NFTs are already widely used for digital content to enhance their value. Lately, it seems that new digital markets based on NFT products are emerging for sports collectibles, 3D clothing, and abstract ownership of internet content. One area that has not yet been widely explored is the potential for NFTs tied to patents. There have been numerous blockchain trials for other intellectual property (IP) rights, such as copyright.
The tokenization of intellectual property makes it easier to license, commercialize and potentially trade. We’ll come back to whether trading patents is a positive outcome. While most companies already treat patents as assets, it may make them easier to value. Additionally, having patents represented by NFTs may provide a new owner with an additional layer of trust about the transaction’s validity and enables them to prove their rightful ownership of the IP more easily. As with anything that uses blockchain, it’s still necessary to ensure that the original rights owner was also the issuer of the NFT.
The concept of investing in intellectual property is not new, but it is tricky to make intellectual property more liquid. Just as NFTs have enabled the ownership of a First Trade on the stock exchange, they can facilitate investment in IPs.
“The IPwe Platform is designed to transform the patent asset class by increasing transparency and promoting engagement, which we believe will encourage innovation,” said IPwe CEO Erich Spangenberg.
“The use of NFTs to represent patents will help create completely new ways to interact with IP. This is expected to benefit not only large enterprises that have significant intellectual property, but it will bring new opportunities to small and medium enterprises and even individual IP owners. We believe it will usher in new offerings by financial services firms and corporations to promote the evolution of a new patent asset class.”
While making patents easier to license and commercialized seems positive, it’s worth asking the question of whether ease of trading in patents is a good thing. Conceivably one negative outcome could be to enable so-called patent trolls who are purely financial investors and don’t build anything. They tend to make money by threatening to sue innovative companies who often might be unaware of a patent’s existence. There’s one school of thought that patents are intended to protect an innovator that invests in an idea from someone else cloning it.
IPwe’s platform, which is hosted on IBM Cloud, will store and share the NFTs. The same platform powers IPwe’s Global Patent Marketplace, an app where patent owners can commercialize their rights and engage with other members.
IPwe was already working with IBM for the past three years on blockchain applications in regards to patent ownership information, patent analytics, and IP transactions. Furthermore, IPwe Registry, which collects active and historical data on patents, is enabled by IBM Artificial Intelligence.
IPwe is planning to begin NFT patent trials soon, and the solution will be commercially available by the fourth quarter of the year. It expects to attract financial institutions, insurers, and other patent stakeholders in the coming months.
Separately, in January, the company also partnered with the Casper public blockchain.
Meanwhile, the U.S. Customs and Border Protection completed a proof-of-concept of a blockchain platform to protect IP rights. Alibaba and HTC have invested in Bitmark, blockchain-based property rights company, and Ant Group launched a blockchain copyright services platform last year. More recently, DC Comics revealed plans to launch NFTs as part of the strategy to protect their intellectual property.