Top Reasons and How to Fix It

In the fast-paced world of Web3, projects launch daily with big dreams of revolutionizing finance, art, and gaming. But many crash before takeoff. One big reason? They skip proper IP due diligence. IP means intellectual property, like trademarks, copyrights, and patents. Without checking these, projects face lawsuits, rebrands, or total shutdowns.

This post breaks down why . We look at common mistakes, real-world examples, and simple steps to avoid them. If you are a founder, investor, or fan, read on to protect your next big idea.

What is IP Due Diligence in Web3?

IP due diligence is a full check of a project’s intellectual property. It spots risks like:

• Trademark conflicts for names and logos.
• Copyright issues with art, code, or content.
• Patent overlaps in tech like smart contracts.
• Domain name squatting in .com, .eth, or ENS.

In Web3, this matters more. Projects use NFTs, tokens, and DAOs. A small IP slip can wipe out millions in value. Think of Bored Ape Yacht Club success versus copycat failures hit by lawsuits.

Why Do ?

Here are the top 7 reasons, based on patterns in failed launches.

1. Rushing to Launch Without Checks

Web3 moves fast. Founders hype on Twitter, drop NFTs, and list tokens in weeks. No time for IP searches. Result? They pick names already taken.

Example: A DeFi project named “LunaSwap” launched big. But Luna was trademarked. They rebranded after legal threats, losing user trust.

2. Ignoring Trademarks and Branding

Project names sound cool, like “MetaVerseX”. But “Meta” is owned by Facebook. Web3 projects often copy big brands without searching USPTO or EUIPO databases.

Tip: Use tools like Trademarkia or Namecheap for quick scans. Register your mark early in key countries.

3. NFT Art and Copyright Traps

NFTs boom, but art theft kills projects. Many mint AI-generated or scraped images. Owners sue for infringement.

Case: A gaming NFT collection used fan art. Original artists won $500K in damages. Project died overnight.

4. Open Source Code Misuse

Web3 loves open source like Solidity libraries. But copying without licenses leads to claims. GPL vs MIT confusion is common.

Solution: Audit code with tools like Black Duck or hire devs who know licenses.

5. Domain and ENS Squatting Risks

Your project is “DecentralBank”. But decentralbank.eth is taken. Scammers squat and ransom domains.

Over 30% of Web3 projects face this. Buy .com, .io, and ENS names upfront.

6. No Global IP Strategy

Web3 is borderless. A US trademark does not cover Asia. Projects fail when expanding.

Example: An NFT marketplace thrived in Europe but got blocked in China over local IP claims.

7. Skipping Legal Experts

Founders are techies, not lawyers. They DIY IP checks with Google. Misses nuances like “likelihood of confusion” in trademarks.

Pro help costs, but saves fortunes. Use IP lawyers specializing in blockchain.

Real-World Failures: Lessons from Crashes

Let’s dive into cases:

Project	IP Issue	Outcome
Copycat Ape NFTs	Trademark & Copyright	Lawsuit, $2M fine
Fake Uniswap Clone	Trade dress imitation	Delisted from exchanges
AI Meme Coin	Generated art infringement	Community backlash, rug pull

These show because they prioritize hype over homework.

How to Ace IP Due Diligence in Web3

Follow this 5-step plan:

1. Search Early: Use TMview, Google Patents, and ENS search before naming.
2. Clear Rights: Get written licenses for all art, code, music.
3. Register IP: File trademarks in US, EU, and key markets. Consider WIPO for global.
4. Audit Partners: Check VCs, collaborators for clean IP.
5. Monitor Ongoing: Use Google Alerts and Brand24 for infringers.

Budget 5-10% of seed round for IP. It pays off.

Future of IP in Web3

Blockchain fixes some issues. Tokenized IP on platforms like IPFS proves ownership. DAOs can own trademarks collectively. But due diligence stays key.

AI tools speed checks, but human experts catch tricks.

Conclusion: Don’t Let IP Kill Your Web3 Dream

due to speed, ignorance, and cost-cutting. But with simple steps, you can build safe. Start your search today. Share this post if it helped. What IP horror stories do you know? Comment below!

Keywords: Web3 IP, blockchain trademarks, NFT copyright, crypto due diligence

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Disclaimer: Blockmanity is a news portal and does not provide any financial advice. Blockmanity's role is to inform the cryptocurrency and blockchain community about what's going on in this space. Please do your own due diligence before making any investment. Blockmanity won't be responsible for any loss of funds.