Africa joins the NFT hype
Unlike fungible tokens such as cryptocurrencies, which may be interchangeable with each other, NFTs are unique digitally stored cryptographic assets, the subject of which may vary from real world to digital assets including art, music and even wine.
In an African first, a South African auction house launched an NFT auction of rare collections and bottles of wine. Each of these NFTs maintain their digital nature but the smart contracts also allow the successful bidders to own the specific bottles of wine which can be drawn or traded at any time.
The non-fungible nature of NFTs makes them suitable for representing the chain of title of assets and even presents a unique opportunity to represent the chain of title of intellectual property rights (IPRs), as well as licencing thereof, digitally in an immutable fashion.
Unregulated marketplaces
For artists and creators, NFTs are an opportunity to circumvent traditional channels of monetising their work by selling NFTs in borderless, online marketplaces which are often more lucrative. Africa has always been adept in adopting new technologies and NFTs are no different.
Both Nigeria and Kenya have experienced rapid growth of their NFT economies with local artists taking advantage of the opportunity to monetise their creations on a global platform, despite the anti-cryptocurrency sentiments of their respective Central Banks.
Given that NFT marketplaces are largely unregulated, brands and artists naturally face an IP infringement risk in the minting of NFTs. While there has been no decided case law, trademark infringement proceedings appear to be a viable strategy in dealing with unlicensed/unauthorised use. Liability may largely depend on whether or not the trademark is registered for NFTs/digital assets based on blockchain technology or similar goods or services.
Arguably, based on principles of trademark dilution, infringement proceedings may also be based on a well-known trademark registered for dissimilar goods/services if the unauthorised use of the mark, through an NFT, would negatively impact the distinctiveness, commercial value, or even the advertising value of the well-known trademark.
