NFT Utility for IP and Legacy Preservation (or The 7 Best Things About NFTs)

© Copyright 2022 Catherine B. Lippert | CEO, Passing the Torch LLC | All Rights Reserved.

Find us at www.passingthetorch.life where life work lives forever

Where We Stand Today

In mid-2022, we find ourselves on the verge of another World War, one that could easily be either funded or evaded by cryptocurrency— crypto as both a lifeline for war-torn populations and a means of bypassing economic sanctions meant to incentivize peace.  The stock market has lost more than 20% of its value from its peak in 2021, but that is no match for the steep ravines in cryptocurrency losses, depicted by the plunging charts in our very own digital wallets. Real estate, the solid kind (and maybe the metaverse, too) still looks OK despite rising interest rates. But another playground of the elite has cratered.

The Rise and Fall of NFTs

Last year was heralded as the year of the NFT. Now barely six months later, headlines are replete with the demise of those frightfully ugly, spliff-toking Bored Apes on yachts they used to talk about as an investment: BAYC.  You know, the multi-million dollar NFTs (non-fungible tokens) created on the blockchain, pure intangible ether. Vapor, the detractors said.  They— the other they, the Apes I mean— are even bought and sold with Ether, or ETH, the second most popular cryptocurrency created after Bitcoin.  Prophetic, I’d say. Nothing there really to look at but zeros and ones.

Celebrities have lost the millions they set aside to play with.  Not even Jimmy Fallon jokes about NFTs anymore on the Tonight Show, perhaps because it’s too sore a subject, as everyone has been pulling out or standing back.  The buyers are, anyway; the wannabees are still buzzing.

With every new technology comes— as the Gartner Group analysts so aptly put it— a rising hype curve, followed by the dreaded trough of disillusionment. We’re hitting that trough pretty hard now, in a bear market.

But I sense an updraft ahead.

Glimmers of Redemption

All current events aside, there is something amazing, something compelling about NFTs— capturing unique intellectual assets, pictures and ideas (not just information, but actual property) in digital form on a public blockchain datastore which anyone can access from anywhere.  Marketing this intellectual or artistic property and selling it peer-to-peer, without a shop, agent, bank, title company or e-commerce site between you and the customer is surely a step beyond the Internet we knew, unveiled recently as Web3, just part of the latest platform.

As for transactions on a blockchain, no one can undo them, or de-commission and remove them; NFTs minted there remain there for all to examine.  But not necessarily for all to own, as you need enough crypto in your digital wallet to purchase them, plus pay transaction fees and “gas” to make the transaction happen. Every ledger entry on the chain requires electronic work you have to pay for, employing blockchain miners, not to mention all the middlemen. (There is partial relief, however, in the Level 2 chains that operate on “proof of stake” as opposed to “proof of work.” Maybe look that up later.)

Just like a run of books, or a limited edition of rare artist’s prints, there can be only so many copies of an NFT minted, ordinarily from 1 to 10,000, but the best are likely on the rare side, no more than 10 or 50 produced. That’s how prices get so high, sometimes stratospheric if there’s a one-of-a-kind (1/1) fabulous NFT minted by a renown creator such as Banksy.

The potential preservation of value, together with a work’s “provenance” (records of origin) is specifically why I made the effort to explore NFTs.  I’ve experimented over the last three months of building my startup, armed with a meager $200 budget earmarked for this project, loaded for bear (not those ugly Apes as it turns out). It’s been a real test to see if ordinary people with extraordinary ideas can be catapulted upward in mobility. The creativity of the human spirit is common to all of us, but discoveries, inventions and inspirations are all too rare in life not to be captured and shared with a future community. I don’t use the word “future” here lightly; NFTs represent a new opportunity to preserve and trade innovations, even across decades, for the benefit of later generations whom we haven’t even met yet.

Testing the waters now, I’m finding that the state of the NFT world is really only halfway where it needs to be in order to become fully accessible as a business platform.  I’ll skip the pitfalls here (reserving them for another article or two), and focus only on what works for now.

A Kind of Quest for Immortality

However badly you or your acquaintances have been burned, blockchain-based NFTs have some redemptive qualities, as I’ve recently discovered for myself.  A counter-current to the steep losses is quietly mounting based on common sense, utility, and intrinsic value— at least for some NFT collections, if not all.

A few of us are beating a path to blockchain normalization, and some semblance of predictability in NFT valuation, finding workarounds along the way to get us all safely past a raft of technical and financial pitfalls.  Pegging the value of our NFT properties to the size of the opportunities they represent, or the magnitude of the problems they solve (just like any other business solution) is the conservative way to go.  Think of it as the Warren Buffett value approach to digital assets, though he himself may never touch the stuff.

A flower bulb is a bulb is a bulb.  No matter how pretty or exotic, it doesn’t do the economic kind of work we do or present enduring value. We learned this in the great Holland tulip crash of the 1600’s. And we are learning it all over again today with inflated digital Ape portraits and their look-alikes.

In my mind (and as it turns out, in the mind of the US Patent and Trademark Office as well), property must have utility, or at least a unique and striking design, otherwise it’s likely to be worthless, and rarely patentable (plants being the possible exception). And what could be more useful and unique than the life’s work of the world’s innovators captured in digital form, for posterity?  We’re talking about the discoveries, insights, creations or compilations of pioneering artists, collectors, scientists, engineers, teachers, authors, coders, chefs, product managers, housewives or stay-at-home dads, theologians, manufacturers, backyard inventors, politicians, retirees and financiers.  Almost nothing, except life itself, is more valuable than such ingenuity.  And so we persist.

Now if only we could get past the limitations on NFT files, to preserve entire data rooms in multiple cloud file folders as single NFTs— for perpetuity. Then we could tell the whole story of any given innovation and have it last forever. (Are you listening, Google Drive?)

No Blockchain Coding Experience, but Qualified None the Less

I had been tackling the wrong end of the problem at work for a year or so leading up to forming our latest startup— creating business cases and entrepreneurial pitches for such innovations, their compounds, their recipes.  Fortunately, my co-founder reminded me that we needed to be on the vanguard of something most people didn’t understand fully, a new mechanism beyond the printing press and better than patents, to carry a person’s life work forward for another 200 years or more, after the family tree is long forgotten.  A person’s work can live (virtually) forever even if they themselves do not.

I’m late to the blockchain fleecing party, having missed out on exorbitant tolls and profits exacted from early adopters.  I don’t code myself, but I can apply technology to everyday problems. By now, half of my tiny budget has been eaten by costly steps in the purchase and conversion of cryptocurrencies, and the minting, sale, purchase and transfer of NFTs. The other half went to the creators of inexpensive digital art I acquired as a kind of NFT greeting card. But I have managed to mint a few NFTs of my own for free, and this paper itself represents one of my first attempts at minting an NFT at zero or low cost to create a “writing product.”

Good that greed is not my thing.  I have no particular agenda to rob, overcharge, or scam anyone with my NFTs.  What gives me the credentials to speak up positively about NFTs is the fact that I’m a serious tech business professional of 40 years, not caught up in the hype. Even after the deflation of my cryptocurrency account and the ubiquitous fees I’ve swallowed, I’m still mining this space for value.

