownership; nobody can alter the ownership record or copy/paste a new NFT into existence. NFT is an acronym for non-fungible tokens.
Does Trademark Act Protect NFTs?
India still needs to catch up in making the best use of basic technology. Therefore, it is evident that ‘downloadable virtual goods’ and ‘online virtual services’ will require a lot of work to comply with existing laws and regulations.
The constant increase of the IP infringement issue is one of the adverse effects of India being IP-aware and ranking 5th globally in trademark filing and 7th in patent registration.
Also, Indians are filing for the registration of trademark of the ‘downloadable virtual goods’ and ‘online virtual services’ from the Indian Trade Mark Registry. But the main issue arises with classifying these goods because the downloadable goods are currently being classified under downloadable computer programs. With the increase in NFTs, a straightforward sort would be required to curb the confusion.
Dilution is yet another problem that the NFTs present for trademark law. It refers to using a well-known trademark illegally on unrelated goods. Even though the two products are not connected, improper use could damage the trademarked product’s reputation in this instance.
It is important to note that the terms “nominative” and “classic” used to describe fair use in the context of trademark rights have both given the manufacturers of NFTs a legal loophole that allows them to operate legally without incurring any consequences. The term “nominative” describes using a trademark to avoid confusing customers. Using the product’s class name in the brand is another example of classic fair use. The creators of NFTs must provide clarity regarding what might constitute infringement.
Due to the increasing exposure of people to these NFTs as a form of investment, its important to be careful. Trademark infringement in the digital sphere will likely significantly impact the trademark’s reputation.
The trademark law, which formerly only offered protection in the virtual world, should include provisions for safeguarding trademark owners’ rights. Also, mentioning the recourses open to them in the event of an infringement.
Is Registration of Trademark Enough To Protect NFTs in India
Using blockchain technology, Indians can purchase both NFTs and cryptocurrencies. With this in mind, it becomes crucial to understand the legal implications of NFTs. It is also necessary to analyse the legality of crypto-currencies.
In India, as there is no specific legal framework, contract law governs NFTs. Recently, interest in NFTs has decreased because most buyers and enthusiasts want quick returns. Many Nobel laureates have claimed that cryptocurrencies lack intrinsic value and have even compared NFTs to Ponzi and pyramid schemes.
As a result, the sale and purchase of tokenized artwork raise concerns about its legality. It includes other legal issues like NFT holders’ rights, creator and holder liability. It also includes the applicability of various other intersecting laws. Also, the exhaustion of copyright holders’ rights after the first sale.
The NFT trade implies the caveat emptor principle. However, users must be aware of the risks before engaging in digital NFT transactions.
