If you were told 15 years ago that a personal post on your social media could be worth millions of dollars, would you believe it? In October 2021 this event came to pass; the very first Tweet posted by Twitter co-founder Jack Dorsey was ‘minted’ (created) as an NFT and sold for a staggering $2.9 million¹.
NFTs have steadily grown in popularity over the last couple of years, challenging our perception of art, fashion, reality, possession, and intellectual property rights. With brands continuing to explore the opportunities offered by the digital world, do NFTs present a new type of commercial opportunity or a threat? Or is the answer somewhere in between?
What is an NFT?
A non-fungible token, also known as NFT, is a one-of-a-kind digital item stored on a public digital ledger (a blockchain), which provides a certificate of ownership to a particular individual². Some well-known owners of NFTs are Eminem, Justin Bieber, Post Malone and Paris Hilton. Those celebrities are members of a famous NFT project, ‘BORED APE YACHT CLUB’, which symbolizes a financial success and consumer demand for digital art. NFTs of individual apes, can be found on NFT marketplace Opensea³, and the latest purchase of a second Bored Ape by Bieber was bought for $470 million⁴.
NFTs are far more than just art tokens or pieces of internet memorabilia; they are seen by many as digital investments, much alike cryptocurrencies. For example, in early 2021 Taco Bell listed on Rarible⁵ their 25 pieces of NFTs valued at $1 each which were sold in under 30 minutes. Later some pieces were resold worth over $3,000⁶.
NFTs also have a growing presence in the world of gaming, where players can obtain unique personalized items to enhance their digital experience. ‘The Sandbox’, a player-driven creation system based on NFT lands and items, has established many successful collaborations, with companies such as Warner Music Group which provided a virtual music venue and experience within the game.
Luxury fashion brand Gucci also invested into The Sandbox, enhancing the purchasing experience by mirroring its ‘Vault’ online store in-game. Within a constantly changing digital landscape and the emergence of the metaverse, NFTs offer an opportunity to strengthen brand recall on channels where many brands typically had no meaningful presence.
Authorized NFTs are yet another tool for brands to interact with the next generation of consumers. They can be designed and minted in-house or, increasingly, by licensees. However, there is a growing market of unauthorized NFTs, with creators simply lifting the intellectual property of brands, artists, and celebrities. If left unchecked, unauthorized NFTs can quickly inflict permanent damage to a brand’s image, reputation, and status.
The risks posed by unauthorized NFTs and block-chain domains
Currently, the consumer demand for authorized NFTs is outpacing supply, fueling the rise of an unregulated market of infringing artwork. Infringers have swiftly automated NFT minting, using copyrighted imagery and trademarks without any authorization from brand owners.
This threat is compounded by the fact that many NFT platforms have not established formal policies to prevent these trademark and copyright abuses, allowing bad actors almost free reign. Corsearch has found that over 50% of top brands are infringed on major NFT platforms, such as: OpenSea, Mintable⁸ or Rarible*.
The anonymity of sellers can also easily mislead consumers into purchasing unauthorized NFTs. Take the Bored Ape Yacht Club for example; it was mimicked by an NFT collection called Big Daddy Ape Club, which conned investors of $1.3 million⁷.
As brand owners are well-aware, reputation is easily eroded by impersonation domains. This is no different with blockchain-native domains such as ‘.eth’. Corsearch’s brand protection technology has detected countless examples of blockchain domains that hijack well-known brands: amazonestore.eth, google-com.eth, and mcdonaldscorporation.eth.
NFT domains are a type of blockchain-native domain that sit in the owner’s digital wallet much alike a cryptocurrency. They are decentralized; individuals make a one-time purchase of a domain rather than rent from registrars. They cannot be seized and are more difficult to enforce against than traditional domains. The content on the domain can be hosted on a decentralized storage network, making it tough to have this taken down.
How Corsearch can help your brand tackle unauthorized NFTs
With years of enforcement experience and strong relationships formed with major NFT marketplaces, Corsearch has developed a proactive and strategic approach to take down infringing NFTs.
Corsearch has recently unveiled NFT marketplaces capability within the Zero brand protection platform that supports the top 5 platforms: OpenSea, Rarible, Mintable, Super Rare, and Foundation. This means brands can now detect, enforce and report directly within the platform.
If you would like to learn more about how we can protect your brand from unauthorized NFTs, please talk to one of our experts.
*51.77% overall infringement for keywords associated with the top global 10 brands, and Wordmark was distinctly connected to the NFT, whether as an Ethermum domain or using the logo of the given brand.