More importantly, I’m willing to trudge my way through the practical matters as an actual creator, user and collector of NFTs, instead of simply writing about them.  I’m representative of many anxious but optimistic entrepreneurs looking hard to find the enduring business proposition– the one that lasts beyond Bored Apes and PFPs (those “pictures for proof” or “parties” as the case may be).  I’m perhaps more trustworthy as a resource because I am literally ready to drop, or rather burn up, NFTs altogether if, like on the emperor, we don’t find any clothes. I’m invested, long-haul, in entrepreneurship itself in whatever form it comes in.

It’s taken quite a while for me to find platforms and technologies suited for the purpose; a shame that leading exchanges like OpenSea still don’t have facilities to mint from pdfs, for example. I’m happy to try Mirror though, and I’ll let you know how it all turns out.

Short story, I started as a student in an art program, now come full circle, as an experienced tech professional and entrepreneur this time. I’m minting my own photographs as NFT experiments, and running a startup to preserve an intellectual legacy on the blockchain, a history of innovation in the making. Around three years ago, it was self-service intellectual property protection I was working on, starting with provisional patents. This is where I made invaluable contacts with leading intellectual property experts, four, five or six of whom have since been recognized as top 100 in IP.  It was also where I first became aware of the gross failure of patents to cover much of anything worth passing to the next generation.

This year so far, it’s been an investment of $200 in NFTs and a yacht-load of effort working on the blockchain for both artistic expression and startup innovation— work that is worthy enough to last forever, not just the 20 years the patent office might grant us.

The 7 Best Things About NFTs

You’ve heard enough horror stories, I’m sure, and if you’ve read this far, you must be curious. Why, as someone with that much experience in business and technology, am I futzing around with NFTs, especially considering the platform flaws, potential rip-offs, and downright silliness of the leading specimens?  I’ll tell you why, and I’ll also explain why you, too, might want to take a closer look.

1. VALUE CAPTURE. NFTs are a new way to represent items of true value— like fine art, ideas, inventions, recipes, wisdom, business plans and trade secrets, even startups and investment opportunities— digitally, and then put them up for sale, in whatever ways you care to structure it. (You still need contracts though, if you want the law on your side).

2. DEMOCRATIZATION. NFTs are traded by individuals, out of reach of most authorities. And even more decentralized exchanges called DAOs are coming. Transactions are conducted peer-to-peer or possibly crowdfunded, with smart contracts to automatically reward the original creator each time a piece of work is passed from one collector to another. Anyone with a digital wallet and the know-how can publish and potentially profit from their work. It’s a fairly low bar.

3. IMMUTABILITY. Blockchain ledger entries are secure and immutable, meaning what’s done is done.  Transactions are automatically recorded as facts of shared history across thousands of nodes on the Internet, records that can’t be changed or reversed.  It’s proof of whatever you need it to be proof of, by virtue of an indelible time stamp, and the consensus of all nodes in the network. A kind of unanimous notary public.

4. PROVENANCE. Each NFT has a continuous provenance, an unbreakable chain of records, related one to another. If you watch Antiques Road Show you probably realize how valuable records can be if they trace something you own back 50 or 100 years to the verified creator. With NFTs, it’s authenticity in the making, and you don’t have to go out of your way to save receipts, additional artifacts or signatures unless you want to.

5. TRANSPARENCY. NFT transactions, on the Ethereum chain at least, are typically publicly verifiable. They are executed and recognized globally, unbounded by time or space. Anyone anywhere at any time with a digital wallet can make a transfer, and view the chain to verify that a transaction took place, and at what price.

6. PERPETUITY. In theory, whatever you mint or transact on the blockchain lives forever (though there are still a few caveats, which I’ll get around to some other time.)

7. BEYOND IPR. It’s a new way, potentially at least, to help protect intellectual property rights and establish “first use,” beyond patents, trademarks, copyrights and trade secrets.

Now I’ll explain. But not necessarily comprehensively, or in that order. Just stick with the highlights, no tl;dr.

A Key Analogy

First let me illustrate the attraction of NFTs on blockchain by contrasting it with a familiar model of passing value from one party to another— that is, real estate transactions.  Practically everybody knows at least a little bit about buying a piece of property to live in or invest.

In real estate, at least in the United States, a deed represents the right of ownership to a unique piece of property described by survey notations and a concise description.  A deed may transfer property rights from a seller to a buyer and become a matter of public record by entering it into an authoritative, centralized ledger— typically a county registry of deeds. Deeds don’t advertise or cause property to sell, however they do document who owns what.  One drawback is that deeds are not intrinsically connected to one another in an unbroken chain of sales transactions for a given property.  You need a county registrar of deeds and maybe a title search for that.

Now consider the county where the deeds are filed. The county is the central authority for real estate in its jurisdiction including any liens upon it.  If a transaction isn’t registered there, it may or may not have taken place.  This could result in a title defect on the property, opening up a contest of ownership rights.

My husband and I live not far from a small piece of land that was foreclosed and sold at a tax sale from the steps of the courthouse.  The new owner, likely realizing that what they bought was nothing but a swamp, heavily protected as wetlands, never bothered to register their deed.  A previous owner’s name still appears in the county record, but they are no longer the owner. The property has long since passed by (unrecorded) deed to other owners, sold for back taxes.  How do we know who owns the property now, and who owes the current taxes upon it? It seems it is in limbo.

Truth By Consensus

Now imagine that in the world of NFT property (by nature intangible, but it can represent tangible property also, a big distinction), we do away with the central registry of transactions at the county. Or anywhere else for that matter.  Instead, the records instantaneously go along with the property, and all title transfers are logged on a shared digital ledger that no one person or organization controls, just like the Internet itself.  If it’s public, everyone who cares has access to an exact copy of the latest updates to the ledger, the blockchain, anywhere in the world. Even if you don’t bother to host your own copy/node of the blockchain to verify records (as I don’t), there are free services that can provide you with a view into the chain, similar to a microfiche viewer in a library that lets you focus on specific events in past history, item by item, newspaper date by date.

The blockchain record you access now from your phone or laptop is just like every other copy; there is no original master, just identical, egalitarian nodes that are all kept up to date near-simultaneously across the globe, no matter where the transaction takes place.  It all happens automatically, powered by blockchain mining, and (so far) paid in “gas” fees to miners who own or lease the computers that do the computations needed to add blocks to the chain.

No blockchain ledger entry therefore can be reversed, because its creation has become an historical fact in the chain, even becoming more and more embedded in the historical record as each new transaction block is recorded, and propagated throughout the electronic ledger. Fraud is virtually impossible because if one copy of the ledger shows a discrepancy, there are untold numbers of other keepers of the ledger to contradict the odd one, by consensus.  The only way, it seems, to cheat is to overwhelm more than half of the hundreds of thousands of nodes of the chain with identical false information, or to scam a user out of their property by persuading them to unintentionally transfer their tokens to someone else.  The latter is likely your own fault for not being vigilant, and it’s not very forgiving.  But in rare cases of theft, if severe and widespread enough, the blockchain technology stewards might agree to fork the chain to exclude the fraudulent transactions, and rightful title to the property is preserved, at least on the fork of the chain deemed to be legitimate— anointed, again by consensus.

Cryptographic Security and Beyond

The reason an NFT is “non-fungible” is that unlike currency where every coin is treated the same, each NFT is unique and has no equivalent. Its uniqueness is important to preserve because therein lies its value.

