NFTs unique, non-fungible tokens created relating to a specific digital asset have captured a lot of attention lately, but in reality, they’ve been around since about 2014. The once-fringe movement burst into the mainstream in 2021 because NFTs now translate to money. For example, CryptoPunks NFTs were released for free several years ago, but by 2021, some were selling for upwards of $10 million each.
In another milestone, Beeple (known as Mike Winkelmann in the physical world) sold an NFT called Everydays: The First 5,000 Days through Christie’s last year for a whopping $69 million, which made him the third-most-expensive living artist in the world. And this is just the beginning.
As with any burgeoning space that involves big names and big money, nefarious opportunists gravitate. In a remarkably short time, counterfeit NFTs have emerged, hoodwinking many unsuspecting consumers and cashing in on the intellectual property of brands and artists alike.
Companies and individuals are still trying to figure out how to use NFTs to promote their brands. After years of being dismissed as inconsequential, the current momentum behind NFTs took a number of folks by surprise. The effect has been that someone else is profiting off of their assets, such as in Hermes’ case with a Birkin bag or Nike’s fight with StockX, and many NFT buyers don’t realize what’s “real,” or in the case of a brand, what’s been sanctioned or approved by that brand.
Several companies have filed lawsuits to protect their brands from being co-opted by NFT creators, and more are sure to follow, but today there is no clear legal precedent to clamp down on counterfeiters or those that infringe upon a brand’s intellectual property. The only immediate recourse is to request removal of infringing NFTs from marketplaces so that they cannot be sold and this is very difficult to do because it means brands have to track hundreds, if not thousands of NFTs that may be infringing on their IP rights. Most organizations have no way to monitor all the NFTs being created and sold each day it’s a massive ecosystem. Because of this, “bad” NFTs are taking over.