The NFT revolution: can patents be tokens?
IP entrepreneur Erich Spangenberg has a plan to turn patents into non-fungible tokens and unlock ‘billions of dollars’ in untapped assets. Muireann Bolger caught up with IPwe CEO to find out more.
In a move that could herald dramatic changes in the patenting arena, patent marketplace IPwe has unveiled plans to begin representing patents as non-fungible tokens (NFTs) or digital assets.
The project, created in a collaboration with IBM and announced late last month, will see the companies creating the infrastructure for this new process and storing the records on a blockchain network.
Speaking to WIPR, IPwe chief executive Erich Spangenberg explained how he believed the tokenisation of IP will help patents to be more easily sold, traded, commercialised, and financed, bringing new liquidity to this asset class for investors and innovators.
WIPR: Why is IPwe collaborating with IBM to representing patents as NFTs?
Spangenberg: When you look at the balance sheets of corporations, a huge percentage is made up of intangible assets. We need to help to create a better understanding of what these intangible components are, and that can be done by NFTs. When we talk to finance practitioners, they visibly cringe when you mention patents. As IP professionals we need to make it easier for them to embrace IP and understand it.
By understanding, I mean creating a better comprehension of simple things that are taken for granted in other asset classes, that we struggle to convey in IP. These include providing answers to questions such as: ‘Who owns this, what is its history, and what is its relevance?’
The systems that were set up to record those things in the past don’t reflect the modern era. As a result of technological advances over the past few years, we are now able to do this. We need to build something that the business world was comfortable with, something that we could show had a clear tangible benefit.
How could NFTs transform IP, and what will it mean for lawyers?
So much information can sit all in one place under NFTs rather than being scattered to the wind; this is an incredible opportunity for standardisation. What does it mean for lawyers? Back in 2017, when everybody was talking about blockchain, they were saying that all the intermediaries would be put out of business. That didn’t happen. Our view is that the high-value service providers, especially the transaction and prosecuting lawyers, will become even more important in this system. They will add their high-value services and will have more work to do than they had before. This is going to create more potential for people who specialise in these areas, especially attorneys.
What are the advantages to companies?
The companies that invest heavily in research and development are undervalued so NFTs will help with this. As for small and medium-sized enterprises (SMEs), they do have intangibles that they get zero credit for. One way to see the SME world flourish is to give them credit for their intangible value and that's what we hope to do. This potential really got the folks at IBM excited. It’s critical to unlock value at the SME level and help them attract financing.
What do you see happening in the NFT space in the future?
We’re still in the early stages, we’ve passed the stage of idle curiosity, and are in the early stages of adoption. For example, I can’t remember a world without smartphones. As companies and universities move to this, they will come to see this development as ubiquitous, in the same way that smartphones have become. That is the objective; that NFTs will become a far superior solution that people adopt quickly.
NFTs aren’t a threat. There will be many new opportunities; it will be better for all of us. And as this happens, there will be consolidation. I expect that in three or four years, there will be a handful of players with organised IP markets—this is a “winner take all” scenario.
Look out for a WIPR Patents Live broadcast interview with Erich Spangenberg coming soon.
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