The cryptography that underlies NFTs, and helps to maintain their value, is that of the blockchain itself. Blockchain uses encryption with keys along with what’s known as a hash, an algorithm that’s applied to a record, changing it beyond recognition to ensure that it can’t be decoded. Blockchain ensures that an NFT cannot be perfectly recreated or reproduced. Moreover, it’s inextricably tied to a string of transactions going back all the way to its origin.

That’s quite an accomplishment in the digital world, where everything digital is normally built from nothing but zeros and ones and can be quite easily copied and modified. As an admirer of art, sure, you can use the “save as” on an NFT, same as on any computer file. But in that case, you don’t get ownership, and you’d be likely breaking copyright law. Try to pawn that piece off as the authentic NFT, and you’ll never be able to produce a record of transactions leading back to the famous artist you lifted it from. If you turn around and create an NFT of someone else’s work, the record will show that you’re the one who created it, caught red-handed.

Pirated copies are hard to make. Fortunately, counterfeit NFTs can be distinguished from those originally minted because just like the tangible fakes, they don’t have the provenance. No unauthorized copy of an NFT will contain the authentic record of origin or ownership. You say the artist was Beeple? He or his gallery had better be listed there as the creator. Pirated copies, downloaded, saved-as, and re-issued by someone other than the creators, are worthless— no more valuable than the photo you snapped of a masterpiece in the Louvre.

There is only one masterpiece, whose copyright is owned by the artist and his or her heirs, or possibly someone who collects the artist’s work. It’s all on record.

Even two (or more) NFTs legitimately minted from the same creative work can be distinguished from one another. Like human identical twins who always have slightly different DNA, any two representations of an NFT file or block are never 100% alike in digital form, even if their appearance is similar. One authentic NFT that appears to be the same as another authentic NFT is usually assigned a separate number in an edition, such as 12/50 (number twelve in the series of 50 minted). Or their minting dates and editions may differ, despite the fact the images are the same. The art world has perfectly legitimate ways to disseminate artwork. Just as an edition of original etchings can be shared with more people than an original oil painting, numbered NFTs can be shared with more people than the original creative work they were minted from.

Tokenization

At this point, I’ll dip into an aspect of the underlying technology without which no paper on NFTs is complete… tokenization. After all, we’re talking about NFTs, where the T stands for Tokens. But for those of you who aren’t interested, just skip to the next section.

There can be some confusion. From what I can tell, tokenization is employed two different ways in the service of NFTs. The first is in the replacement of sensitive data with a string of bits and bytes— a token— that only references the sensitive data which is meanwhile kept in a vault. Sensitive information, for example, can range from a piece of the property itself, some payment information, or a buyer’s identity, bank account or credit card number. The token is a complete replacement for the sensitive data, and unlike encryption, there is no “undo” process that one can apply to the token to get back to the sensitive data. It’s like a subway token that only “stands in” for a dollar fifty; it doesn’t let you get the dollar fifty back out.

The second use of tokenization is in the ability to fractionalize a unique piece of property by issuing one or more tradable, electronic tokens (the NFTs) like shares of equity. The token (or set of tokens) in this case is an electronic stand-in for the property itself. This kind of tokenization uses smart contracts to break down big expensive assets into digital shares that can more easily be traded by ordinary people over the Internet. Please note however that if you’re expecting property rights to an asset to be sold along with the NFT, then you’ll still need some actual legal work done to tie the NFT to the property itself. Otherwise the sale of the NFT is likely to be just that, the sale of the NFT, and not the creative work or property it was minted from.

While the first case is strictly a security strategy (arguably more secure than encryption, though you still need a vault for sensitive data), the second is simply a monetization strategy, and it, too, is secured by blockchain cryptography.

Privacy

In summary, blockchain cryptography together with tokenization strategies provide a way to secure an original digital work minted in an NFT and transfer it (at a price or no price at all) from the creator to new owners, investors, licensees, listeners or viewers. On blockchain, NFTs can pass from one owner to another with the potential anonymity of both parties. People need not associate a real name to their digital wallets (at the moment, for example, my wallet is unnamed). No county registries, no government authorities or financial institutions need be involved.   All you actually need is access to the internet, a digital wallet and a bit of crypto (though an NFT-friendly internet bank and a few investor contacts of your own may still come in handy).

Crooks have discovered they can launder money anonymously and with impunity this way, for example buying artwork with large sums of ill-gotten crypto funds. Or they can use crypto and NFTs to facilitate transactions like drug deals or trading stolen weapons, because it’s hard to trace who owns which wallets: “I’ll buy this NFT from you for X number of ETH, and you can have my item ready for pickup on Tuesday at this location.” There’s very little regulation preventing criminals from prospering, at least until they try to cash out in fiat money (ordinary national currency like the US Dollar, Euro or Yen), through a conventional bank. That’s where the Patriot Act and IRS stand ready to trip them up— in the US at least, but every country is its own sieve.  Thus, the crypto monetary world is like a massive market unto itself until you need to buy something that isn’t sold there.

Nevertheless, there are plenty of good reasons to preserve anonymity on the chain, even if business partners are executing perfectly legal transactions among themselves, and whether or not they are privately known to each other.

Beyond the privacy that anonymity affords, there are some other emerging protections as well. Let’s get back to intellectual property, for example.

IP Opportunity Lost

For most of modern history, the protection of property rights through trademarks, copyrights and patents was based on a principle of “first to invent,” “first to publish,” or “first to be used in interstate commerce.”  For patent applications in particular, the burden was always placed on the inventor to show contemporaneous records providing evidence of the earliest date of discovery and the reduction of theory to practice.

From the beginning, the US patent office used to award patents, like trademarks and copyrights, on the basis of “first to invent.”  But no more! The new rules for patents have been “first to file” since 2015— and this is aligned internationally with other patent jurisdictions. That means whoever gets to a patent office first with an eligible invention, described in a conforming patent application (fee paid, of course) may be declared the winner, the patent-holder— the party who has the power to prevent others from copying, selling and using their work in a particular geography.  In the case of US utility patents, that protection lasts 20 years from the application date. And yes, it does require supporting legislation and enforcement by the courts in order for you to defend your claims and sort out disputes. (Good luck collecting though; patent infringement cases usually involve a long, drawn out legal battle that few can afford.)

Sadly, the patent office zigs where the blockchain world zags.  NFTs could be easily used to document “first to invent,” but those are the old rules now.  They don’t apply anymore. If only the US patent office had the foresight to hold off changing the policy to first-to-file in light of blockchain prospects seven years ago, they would now have an easy, iron-clad way to manage all first-to-invent claims: just ask inventors to submit their Invention as an NFT abstract (with secret, hidden files locked up inside) during the normal course of documenting the innovation.  It would have been easier than saving all those carefully dated hand-written lab books in a box in the attic.  After all, simplicity was what they were going for when they changed the rules.

Unfortunately, publishing something on blockchain today, though immutable, gives you no extra advantage as a patent applicant with the patent office.  Patent examiners only look at the applicants who file first, then they attempt to discover whether there was any similar prior art already publicly known before the first inventor filed. Finding prior art that tells all about an invention, it turns out, can doom any further patent aspirations, even if it’s the inventor’s own prior art. The invention has to have utility, novelty, and not be obvious.  That means, in part, never having been disclosed before except under attorney-client privilege or a non-disclosure/confidentiality agreement. Not disclosed in a research paper, not in a product, not at a conference, not in the market.

