Demystifying NFTs: Intellectual Property Protections with Design Patents

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A non-fungible token (NFT) displayed on the OpenSea NFT marketplace website is seen through a magnifying glass, in this illustrative photo taken February 28, 2022. REUTERS/Florence Lo/Illustration

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June 1, 2022 – In our last article, we discussed the implications of NFTs and how intellectual property rights could be used to protect them. In this article, we will explore the availability and implications of design patent protections for NFTs.

NFTs create a pathway for IP owners to monetize their IP. This often happens through licensing, as discussed in the first article in this series. As IP owners brand and license their NFTs and as NFTs increase in value, it will be increasingly important to consider strategies to protect their IP. Could design patents be one of these types of intellectual property?

Design Patent Basics

According to the law, there are five requirements for design patentability. In the United States, design patents can be obtained for designs of manufactured items (more on this requirement later). Protectable designs must also be new and non-obvious extensions of prior designs. Finally, to be protected, the design must have an ornamental appearance and the design must be original.

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Unlike a utility patent, a protectable design need not have any utility or utility because the protection in a design patent extends to the ornamental aspects of the design (i.e. the parts of the design that are not dictated solely by function). The manufactured item is the underlying functional element to which the design is applied. Unlike the design, the underlying manufactured item must have a function, as it is the role of design patents to protect designs of functional items.

The difference between a design and a manufactured item is sometimes confusing. Consider a design patent for a car design, which could have various underlying articles of manufacture, including a full-size car, mini toy car, or model car. Each of the different items could use the same design (the shape of the car), even if the items themselves are different. Thus, the scope of a design patent depends, in part, on the scope of the claimed underlying article of manufacture.

Design patents for digital designs

Design patents can also protect logo and user interface designs intended to be displayed by computers. In this case, the underlying article of manufacture is the display device. Although outnumbered by their 2D counterparts, the USPTO has issued design patents for three-dimensional designs to be displayed by display devices.

There have been discussions about the possibility of extending design protection to include other types of manufactured articles (including projections, holograms and virtual and augmented reality designs – generally designs that are not limited not to display screens), but the USPTO is still considering publishing it.

Could NFTs be protected by design patents?

Before answering this question, it is important to emphasize the distinction between the design, the underlying manufactured item and the NFT. Recall that the NFT is a certificate that contains information about an associated asset, but the NFT is not the asset itself. In design jargon, the “asset” would probably be the manufactured article to which the protected design would be applied. So, the question is not whether you can protect an NFT with a design patent, but rather can you protect the underlying asset that the NFT is associated with. The answer to this question depends on the nature of the asset.

One thing is clear: designs must have an ornamental – ie visual – component to meet current patent law requirements. If the underlying asset is just sound, then a design patent will not be able to protect that asset. But, if the underlying asset is a digital design viewable on a computer screen, design protection may be possible.

On a related note, design patents must be “designed” by an inventor/designer who must be a human being. If the underlying asset is something that was not created by a human being, it is also unlikely to be protectable by a design patent. Under federal patent law, an inventor must be a natural person and cannot be an artificial intelligence.

Design patents can be one of the best ways to defend your NFT against possible infringement, as an NFT owner can sue an infringer and, if successful, be awarded the profits the infringer made from the infringement. commercial exploitation of the patent holder’s patented design. Copyright damages provide similar rewards for profits the infringer has derived from the commercial exploitation of the copyright owner’s work. The Copyright Act also provides statutory damages. Although monetary relief is available in trademark infringement lawsuits, an injunction is more likely to be granted, which orders the infringer to cease its illegal activity.

What can an NFT owner do to protect an NFT with design rights?

Certain rules must be followed by those who have an NFT protectable by a design patent, so that they do not lose the possibility of patenting the design.

Before considering a design patent to protect NFTs, ensure that the design is not already in use and has not already been patented. If the design has been in use for less than a year, one may still be able to file for a design patent under certain circumstances. The people who created the design—normally called “inventors” in this context—must also be identified.

Many applicants may also consider applying for both a design patent and a utility patent, particularly if the appearance and function of the invention is unique. The important thing to understand is that applying for a design patent for the NFT asset does not exclude the potential that other intellectual property rights, including utility patents, trademarks or copyrights. author, may also be a good idea.

In short, some assets protected by NFTs may be protected by design patents, but the same legal requirements that apply to traditional assets would apply to those NFTs. But some NFTs may be protected by trademarks and copyrights, which we’ll discuss in the next article in this series.

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The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and non-partisanship by principles of trust. Westlaw Today is owned by Thomson Reuters and operates independently from Reuters News.

Elizabeth Ferril

Elizabeth Ferrill is a partner at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, and works out of the Washington, DC office. She focuses her practice on all aspects of design patents, including prosecution, counsel, post-grant and litigation. She can be contacted at [email protected]

Sonia Shah

Soniya Shah is a partner at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP and is located in the Washington, DC office. She focuses on patent litigation and prosecution and handles intellectual property matters related to electronics and information technology. She can be contacted at [email protected]

Michael Young

Michael Young is a partner at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP and is located in the Reston, Virginia office. He co-chairs the company’s Blockchain, NFT and Other Digital Assets Industry Group and represents clients in a range of technologies including wireless tracking, embedded systems, Internet of Things (IoT), financial technology (FinTech) and crypto assets. He can be reached at [email protected]

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