For hundreds of years, our traditional patent system has served as the gatekeeper of innovation—protecting the rights of inventors and rewarding ingenuity. The system isn't without its flaws. It can be time-consuming, costly, and convoluted, usually benefiting big business with lots of cash to spend rather than independent inventors and small businesses. Now, a new technology is emerging that could potentially disrupt this established order: Non-Fungible Tokens, or NFTs. Li Wei is a blockchain content strategist with strong ties to China’s technological powerhouse. He dives deep into how NFTs offer the potential to create new methods to finance, safekeep and profit with innovation.

NFTs, or non-fungible tokens—a unique digital asset that use blockchain technology to establish ownership of a digital or physical item—have started a tsunami of disruption among industries. The use cases for NFTs provide incredible opportunities for artists, musicians and content creators. They include everything from digital art and collectibles to music and virtual real estate. Might they change the game on how inventors monetize and protect their ideas? ThrowingToken.com deep dives into this important question that gets to the heart of how NFTs could help make things fairer for inventors filled here.

How NFTs are Shaking Up the Patent System

NFTs are providing creators with fresh ways to finance, secure, and profit from their work. Inventors will be able to tokenize their inventions to facilitate access to a global pool of potential investors. This unconventional strategy enables them to circumvent the classic gatekeepers of venture capital and patent offices. This democratization of innovation will create a wave of new ideas and inventions. More emerging creators will feel invited and empowered to go out there and bring their ideas to life.

New Revenue Streams

NFTs offer a unique opportunity for creators to profit off of their inventions in the digital space. This could be anything from designs to prototypes, or even just early-stage concepts. Instead of relying on conventional funding sources, inventors can create and sell NFTs representing ownership or licenses to their inventions, generating revenue directly from supporters and enthusiasts.

Decentralized Funding

NFT marketplaces and platforms provide a new, decentralized mechanism for creators to find investors and fans. This cuts out the middle men like venture capitalists or angel investors. This makes funding easier to obtain for a wider variety of inventors, especially those who have been historically marginalized by traditional funding avenues.

Increased Ownership and Control

NFTs give creators new tools to protect their creative works. Through tokenization, inventors can uniquely show ownership and provenance with ease and confidence. This methodology already draws tremendous interest from would-be investors and partners. This increased leverage increases investments in licensing agreements and collaborative partnerships. The terms of ownership are laid bare and readily provable on the blockchain.

Speculative Investment

NFTs are just a more flawed, exclusive, and narcissistic speculative investment. They allow inventors to crowdfund pools of capital from investors that are willing to assume risks for the prospect of future returns. This model allows inventors to secure funding from a broader range of sources, including individuals who believe in the potential of their inventions.

The Risks and Challenges of NFTs

NFTs offer a host of benefits for creators. We need to be honest about the risks and challenges this technology brings. The NFT market is incredibly new and rapidly evolving. Inventors need to keep a few things in mind before jumping in.

  • Market volatility: The NFT market is highly volatile, and the value of NFTs can fluctuate rapidly. This can make it challenging for inventors to predict and secure funding, as the value of their NFTs could drop significantly.
  • Cyber threats: Those who buy and sell NFTs face cyber threats, including the risk of hacking and theft of NFTs.
  • Energy consumption and environmental impact: Blockchain in financial services consumes a lot of energy daily, which can have a significant environmental impact. French artist Joanie Lemercier’s first sale of six NFTs consumed 8.7 megawatt-hours of energy.
  • Lack of regulation and fraud: One major ethical problem of NFTs is fraud. One well-known form of fraud is called “wash trading,” when an NFT creator or seller inflates the price of their NFT.
  • Uncertainty of ownership: If the digital asset sits on someone’s computer, say Coinbase, and it shuts down, there is no way to prove ownership of the original copy.
  • Volatility of value: NFTs are moving up and down in value quite dramatically, which can make it difficult for inventors to predict their worth.

Real-World Examples and Expert Opinions

NFTs are currently in the early adoption stage. Inventors and creators can’t wait for a federal solution — they are already using them to upend established industries.

  • Jaiden Stipp: A 15-year-old from Tacoma, Washington, who sold a digital illustration for over $30,000.
  • Erin Beesley: A 14-year-old from North Carolina, whose generative art NFTs have sold for as much as $50,000.
  • FEWOCiOUS: An 18-year-old digital artist who has reportedly earned over $18 million from NFT sales in the past year.
  • Benyamin Ahmed and Nyla Hayes: Both 12 years old, who have found success with their “Weird Whales” and “Long Neckie Ladies” NFT collections, respectively.
  • Brittany Pierre: A 36-year-old photographer who earned over $109,000 in just 9 months by selling her own NFTs and flipping others for a profit.

Nevertheless, experts caution that NFTs are a dangerous fad. Nonetheless, they still aren’t considered a safe bet for defending against IP infringement for big name brands and corporations. The Berne Convention protects the authors' exclusive rights to their original works. This is true no matter how those works are conveyed or what medium they’re in. On their part, the NFT buyer would be wise to verify who the underlying asset owner is. United States copyright law requires that to be copyrighted, art must be conceived from human creativity. To receive protection, it needs to show originality. The deal on Article 1 of the WIPO Copyright Treaty makes that point, which was previously a matter of uncertainty, clear. Even just storing a protected work in digital form — such as in an NFT or as a work used in the metaverse — constitutes reproduction, and it must get permission in advance from the copyright owner.

The Future of NFTs and Intellectual Property

NFT/IP issues are only starting to scratch the surface of this intersection. The opportunity to disrupt is no less real. As the technology matures, NFTs will become an increasingly vital tool for inventors. More clarity in these regulations will allow them to better protect their ideas and find ways to monetize them. NFTs are giving inventors more power than ever before. They can pursue broader potential revenue sources, leverage emergent decentralized funding, and achieve greater ownership and control over their innovations, redefining the future of invention. ThrowingToken.com is committed to providing cutting-edge analysis on the rapidly changing NFT landscape. We prepare you to capitalize on these rapid advancements in technology and research.