IP Opportunity Gained

Despite the patent office being caught wrong-footed in its failure to uphold “first to invent” policies backed up by the latest technology, NFTs can potentially still:

1. Document “first use” in copyright and trademark law

2. Demonstrate who came up with an idea first, for bragging rights, or building credentials (Look mom!)

3. Help to settle prior art claims in patenting

4. Support freedom to operate

The power of number one is pretty obvious, because if you are first to document the use of something in an NFT, you have an immutable record with a date stamp to back you up.

The second one— bragging rights— may not be defensible in court without any accompanying IP ruling. But you can surely add the link to an innovative NFT on your resume, as a claim to back up your expertise, and display the knowledge you’ve accumulated as an expert.

Those last couple, numbers three and four are a bit more sophisticated from a legal perspective. I am no lawyer, and in no way can this article be construed as legal advice. But the crux of the matter, in lay terms, is this: if you can demonstrate that you had already made the details of an invention known to the public (say by publishing all the drawings, know-how and claims— nothing secret— on blockchain and getting a timestamp), you can preclude anyone else from claiming they own those rights. That is, unless they managed to file a patent application before you went public with the info. This is a sure way for no one, not even you, to get a patent. So don’t do it without consulting an attorney.

Your risk of infringement is greatly diminished by either having patent rights yourself, or placing the invention out in public as prior art so no one can claim it. No one can limit your freedom to operate using an invention that no one can patent. It’s at least a way to de-risk your business, if not a way to limit competition.

Proactive public disclosure of an invention through NFTs can nullify subsequent claims if the patent examiner finds it, and it can preserve your right to continue profiting from your invention.  It doesn’t stop someone else from copying you (anyone can use your idea once the invention is known to the public and remains unprotected by a patent), but it does mean that no one else should be able to shut you down or win an infringement case against you— you can simply point to the date the NFT was minted which discloses the invention to customers and the public. It’s an objective, verifiable public record on the blockchain.

Even if minting an NFT isn’t quite as good as having a patent granted by the USPTO, it’s at least under your control. It can prevent other people from stopping you from operating with it, or getting their own patent on your invention.

You can all but guarantee yourself the freedom to operate using your invention, even if a law firm hasn’t vouched for it.  Having been first to disclose an invention in public, you can continue using it (as long as someone else’s patent application wasn’t already in the works). You’ve just created a prior art impediment to the next guy (or yourself) trying to file a patent on the same invention.  It’s just that you can’t stop anyone else from benefiting from your invention either.  It’s an “If I can’t have a patent on this, neither can anyone else” situation.

Likely all you’d get anyway even if you paid $100,000 to a lawyer for “freedom to operate” is a thorough prior art search, analysis and some extra insurance, backed by the firm. This is not very affordable except for the very largest corporations.

One Last Thought for Innovators and Their Attorneys

Let’s say you do publish your invention defensively as an NFT on the blockchain and in other places. Anyone can buy your NFT, but it becomes prior art for anyone who follows you to the patent office, effectively shutting down the possibility of others getting patents issued on what you shared with the world. If yours is a really useful invention in the public domain, or if products based on your invention are purchased by customers, then chances are, other people will be using and taking advantage of what you invented.  That can be bad if you’re not compensated for it, or good because you are establishing a following.

Now consider filing a patent or provisional application for an enhancement to the popular invention that you first published as an NFT.  Chances are, competitors will not be keeping up with you.  First of all, they may study or try to copy your invention, but they may not have the know-how you gained in working out the idea. So their implementation may prove inferior. Secondly, they may have no desire to follow in your footsteps because they’re working on something else— something that skirts around your public disclosure, avoiding the prior art.  Competitors are usually looking for something they can patent for themselves, and they put their effort into building out their own differentiator, not yours.

Thus, your second invention (the enhancement to the original idea) may have a better chance of having a patent issued than the first. It might even be more commercially viable, too, if you have already cultivated a market.    If you’re lucky, the widespread knowledge of the prior art that you originally minted as an NFT has stimulated some demand among users of your first invention for the second.  It may attract them to purchase or license the enhancement, this time patented.  Moreover, due to the insights you’ve gained in working out problems in the first invention, you are uniquely positioned to make technical breakthroughs the second time around.  Large companies evergreen their inventions in similar ways all the time, usually to extend their protections beyond the initial patent rights limit of 20 years.

Summing It Up

It may seem that protecting your intellectual property rights involves navigating a labyrinth of legal and technical nuances, and you’d be right. But the overall message is clear: keep innovating. The speed of innovation is your best defense.  Use a combination of intellectual property rights and blockchain NFT evidence of first use or prior art to establish a defense around your innovations. Don’t neglect to ask for help getting inventions and enhancements (with secret files or not) protected and minted as NFTs on the blockchain.  Let’s figure out together how we can utilize blockchain to convey your value to the next generation and beyond, with or without patent protection.

ABOUT THE AUTHOR: Cathy Lippert is Founder and CEO of Passing the Torch, LLC, a technology and information services firm to help ensure that your life’s work lives forever. Contact Cathy on LinkedIn or at info@passingthetorch.life.

C. Lippert Biographical Notes:

The First Bookend, Strangely Prophetic

Personally, I’m a financially risk-averse individual which gives me the freedom to take high risks in what I do for a living, having already secured a financial future of sorts working as a high-end wage slave.  I’m free to find new ways to prosper in technology without experiencing many of the personal downsides that come wrapped in a career, identity or paycheck in various tech industry niches.  For a glimpse of my background, you can check out my LinkedIn profile, but it doesn’t tell much of a blockchain story.

Mine is a saga of “bookends,” from the early days of digital graphics and electronic publishing on workstations (before PCs), to the current state of NFT digital property that you can mint and display in a digital wallet on your phone.  I can also bore you with many hard lessons learned between those bookends, but I’ll spare you the rabbit trails for now.

I will share one little-known anecdote about myself, however, not because it has much bearing on the blockchain topic, but it shows you where the first bookend of my professional life was anchored to support what was about to be stacked up on the shelf beside it.  I’m credited with the first life drawing of a nude on the Apple Macintosh using MacPaint.

The evening after the Mac was announced in that stunning David-and-Goliath Apple commercial during the Super Bowl (in the year 1984, of Aldus Huxley significance), I took one of the first Macs ever built out of hiding from our secret, locked closet at the office, and brought it along to my life drawing class.  Now those were the heady days of Bill Atkinson, Dan Eilers and Guy Kawasaki, Apple Fellows and the power team supporting Steve Jobs’ creations.  I met them in their youth in Hawaii at the annual national sales boondoggle and again later at Comdex (now CES, the Consumer Electronics Show) in that first year of Mac development insomnia, in Las Vegas.  It was at Comdex that the Apple Lisa had been introduced a couple of years before; I had already developed an electronic clip art product for that. (A flash in the pan, I might add; not many people ever saw it, and it was quickly eclipsed by the Mac.)

As volunteer director of the Boston Computer Society Graphics Group at the time, I was given an impromptu chance to present my early MacPaint sketches at a conference on computer graphics hosted at Massachusetts College of Art in Boston.  After that, I moved on to other less fun but more lucrative work on all three coasts for the next three or four decades.

