NFTs Will Replace Copyrights and Trademarks

The USPTO is “experiencing a huge surge in trademark application filings,” but Web3 provides a scalable alternative.

Living Opera
4 min readDec 31, 2021


Photo by Markus Winkler on Unsplash

Origins of the Patent System

Ever since at least 1790 with the passage of the Patent Act, copyright and trademark law has governed the demarcation of property rights of all shapes and sizes. Without property rights, whether physical or intellectual, commerce cannot take place: there would be no incentive for parties to invest if there is no way to link their investment with the reward.

Before the invention of the internet, intellectual property was much easier to manage, there was much less content and much less risk of pirating. Following the Web1 revolution, and even more so with the Web2 revolution with social media, content became much more non-rival and non-excludable. Yes, companies can create paywalls, and many do, but there is generally a way to access the content, or a variant of it, through other mechanisms.

The rapid expansion of content has a lot of benefits, but it comes at the cost of how we make sense of it all and ensures that unique contributions are recognized and rewarded. If a new idea simply gets launched into a sea of noise and there is no way to distinguish it, then that undermines the incentive to innovate in the first place.

Challenges to the Current System

Unfortunately, the current legal infrastructure around copyright and trademark law is not well equipped to handle Web3. Even just this past year, the United States Patent and Trademark Office (USPTO) reported that they were “experiencing a huge surge in trademark application filings, which has resulted in a significant increase in unexamined application inventory.” An overextended team of patent officers leads to a decline in patent quality since “examiners fail to identify and apply the references most relevant to the examination of patent applications.”

If it is hard to keep up today, how will the USPTO keep up as Web3 takes over? The reality is that the conventional process for evaluating copyrights and trademarks is highly labor-intensive.

If it is hard to keep up today, how will the USPTO keep up as Web3 takes over? The reality is that the conventional process for evaluating copyrights and trademarks is highly labor-intensive.

Enter the world of NFTs. Despite all the critics, my belief is that the fundamental innovation behind NFTs is that they tokenize ideas at the atomic level. By digitizing ownership on an immutable ledger for all to see, records, ranging from breakthrough inventions to informal commentary, are tracked on a secure, accessible and standardized system. Moreover, blockchain technologies are well-suited for the application of artificial intelligence, including natural language processing (NLP), which can help resolve conflicts among users who mint similar types of content.

Centralization versus Decentralization

The obvious counterargument is that the USPTO could apply similar types of NLP techniques, and indeed the USPTO is already working hard to do just that. However, there are at least two differences with a decentralized blockchain-based approach.

First, a centralized approach relies on continuous innovation from the centralized entity, whereas a decentralized approach creates incentives at scale for users to contribute towards verification and system improvement. Take, for instance, the incentives that bitcoin miners face to complete proof of work: similar incentives could exist at scale for potential overlapping intellectual content in NFTs.

Second, the cost associated with producing NFTs is much lower, which means that the incentive for a user to pirate a single NFT is much lower than, say, to eschew the boundaries of a patent or other form of intellectual property in the conventional system. Technologies, like, are making it seamless for content creators to produce content at scale across platforms and mint NFTs. For malicious users to pirate anything of serious value would require doing it overtly, which would be easy for the protocol to flag in the system and the marketplace to respond accordingly.

To be sure, there are many more questions and meaningful challenges to resolve. But, the reality is that NFTs are here to stay because they are inherently value-enhancing, not just for producing more flexible art, but also for resolving fundamental challenges related to ownership and authentication. Let’s embrace the challenge, rather than fleeing from it.

This article was originally written by Christos A. Makridis, a research affiliate at Stanford University’s Digital Economy Lab and Columbia Business School’s Chazen Institute, and the Chief Technology Officer and Head of Research at Living Opera, in Finance Magnates. He holds dual doctorates in economics and management science & engineering from Stanford University.



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