Counterfeiting has always been a problem for large producers of clothing and sporting goods. Every year, the damage runs into the billions. Sporting goods manufacturer Nike has received a patent that allows Nike shoes to be tokenized on the Ethereum blockchain. This is shown in a document from the U.S. Patent and Trademark Office. In it, Nike says it wants to assign custom IDs to shoes and create ERC 721 tokens for them. When buying shoes, buyers can “unlock” these tokens and then link them to unique owner IDs, confirming ownership of the shoes.
The advantage is that the token then not only represents the digital shoe. It also serves to record so-called genotype information of a digital shoe. This information includes specific attributes such as colors, styles, backgrounds, etc.
Counterfeit items are a problem for Nike
Counterfeiting is an increasing problem for Nike. A NY Times report on counterfeiting also shows this. It says that Nike estimates that for every two authentic items, there is one counterfeit Nike item. Often customers are also unsure whether they have purchased an original product.
The patent debut, which has now been published, could allow customers to gain more information about the origin of the shoes and the shoe design. Counterfeits can be avoided thanks to blockchain, as the portal “Token Information” writes. In China, for example, the demand for limited edition shoes is high. However, this high demand also results in counterfeit products that flood the market, reducing profits of established brands and damaging the brand’s reputation at the same time.
Blockchain allows products to be traced back to their origin. Blockchain allows manufacturers and designers to protect their brand from counterfeiting, as origin and ownership can be traced back to the source for each item. Counterfeit products have no authentic record and can therefore be easily identified. The data on the blockchain also cannot be tampered with, making authentication secure.
Companies want to protect their brand
Companies and startups protect the names of their products and services to create a meaningful and memorable “brand.” Brand protection is therefore steadily gaining in importance. Advertising a brand and making it known is important. But so is the legal protection of the name as a brand. In Austria, protection at the Austrian Patent Office (ÖPA) is an option. In Switzerland, the Swiss Federal Institute of Intellectual Property is responsible for trademark applications. In Germany, the trademark application must be filed with the German Patent and Trademark Office (DPMA).
If you want to operate throughout Europe, a trademark application at the European Union Intellectual Property Office (EUIPO) in Alicante is recommended.
Blockchain can be used for trademark protection. Trademarks are not registered in simple directories or registers. They could be added to the blockchain with a tamper-proof time stamp and a digital description of the trademark. This would make it possible to create a global, decentralized directory of trademark registrations, which anyone could view and which would be completely transparent and safe from manipulation.
Licensing via blockchain
Another interesting possibility for the use of decentralized peer-to-peer communication in trademark law would be the granting of licenses via blockchain. Nowadays, licenses in the trademark field are often agreed upon in comprehensive contracts after long negotiations. Who holds such a license is often not apparent to outsiders. There is no list of licensees of a trademark – so it is not always easy to see whether someone is engaging in product piracy or is a legitimate licensee.
As an example: You often see people wearing NASA t-shirts – why is that? It’s because NASA uses a loose licensing system. Anyone can send an email to NASA requesting a license. On NASA’s website you can see this system – you just have to distribute NASA’s name and logo unchanged and follow their “guidelines”.
Clothes with NASA logo
Consequently, it is not difficult to find clothes with the Nasa logo. Chains like H&M or Zalando have them in their assortment. Labels like Forever 21, Old Navy, Nike, Urban Outfitters and others have also launched their own collections. You can easily pay 500 francs for a Nasa hoodie from luxury brands.
NASA could greatly simplify the system, however, and offer licensing packages for T-shirts, bags, etc. via the blockchain. Licensees could register online and commit to following the guidelines. Everyone, including NASA, could then look at the blockchain themselves to identify legitimate licensees.