NFT Utility for IP and Legacy Preservation (or The 7 Best Things About NFTs)

© Copyright 2022 Catherine B. Lippert | CEO, Passing the Torch LLC | All Rights Reserved.

Find us at www.passingthetorch.life where life work lives forever

Where We Stand Today

In mid-2022, we find ourselves on the verge of another World War, one that could easily be either funded or evaded by cryptocurrency— crypto as both a lifeline for war-torn populations and a means of bypassing economic sanctions meant to incentivize peace.  The stock market has lost more than 20% of its value from its peak in 2021, but that is no match for the steep ravines in cryptocurrency losses, depicted by the plunging charts in our very own digital wallets. Real estate, the solid kind (and maybe the metaverse, too) still looks OK despite rising interest rates. But another playground of the elite has cratered.

The Rise and Fall of NFTs

Last year was heralded as the year of the NFT. Now barely six months later, headlines are replete with the demise of those frightfully ugly, spliff-toking Bored Apes on yachts they used to talk about as an investment: BAYC.  You know, the multi-million dollar NFTs (non-fungible tokens) created on the blockchain, pure intangible ether. Vapor, the detractors said.  They— the other they, the Apes I mean— are even bought and sold with Ether, or ETH, the second most popular cryptocurrency created after Bitcoin.  Prophetic, I’d say. Nothing there really to look at but zeros and ones.

Celebrities have lost the millions they set aside to play with.  Not even Jimmy Fallon jokes about NFTs anymore on the Tonight Show, perhaps because it’s too sore a subject, as everyone has been pulling out or standing back.  The buyers are, anyway; the wannabees are still buzzing.

With every new technology comes— as the Gartner Group analysts so aptly put it— a rising hype curve, followed by the dreaded trough of disillusionment. We’re hitting that trough pretty hard now, in a bear market.

But I sense an updraft ahead.

Glimmers of Redemption

All current events aside, there is something amazing, something compelling about NFTs— capturing unique intellectual assets, pictures and ideas (not just information, but actual property) in digital form on a public blockchain datastore which anyone can access from anywhere.  Marketing this intellectual or artistic property and selling it peer-to-peer, without a shop, agent, bank, title company or e-commerce site between you and the customer is surely a step beyond the Internet we knew, unveiled recently as Web3, just part of the latest platform.

As for transactions on a blockchain, no one can undo them, or de-commission and remove them; NFTs minted there remain there for all to examine.  But not necessarily for all to own, as you need enough crypto in your digital wallet to purchase them, plus pay transaction fees and “gas” to make the transaction happen. Every ledger entry on the chain requires electronic work you have to pay for, employing blockchain miners, not to mention all the middlemen. (There is partial relief, however, in the Level 2 chains that operate on “proof of stake” as opposed to “proof of work.” Maybe look that up later.)

Just like a run of books, or a limited edition of rare artist’s prints, there can be only so many copies of an NFT minted, ordinarily from 1 to 10,000, but the best are likely on the rare side, no more than 10 or 50 produced. That’s how prices get so high, sometimes stratospheric if there’s a one-of-a-kind (1/1) fabulous NFT minted by a renown creator such as Banksy.

The potential preservation of value, together with a work’s “provenance” (records of origin) is specifically why I made the effort to explore NFTs.  I’ve experimented over the last three months of building my startup, armed with a meager $200 budget earmarked for this project, loaded for bear (not those ugly Apes as it turns out). It’s been a real test to see if ordinary people with extraordinary ideas can be catapulted upward in mobility. The creativity of the human spirit is common to all of us, but discoveries, inventions and inspirations are all too rare in life not to be captured and shared with a future community. I don’t use the word “future” here lightly; NFTs represent a new opportunity to preserve and trade innovations, even across decades, for the benefit of later generations whom we haven’t even met yet.

Testing the waters now, I’m finding that the state of the NFT world is really only halfway where it needs to be in order to become fully accessible as a business platform.  I’ll skip the pitfalls here (reserving them for another article or two), and focus only on what works for now.

A Kind of Quest for Immortality

However badly you or your acquaintances have been burned, blockchain-based NFTs have some redemptive qualities, as I’ve recently discovered for myself.  A counter-current to the steep losses is quietly mounting based on common sense, utility, and intrinsic value— at least for some NFT collections, if not all.

A few of us are beating a path to blockchain normalization, and some semblance of predictability in NFT valuation, finding workarounds along the way to get us all safely past a raft of technical and financial pitfalls.  Pegging the value of our NFT properties to the size of the opportunities they represent, or the magnitude of the problems they solve (just like any other business solution) is the conservative way to go.  Think of it as the Warren Buffett value approach to digital assets, though he himself may never touch the stuff.

A flower bulb is a bulb is a bulb.  No matter how pretty or exotic, it doesn’t do the economic kind of work we do or present enduring value. We learned this in the great Holland tulip crash of the 1600’s. And we are learning it all over again today with inflated digital Ape portraits and their look-alikes.

In my mind (and as it turns out, in the mind of the US Patent and Trademark Office as well), property must have utility, or at least a unique and striking design, otherwise it’s likely to be worthless, and rarely patentable (plants being the possible exception). And what could be more useful and unique than the life’s work of the world’s innovators captured in digital form, for posterity?  We’re talking about the discoveries, insights, creations or compilations of pioneering artists, collectors, scientists, engineers, teachers, authors, coders, chefs, product managers, housewives or stay-at-home dads, theologians, manufacturers, backyard inventors, politicians, retirees and financiers.  Almost nothing, except life itself, is more valuable than such ingenuity.  And so we persist.

Now if only we could get past the limitations on NFT files, to preserve entire data rooms in multiple cloud file folders as single NFTs— for perpetuity. Then we could tell the whole story of any given innovation and have it last forever. (Are you listening, Google Drive?)

No Blockchain Coding Experience, but Qualified None the Less

I had been tackling the wrong end of the problem at work for a year or so leading up to forming our latest startup— creating business cases and entrepreneurial pitches for such innovations, their compounds, their recipes.  Fortunately, my co-founder reminded me that we needed to be on the vanguard of something most people didn’t understand fully, a new mechanism beyond the printing press and better than patents, to carry a person’s life work forward for another 200 years or more, after the family tree is long forgotten.  A person’s work can live (virtually) forever even if they themselves do not.

I’m late to the blockchain fleecing party, having missed out on exorbitant tolls and profits exacted from early adopters.  I don’t code myself, but I can apply technology to everyday problems. By now, half of my tiny budget has been eaten by costly steps in the purchase and conversion of cryptocurrencies, and the minting, sale, purchase and transfer of NFTs. The other half went to the creators of inexpensive digital art I acquired as a kind of NFT greeting card. But I have managed to mint a few NFTs of my own for free, and this paper itself represents one of my first attempts at minting an NFT at zero or low cost to create a “writing product.”

Good that greed is not my thing.  I have no particular agenda to rob, overcharge, or scam anyone with my NFTs.  What gives me the credentials to speak up positively about NFTs is the fact that I’m a serious tech business professional of 40 years, not caught up in the hype. Even after the deflation of my cryptocurrency account and the ubiquitous fees I’ve swallowed, I’m still mining this space for value.

