Article

• Jurisdiction: United States,Federal
• Citation: Vol. 35 No. 6 Pg. 50
• Pages: 50
• Publication year: 2022

ArticleNo. Vol. 35 No. 6 Pg. 50Utah Bar JournalDecember, 2022

November, 2022

When NFTs and Intellectual Property Collide

by Alexis Nelson

In December 2019, Nike was granted U.S. Patent No. 10,505,726 for cryptographic digital assets covering footwear, thereby securing its place in non-fungible token (NFT) history. While many NFTs gaining notoriety as of late depict memes or famous photographs, NFTs can be associated with either digital or physical assets (such as a shoe), which assets ultimately exist separately from the NFTs themselves. In contrast to most other digital creations, however, an NFTs unique identifying code hosted on the blockchain makes it one-of-a-kind.

Blockchain technology creates a shared, immutable, decentralized ledger of all transactions across a peer-to-peer network. Though most commonly associated with cryptocurrency systems, blockchain technology can be applied to virtually any industry. IBM, for example, has created a "Food Trust" blockchain to trace the journey that food products take to get to their locations.

A blockchain collects information in groups, or blocks, that hold sets of information. When a block is filled to capacity, it is closed and linked to a previously-filled block, forming a chain of blocks, or a "blockchain." All new information that follows is compiled into a new block, and new blocks are always added to the end of the chain when filled.

Unlike a database, which typically utilizes tables of data, each block in a blockchain is permanent and immutable once it is filled and closed. Also unlike a database, each block in the blockchain is stored linearly and chronologically. To this end, each block contains its own hash, the hash of the block before it, and an exact timestamp recorded when the block is added to the chain. Each block thus forms part of a permanent timeline.

The decentralized nature of blockchain technology means that all transactions stored on the blockchain can be transparently viewed by anyone. Of course, individual records stored within the blockchain are encrypted. Blockchain participants can thus remain anonymous while blockchain transactions themselves are transparent. By maintaining a secure and decentralized record of transactions in this manner, participants can confirm transactions without the need for a central clearing authority.

The Nike patent connects a real-world physical shoe to a virtual collectible digital shoe (represented...