Trade marks, the Metaverse and Non-Fungible Tokens (NFTs)

With continuous technological developments, there comes a need to address the changes from a legal perspective. This has been particularly true for the metaverse and Non-Fungible Tokens (NFTs).

Described as ‘the next phase of progression on the internet’, the metaverse is a three-dimensional immersive virtual world which allows a user to carry out several activities including the purchasing of virtual real estate, shopping for virtual clothing, or even attending virtual concerts.[1] NFTs, on the other hand, are cryptographic tokens stored on a blockchain. Their purpose is to certify ownership of a digital asset. Both types of technologies have become significant topics of discussion this year, particularly in the context of brand protection.

A question posed by many is how trade mark protection can be sought for these types of technologies if the Nice Classification (the 45 classes of goods and services which can be applied for in a trade mark application) does not currently reference them.

Fortunately, the United Kingdom’s Intellectual Property Office (UKIPO) has sought to address such uncertainty by publishing its statutory Practice Amendments Notice (‘PAN’) 2/23 in April this year.

The PAN provides guidance on the classification of NFTs, virtual goods, and services provided in the metaverse.[2] It states the following:

1. NFTs

The term ‘NFTs’ by itself in the classification of a trade mark application will not be accepted by the UKIPO. The reason being that it is inherently vague.

To overcome this issue, it is advised that the asset which the NFT directly relates to, whether that be a digital asset or a physical one, must be stated clearly alongside the term.

Examples of acceptable terms referenced in the PAN are:

2. Virtual goods

Virtual goods fall under class 9 of the Nice Classification with an example of an acceptable term being ‘Downloadable virtual clothing, footwear or headgear’.

3. Virtual services provided in the Metaverse

Services provided in the metaverse can be included as a term in the classes that conventional services fall under. For instance:

If the guidance isn’t followed correctly, an examiner may deem a trade mark application to be too vague in its specification and thus may issue an objection to the application. Such an objection provides the applicant with a two-month period to file a response or to clarify the specification.

If a response to an objection is not filed, the applicant of the trade mark application will risk losing potential registration in the mark.

Implications

Fortunately, those seeking to register a trade mark application in respect of virtual goods and services have been given some clarity in terms of their classification, especially with the examples which the UKIPO have provided.

It also appears that the European Union’s Intellectual Property Office (‘EUIPO’) have adopted a consistent approach with one another given that both have decided class 9 is the most appropriate to categorise virtual goods, for instance.

Nevertheless, there are concerns that categorising virtual goods as class 9 goods will cause issues when conducting trade mark clearance searches.

A trade mark clearance search is a search of the relevant trade mark register to identify any existing or similar registered trade marks to a mark subject to a potential trade mark application. The more goods falling under a class, the more results there will be to filter through therefore an ‘overcrowded’ category of goods could become an issue to trade mark practitioners. Academics have sought to address this issue by proposing an additional class to the Nice Classification to represent digital goods and services.

Another issue which may arise from virtual goods being categorised within the same class as conventional goods is assessing the similarity between both. For instance, virtual clothing cannot be worn and does not serve the same purpose as normal clothing thus they are not interchangeable. It is also argued that a consumer may not experience confusion between both types of goods given that one is available in real-life and the other, virtually.

Overall, the UKIPO’s PAN guidance serves as a notice to others that trade marks law is becoming more accommodating to new types of technologies. This is especially important for brands who wish to enforce their rights further by protecting both virtual goods and conventional goods.

It will be interesting to see whether a harmonised approach will be adopted by other territories in respect of the trade marks classification of NFTs, virtual goods, and the metaverse.

If you have any further inquiries regarding trade marks, the metaverse and NFTs, please contact our Intellectual Property, Data Protection and Technology team we would be happy to help.

[1] What is the metaverse – and will it help us or harm us? (cam.ac.uk)

[2] PAN 2/23: The classification of non-fungible tokens (NFTs), virtual goods, and services provided in the metaverse – GOV.UK (www.gov.uk)