More importantly, I’m willing to trudge my way through the practical matters as an actual creator, user and collector of NFTs, instead of simply writing about them.  I’m representative of many anxious but optimistic entrepreneurs looking hard to find the enduring business proposition– the one that lasts beyond Bored Apes and PFPs (those “pictures for proof” or “parties” as the case may be).  I’m perhaps more trustworthy as a resource because I am literally ready to drop, or rather burn up, NFTs altogether if, like on the emperor, we don’t find any clothes. I’m invested, long-haul, in entrepreneurship itself in whatever form it comes in.

It’s taken quite a while for me to find platforms and technologies suited for the purpose; a shame that leading exchanges like OpenSea still don’t have facilities to mint from pdfs, for example. I’m happy to try Mirror though, and I’ll let you know how it all turns out.

Short story, I started as a student in an art program, now come full circle, as an experienced tech professional and entrepreneur this time. I’m minting my own photographs as NFT experiments, and running a startup to preserve an intellectual legacy on the blockchain, a history of innovation in the making. Around three years ago, it was self-service intellectual property protection I was working on, starting with provisional patents. This is where I made invaluable contacts with leading intellectual property experts, four, five or six of whom have since been recognized as top 100 in IP.  It was also where I first became aware of the gross failure of patents to cover much of anything worth passing to the next generation.

This year so far, it’s been an investment of $200 in NFTs and a yacht-load of effort working on the blockchain for both artistic expression and startup innovation— work that is worthy enough to last forever, not just the 20 years the patent office might grant us.

The 7 Best Things About NFTs

You’ve heard enough horror stories, I’m sure, and if you’ve read this far, you must be curious. Why, as someone with that much experience in business and technology, am I futzing around with NFTs, especially considering the platform flaws, potential rip-offs, and downright silliness of the leading specimens?  I’ll tell you why, and I’ll also explain why you, too, might want to take a closer look.

1. VALUE CAPTURE. NFTs are a new way to represent items of true value— like fine art, ideas, inventions, recipes, wisdom, business plans and trade secrets, even startups and investment opportunities— digitally, and then put them up for sale, in whatever ways you care to structure it. (You still need contracts though, if you want the law on your side).

2. DEMOCRATIZATION. NFTs are traded by individuals, out of reach of most authorities. And even more decentralized exchanges called DAOs are coming. Transactions are conducted peer-to-peer or possibly crowdfunded, with smart contracts to automatically reward the original creator each time a piece of work is passed from one collector to another. Anyone with a digital wallet and the know-how can publish and potentially profit from their work. It’s a fairly low bar.

3. IMMUTABILITY. Blockchain ledger entries are secure and immutable, meaning what’s done is done.  Transactions are automatically recorded as facts of shared history across thousands of nodes on the Internet, records that can’t be changed or reversed.  It’s proof of whatever you need it to be proof of, by virtue of an indelible time stamp, and the consensus of all nodes in the network. A kind of unanimous notary public.

4. PROVENANCE. Each NFT has a continuous provenance, an unbreakable chain of records, related one to another. If you watch Antiques Road Show you probably realize how valuable records can be if they trace something you own back 50 or 100 years to the verified creator. With NFTs, it’s authenticity in the making, and you don’t have to go out of your way to save receipts, additional artifacts or signatures unless you want to.

5. TRANSPARENCY. NFT transactions, on the Ethereum chain at least, are typically publicly verifiable. They are executed and recognized globally, unbounded by time or space. Anyone anywhere at any time with a digital wallet can make a transfer, and view the chain to verify that a transaction took place, and at what price.

6. PERPETUITY. In theory, whatever you mint or transact on the blockchain lives forever (though there are still a few caveats, which I’ll get around to some other time.)

7. BEYOND IPR. It’s a new way, potentially at least, to help protect intellectual property rights and establish “first use,” beyond patents, trademarks, copyrights and trade secrets.

Now I’ll explain. But not necessarily comprehensively, or in that order. Just stick with the highlights, no tl;dr.

A Key Analogy

First let me illustrate the attraction of NFTs on blockchain by contrasting it with a familiar model of passing value from one party to another— that is, real estate transactions.  Practically everybody knows at least a little bit about buying a piece of property to live in or invest.

In real estate, at least in the United States, a deed represents the right of ownership to a unique piece of property described by survey notations and a concise description.  A deed may transfer property rights from a seller to a buyer and become a matter of public record by entering it into an authoritative, centralized ledger— typically a county registry of deeds. Deeds don’t advertise or cause property to sell, however they do document who owns what.  One drawback is that deeds are not intrinsically connected to one another in an unbroken chain of sales transactions for a given property.  You need a county registrar of deeds and maybe a title search for that.

Now consider the county where the deeds are filed. The county is the central authority for real estate in its jurisdiction including any liens upon it.  If a transaction isn’t registered there, it may or may not have taken place.  This could result in a title defect on the property, opening up a contest of ownership rights.

My husband and I live not far from a small piece of land that was foreclosed and sold at a tax sale from the steps of the courthouse.  The new owner, likely realizing that what they bought was nothing but a swamp, heavily protected as wetlands, never bothered to register their deed.  A previous owner’s name still appears in the county record, but they are no longer the owner. The property has long since passed by (unrecorded) deed to other owners, sold for back taxes.  How do we know who owns the property now, and who owes the current taxes upon it? It seems it is in limbo.

Truth By Consensus

Now imagine that in the world of NFT property (by nature intangible, but it can represent tangible property also, a big distinction), we do away with the central registry of transactions at the county. Or anywhere else for that matter.  Instead, the records instantaneously go along with the property, and all title transfers are logged on a shared digital ledger that no one person or organization controls, just like the Internet itself.  If it’s public, everyone who cares has access to an exact copy of the latest updates to the ledger, the blockchain, anywhere in the world. Even if you don’t bother to host your own copy/node of the blockchain to verify records (as I don’t), there are free services that can provide you with a view into the chain, similar to a microfiche viewer in a library that lets you focus on specific events in past history, item by item, newspaper date by date.

The blockchain record you access now from your phone or laptop is just like every other copy; there is no original master, just identical, egalitarian nodes that are all kept up to date near-simultaneously across the globe, no matter where the transaction takes place.  It all happens automatically, powered by blockchain mining, and (so far) paid in “gas” fees to miners who own or lease the computers that do the computations needed to add blocks to the chain.

No blockchain ledger entry therefore can be reversed, because its creation has become an historical fact in the chain, even becoming more and more embedded in the historical record as each new transaction block is recorded, and propagated throughout the electronic ledger. Fraud is virtually impossible because if one copy of the ledger shows a discrepancy, there are untold numbers of other keepers of the ledger to contradict the odd one, by consensus.  The only way, it seems, to cheat is to overwhelm more than half of the hundreds of thousands of nodes of the chain with identical false information, or to scam a user out of their property by persuading them to unintentionally transfer their tokens to someone else.  The latter is likely your own fault for not being vigilant, and it’s not very forgiving.  But in rare cases of theft, if severe and widespread enough, the blockchain technology stewards might agree to fork the chain to exclude the fraudulent transactions, and rightful title to the property is preserved, at least on the fork of the chain deemed to be legitimate— anointed, again by consensus.

Cryptographic Security and Beyond

The reason an NFT is “non-fungible” is that unlike currency where every coin is treated the same, each NFT is unique and has no equivalent. Its uniqueness is important to preserve because therein lies its value.

