Non-Fungible Tokens (“NFTs”)

There is no topic right now in the IP space hotter than Non-Fungible Tokens (“NFTs”) and the Metaverse! So, what is the Metaverse? What are NFTs? Why should you be interested?

It all sounds very complicated and technical but quite simply, the Metaverse is a realm of interconnected digital spaces where people can connect and, importantly, spend money! Inside the Metaverse, you can exist as an avatar and your avatar can connect with others. The experience of the Metaverse would be enhanced by using virtual reality headsets and other technology. It’s like Facebook, Amazon, Fortnite and the Matrix combined.

What is an NFT?

Simply put, NFTs are one-of-a-kind digital assets. Their code is written in a blockchain ledger, mostly but not exclusively the Ethereum blockchain, which can be used to irrefutably prove ownership of the NFT and, potentially, the authenticity of the underlying work represented within the NFT. NFTs, like those created by the Bored Apes Yacht Club, can be one-of-a-kind artistic works existing in the digital space, which have the potential to generate income for the creator through, for example, an out-and-out sale or licensing. These can also generate income for the buyer through merchandising, renting or staking, for example.

In the Metaverse your avatar can wear the latest Adidas sneakers, can show up to a virtual date in a BMW and can hang the latest Bored Ape NFT on their digital wall. On 6 February 2022, the first wedding reception in the Metaverse took place! It’s crazy to think about what will be next…

While the Metaverse and the creation and trading of NFTs are still in their infancy, they are growing up fast. The amount of money being invested in this space is staggering! The NFT market generated over $23 billion in trading volume in 2021 and OpenSea (a platform for marketing and selling NFTs) surpassed $3.5 billion in NFT sales in 2021.

The sale of NFTs, like tickets, or pieces of art or motion designs, or other digital goods such as sneakers have opened up massive potential for brand owners and marketers to capitalise on their reputation and their intellectual property. An NFT music video created by the artist, Grimes, generated $389,000 and certain ASICS Sunrise Red sneaker NFTs are priced at 12 ETH (around $33 600) – each at the time of writing.

Metaverse and the creation of NFTs

Because of the potential, the Metaverse and the creation of NFTs has for your brand, it is important to make sure that your intellectual property is protected. Just as in the physical universe, infringers leverage off the reputation of brands and create imitations and copies of products or works. The potential to copy designs, or artistic works, or any other form of intellectual property rights is just as prevalent in the Metaverse and in relation to the NFT market. We are even seeing counterfeits reach the Metaverse!

From creation to protection, from advertising to the commercialization of your assets in the digital world, it can be difficult to navigate this new space. For this reason, Spoor & Fisher has assembled a team of experts across all areas of IP who can answer any of your questions and give you the advice you need to make sure that your brand is at the forefront of the development of this new market. We are here to give you the peace of mind you need to make sure that your brand and intellectual property assets are protected.

If you would like more information, please do not hesitate to contact us on +27 12 676 1111, alternatively, send us an email at info@spoor.com.
You can also contact any of our team of NFT and Metaverse experts directly, which include Scott Saunders (associate), Natalie Slabbert (senior associate), Jeremy Speres (partner) and Herman Blignaut (partner).