The cryptography that underlies NFTs, and helps to maintain their value, is that of the blockchain itself. Blockchain uses encryption with keys along with what’s known as a hash, an algorithm that’s applied to a record, changing it beyond recognition to ensure that it can’t be decoded. Blockchain ensures that an NFT cannot be perfectly recreated or reproduced. Moreover, it’s inextricably tied to a string of transactions going back all the way to its origin.

That’s quite an accomplishment in the digital world, where everything digital is normally built from nothing but zeros and ones and can be quite easily copied and modified. As an admirer of art, sure, you can use the “save as” on an NFT, same as on any computer file. But in that case, you don’t get ownership, and you’d be likely breaking copyright law. Try to pawn that piece off as the authentic NFT, and you’ll never be able to produce a record of transactions leading back to the famous artist you lifted it from. If you turn around and create an NFT of someone else’s work, the record will show that you’re the one who created it, caught red-handed.

Pirated copies are hard to make. Fortunately, counterfeit NFTs can be distinguished from those originally minted because just like the tangible fakes, they don’t have the provenance. No unauthorized copy of an NFT will contain the authentic record of origin or ownership. You say the artist was Beeple? He or his gallery had better be listed there as the creator. Pirated copies, downloaded, saved-as, and re-issued by someone other than the creators, are worthless— no more valuable than the photo you snapped of a masterpiece in the Louvre.

There is only one masterpiece, whose copyright is owned by the artist and his or her heirs, or possibly someone who collects the artist’s work. It’s all on record.

Even two (or more) NFTs legitimately minted from the same creative work can be distinguished from one another. Like human identical twins who always have slightly different DNA, any two representations of an NFT file or block are never 100% alike in digital form, even if their appearance is similar. One authentic NFT that appears to be the same as another authentic NFT is usually assigned a separate number in an edition, such as 12/50 (number twelve in the series of 50 minted). Or their minting dates and editions may differ, despite the fact the images are the same. The art world has perfectly legitimate ways to disseminate artwork. Just as an edition of original etchings can be shared with more people than an original oil painting, numbered NFTs can be shared with more people than the original creative work they were minted from.

Tokenization

At this point, I’ll dip into an aspect of the underlying technology without which no paper on NFTs is complete… tokenization. After all, we’re talking about NFTs, where the T stands for Tokens. But for those of you who aren’t interested, just skip to the next section.

There can be some confusion. From what I can tell, tokenization is employed two different ways in the service of NFTs. The first is in the replacement of sensitive data with a string of bits and bytes— a token— that only references the sensitive data which is meanwhile kept in a vault. Sensitive information, for example, can range from a piece of the property itself, some payment information, or a buyer’s identity, bank account or credit card number. The token is a complete replacement for the sensitive data, and unlike encryption, there is no “undo” process that one can apply to the token to get back to the sensitive data. It’s like a subway token that only “stands in” for a dollar fifty; it doesn’t let you get the dollar fifty back out.

The second use of tokenization is in the ability to fractionalize a unique piece of property by issuing one or more tradable, electronic tokens (the NFTs) like shares of equity. The token (or set of tokens) in this case is an electronic stand-in for the property itself. This kind of tokenization uses smart contracts to break down big expensive assets into digital shares that can more easily be traded by ordinary people over the Internet. Please note however that if you’re expecting property rights to an asset to be sold along with the NFT, then you’ll still need some actual legal work done to tie the NFT to the property itself. Otherwise the sale of the NFT is likely to be just that, the sale of the NFT, and not the creative work or property it was minted from.

While the first case is strictly a security strategy (arguably more secure than encryption, though you still need a vault for sensitive data), the second is simply a monetization strategy, and it, too, is secured by blockchain cryptography.

Privacy

In summary, blockchain cryptography together with tokenization strategies provide a way to secure an original digital work minted in an NFT and transfer it (at a price or no price at all) from the creator to new owners, investors, licensees, listeners or viewers. On blockchain, NFTs can pass from one owner to another with the potential anonymity of both parties. People need not associate a real name to their digital wallets (at the moment, for example, my wallet is unnamed). No county registries, no government authorities or financial institutions need be involved.   All you actually need is access to the internet, a digital wallet and a bit of crypto (though an NFT-friendly internet bank and a few investor contacts of your own may still come in handy).

Crooks have discovered they can launder money anonymously and with impunity this way, for example buying artwork with large sums of ill-gotten crypto funds. Or they can use crypto and NFTs to facilitate transactions like drug deals or trading stolen weapons, because it’s hard to trace who owns which wallets: “I’ll buy this NFT from you for X number of ETH, and you can have my item ready for pickup on Tuesday at this location.” There’s very little regulation preventing criminals from prospering, at least until they try to cash out in fiat money (ordinary national currency like the US Dollar, Euro or Yen), through a conventional bank. That’s where the Patriot Act and IRS stand ready to trip them up— in the US at least, but every country is its own sieve.  Thus, the crypto monetary world is like a massive market unto itself until you need to buy something that isn’t sold there.

Nevertheless, there are plenty of good reasons to preserve anonymity on the chain, even if business partners are executing perfectly legal transactions among themselves, and whether or not they are privately known to each other.

Beyond the privacy that anonymity affords, there are some other emerging protections as well. Let’s get back to intellectual property, for example.

IP Opportunity Lost

For most of modern history, the protection of property rights through trademarks, copyrights and patents was based on a principle of “first to invent,” “first to publish,” or “first to be used in interstate commerce.”  For patent applications in particular, the burden was always placed on the inventor to show contemporaneous records providing evidence of the earliest date of discovery and the reduction of theory to practice.

From the beginning, the US patent office used to award patents, like trademarks and copyrights, on the basis of “first to invent.”  But no more! The new rules for patents have been “first to file” since 2015— and this is aligned internationally with other patent jurisdictions. That means whoever gets to a patent office first with an eligible invention, described in a conforming patent application (fee paid, of course) may be declared the winner, the patent-holder— the party who has the power to prevent others from copying, selling and using their work in a particular geography.  In the case of US utility patents, that protection lasts 20 years from the application date. And yes, it does require supporting legislation and enforcement by the courts in order for you to defend your claims and sort out disputes. (Good luck collecting though; patent infringement cases usually involve a long, drawn out legal battle that few can afford.)

Sadly, the patent office zigs where the blockchain world zags.  NFTs could be easily used to document “first to invent,” but those are the old rules now.  They don’t apply anymore. If only the US patent office had the foresight to hold off changing the policy to first-to-file in light of blockchain prospects seven years ago, they would now have an easy, iron-clad way to manage all first-to-invent claims: just ask inventors to submit their Invention as an NFT abstract (with secret, hidden files locked up inside) during the normal course of documenting the innovation.  It would have been easier than saving all those carefully dated hand-written lab books in a box in the attic.  After all, simplicity was what they were going for when they changed the rules.

Unfortunately, publishing something on blockchain today, though immutable, gives you no extra advantage as a patent applicant with the patent office.  Patent examiners only look at the applicants who file first, then they attempt to discover whether there was any similar prior art already publicly known before the first inventor filed. Finding prior art that tells all about an invention, it turns out, can doom any further patent aspirations, even if it’s the inventor’s own prior art. The invention has to have utility, novelty, and not be obvious.  That means, in part, never having been disclosed before except under attorney-client privilege or a non-disclosure/confidentiality agreement. Not disclosed in a research paper, not in a product, not at a conference, not in the market.

IP Opportunity Gained

Despite the patent office being caught wrong-footed in its failure to uphold “first to invent” policies backed up by the latest technology, NFTs can potentially still:

1. Document “first use” in copyright and trademark law

2. Demonstrate who came up with an idea first, for bragging rights, or building credentials (Look mom!)

3. Help to settle prior art claims in patenting

4. Support freedom to operate

The power of number one is pretty obvious, because if you are first to document the use of something in an NFT, you have an immutable record with a date stamp to back you up.

The second one— bragging rights— may not be defensible in court without any accompanying IP ruling. But you can surely add the link to an innovative NFT on your resume, as a claim to back up your expertise, and display the knowledge you’ve accumulated as an expert.

Those last couple, numbers three and four are a bit more sophisticated from a legal perspective. I am no lawyer, and in no way can this article be construed as legal advice. But the crux of the matter, in lay terms, is this: if you can demonstrate that you had already made the details of an invention known to the public (say by publishing all the drawings, know-how and claims— nothing secret— on blockchain and getting a timestamp), you can preclude anyone else from claiming they own those rights. That is, unless they managed to file a patent application before you went public with the info. This is a sure way for no one, not even you, to get a patent. So don’t do it without consulting an attorney.

Your risk of infringement is greatly diminished by either having patent rights yourself, or placing the invention out in public as prior art so no one can claim it. No one can limit your freedom to operate using an invention that no one can patent. It’s at least a way to de-risk your business, if not a way to limit competition.

Proactive public disclosure of an invention through NFTs can nullify subsequent claims if the patent examiner finds it, and it can preserve your right to continue profiting from your invention.  It doesn’t stop someone else from copying you (anyone can use your idea once the invention is known to the public and remains unprotected by a patent), but it does mean that no one else should be able to shut you down or win an infringement case against you— you can simply point to the date the NFT was minted which discloses the invention to customers and the public. It’s an objective, verifiable public record on the blockchain.

Even if minting an NFT isn’t quite as good as having a patent granted by the USPTO, it’s at least under your control. It can prevent other people from stopping you from operating with it, or getting their own patent on your invention.

You can all but guarantee yourself the freedom to operate using your invention, even if a law firm hasn’t vouched for it.  Having been first to disclose an invention in public, you can continue using it (as long as someone else’s patent application wasn’t already in the works). You’ve just created a prior art impediment to the next guy (or yourself) trying to file a patent on the same invention.  It’s just that you can’t stop anyone else from benefiting from your invention either.  It’s an “If I can’t have a patent on this, neither can anyone else” situation.

Likely all you’d get anyway even if you paid $100,000 to a lawyer for “freedom to operate” is a thorough prior art search, analysis and some extra insurance, backed by the firm. This is not very affordable except for the very largest corporations.

One Last Thought for Innovators and Their Attorneys

Let’s say you do publish your invention defensively as an NFT on the blockchain and in other places. Anyone can buy your NFT, but it becomes prior art for anyone who follows you to the patent office, effectively shutting down the possibility of others getting patents issued on what you shared with the world. If yours is a really useful invention in the public domain, or if products based on your invention are purchased by customers, then chances are, other people will be using and taking advantage of what you invented.  That can be bad if you’re not compensated for it, or good because you are establishing a following.

Now consider filing a patent or provisional application for an enhancement to the popular invention that you first published as an NFT.  Chances are, competitors will not be keeping up with you.  First of all, they may study or try to copy your invention, but they may not have the know-how you gained in working out the idea. So their implementation may prove inferior. Secondly, they may have no desire to follow in your footsteps because they’re working on something else— something that skirts around your public disclosure, avoiding the prior art.  Competitors are usually looking for something they can patent for themselves, and they put their effort into building out their own differentiator, not yours.

Thus, your second invention (the enhancement to the original idea) may have a better chance of having a patent issued than the first. It might even be more commercially viable, too, if you have already cultivated a market.    If you’re lucky, the widespread knowledge of the prior art that you originally minted as an NFT has stimulated some demand among users of your first invention for the second.  It may attract them to purchase or license the enhancement, this time patented.  Moreover, due to the insights you’ve gained in working out problems in the first invention, you are uniquely positioned to make technical breakthroughs the second time around.  Large companies evergreen their inventions in similar ways all the time, usually to extend their protections beyond the initial patent rights limit of 20 years.

Summing It Up

It may seem that protecting your intellectual property rights involves navigating a labyrinth of legal and technical nuances, and you’d be right. But the overall message is clear: keep innovating. The speed of innovation is your best defense.  Use a combination of intellectual property rights and blockchain NFT evidence of first use or prior art to establish a defense around your innovations. Don’t neglect to ask for help getting inventions and enhancements (with secret files or not) protected and minted as NFTs on the blockchain.  Let’s figure out together how we can utilize blockchain to convey your value to the next generation and beyond, with or without patent protection.

ABOUT THE AUTHOR: Cathy Lippert is Founder and CEO of Passing the Torch, LLC, a technology and information services firm to help ensure that your life’s work lives forever. Contact Cathy on LinkedIn or at info@passingthetorch.life.

C. Lippert Biographical Notes:

The First Bookend, Strangely Prophetic

Personally, I’m a financially risk-averse individual which gives me the freedom to take high risks in what I do for a living, having already secured a financial future of sorts working as a high-end wage slave.  I’m free to find new ways to prosper in technology without experiencing many of the personal downsides that come wrapped in a career, identity or paycheck in various tech industry niches.  For a glimpse of my background, you can check out my LinkedIn profile, but it doesn’t tell much of a blockchain story.

Mine is a saga of “bookends,” from the early days of digital graphics and electronic publishing on workstations (before PCs), to the current state of NFT digital property that you can mint and display in a digital wallet on your phone.  I can also bore you with many hard lessons learned between those bookends, but I’ll spare you the rabbit trails for now.

I will share one little-known anecdote about myself, however, not because it has much bearing on the blockchain topic, but it shows you where the first bookend of my professional life was anchored to support what was about to be stacked up on the shelf beside it.  I’m credited with the first life drawing of a nude on the Apple Macintosh using MacPaint.

The evening after the Mac was announced in that stunning David-and-Goliath Apple commercial during the Super Bowl (in the year 1984, of Aldus Huxley significance), I took one of the first Macs ever built out of hiding from our secret, locked closet at the office, and brought it along to my life drawing class.  Now those were the heady days of Bill Atkinson, Dan Eilers and Guy Kawasaki, Apple Fellows and the power team supporting Steve Jobs’ creations.  I met them in their youth in Hawaii at the annual national sales boondoggle and again later at Comdex (now CES, the Consumer Electronics Show) in that first year of Mac development insomnia, in Las Vegas.  It was at Comdex that the Apple Lisa had been introduced a couple of years before; I had already developed an electronic clip art product for that. (A flash in the pan, I might add; not many people ever saw it, and it was quickly eclipsed by the Mac.)

As volunteer director of the Boston Computer Society Graphics Group at the time, I was given an impromptu chance to present my early MacPaint sketches at a conference on computer graphics hosted at Massachusetts College of Art in Boston.  After that, I moved on to other less fun but more lucrative work on all three coasts for the next three or four decades.