Since virtual commodities are regarded as digital content or images, Class 9 is the appropriate category. However, the phrase “virtual goods” has to be further defined by clarifying the content to which the virtual products are related because it is unclear and imprecise on its own (e.g., downloadable virtual goods, namely, virtual clothing).
Downloadable digital files authenticated by non-fungible tokens will be included in Class 9 of the 12th Edition of the Nice Classification. NFTs are viewed as discrete digital certificates registered on a blockchain and used to certify digital goods while remaining separate from those. The word “non-fungible tokens” by itself is unacceptable to the Office. Specifying the type of digital item that the NFT authenticated is necessary.
The usage of trademarks for virtual goods and non-fungible tokens (NFTs) in the Metaverse is expanding quickly. The instances of Nike v. StockX and Hermès v. MetaBirkins serve as examples of the expanding use of trademarks in NFTs and the Metaverse. Trademark owners may take a needless risk by not extending their current trademarks to cover NFT and Metaverse uses. This risk might be easily and economically resolved. The registered trademark may not grant exclusive rights to use, license, and sell the brand for specific business activities if the incorrect trademark classes were not chosen.
A sort of file permanently kept in a blockchain is an NFT. Any digital or physical item’s chain of ownership is recorded by an NFT, along with metadata like a link to the digital item, which could be an image file, audio file, or video file. The Metaverse is a network of connected 3D virtual worlds that may be accessed by a person wearing a virtual reality headset.
The Metaverse: What is it?
The best way to think of it is as a greatly enlarged version of current virtual gaming settings like Second Life, where you can interact with others, exchange experiences, and buy and sell products. You can easily integrate the real and virtual worlds for a single experience thanks to the integration of high-quality 3D images. The Metaverse will be as simple to enter as a search engine. Still, its offerings will go beyond the infinite amounts of data, images, and movies we currently see online to include connections and experiences. “The Oasis” is an extremely sophisticated example of what the Metaverse could be if you have seen the movie Ready Player One.
That is a general notion, but we have not quite reached that point yet, and when we do, you can be sure that it will be strongly commercialized, with shopping for both goods and services at its core. Online clothing shopping is common, but isn’t it more enjoyable if you could virtually try on the clothes before making a purchase, with a lifelike avatar demonstrating the fit and appearance of the item in almost exact reality? Brand owners might make significant investments in such an experience to increase sales, lower the cost of brick-and-mortar stores, and lower the amount of returned goods. Nike is already involved in this space, working with the wildly popular gaming platform Fortnite and filing various trademark applications for virtual items.
Trademark Use
The categories of goods and services for which a trademark is used or its specified classes restrict its usage. Two identical or nearly identical trademarks may coexist without infringing on one another, thanks to trademark classes. This is possible where the classes and the goods/services are wholly distinct. For example, it is acceptable for a clothes company and a company that sells medical supplies to use the same trademark because it is rare that consumers will mistake these two companies.
In most nations, a new independent trademark application must be submitted to add classes to an existing registered brand. It shouldn’t come as a surprise that most business-savvy trademark owners intend to use NFTs for their products and services or introduce virtual products and services in the Metaverse within three years of the new application’s filing date.
Virtual goods, NFT-related items, and other products connected to e-sports and the Metaverse should all be categorized under class 9, not class 8. Specifying the content to which virtual goods connect will help to define the virtual products (downloadable virtual goods, namely, virtual sporting equipment, virtual sneakers, virtual food items, virtual household items, etc.). It would be wise for trademark owners to audit their current trademark registrations to make sure that class 9 is covered by their trademarks. Online non-downloadable virtual goods and NFTs (class 42), retail shop services with virtual goods (class 35), entertainment services (class 35), downloadable virtual goods (class 9), and financial services (including digital tokens) are other essential trademark classes to take into account (class 36).
So, in light of this new reality, should you be protecting your trademark?
The Metaverse is a red herring. The legal action being brought by Hermes against MetaBirkin concerning digital artwork imitating their products is a current example of a legal action that is sparking a lot of discussion about the Metaverse in the news. Still, this action is likely to be based on conventional Intellectual Property Rights (IPR), and the infringement’s digital nature is unlikely to impact the claim.
Additionally, at least concerning fashion brands, virtual imitators are likely to copy not only the trademark but also the product design, infringing upon other rights like design and copyright that are not restricted to a particular class of goods and are therefore equally applicable in both the virtual and physical worlds.
On the other hand, the usage of the Metaverse, particularly in the fashion industry, is expanding quickly, as evidenced by the virtual brand appearances on gaming platforms and the use of the Metaverse by brand owners to enable buyers to virtually try on products. Your existing intellectual property rights (IPR) are likely to provide a strong foundation for action against someone selling virtual imitations of your brand in the Metaverse. Still, it might be possible to streamline the action by registering your marks for downloadable virtual goods or the like. This is because it is simpler to take action if your registration covers the exact goods of interest. That being said, it may be claimed that the virtual and actual products are identical, reducing the need for a second registration if I sell a virtual handbag and I already have a registration that covers handbags (rather than downloaded virtual handbags).
It would be worthwhile to explore expanding your protection to cover virtual goods if you aggressively target the Metaverse. Still, judging the worth of those registrations will be difficult until we have a body of judgments on the subject. If new filings are required due to a traditional portfolio expansion, consideration could be given to including virtual goods and services within the new applications. For other brands who do not yet intend to engage with the Metaverse, their existing rights should provide sufficient protection to prevent digital copies of their goods in the current environment.
There are still a lot of unanswered questions regarding the Metaverse and how it will be created and expanded. What if the Metaverse got its own Trade Mark Office and legal system? Will you require protection there in the same manner you would elsewhere? Do you have a conventional trademark registration in the nation where the infringement occurred if you rely on conventional rights? Can you find the actual infringer to pursue legal action against them, considering our experience with banking institutions whose names have been used for cryptocurrency without permission and where the legal case is unanswerable? What is the penalty for violating IPR by a virtual person, and can you find them using the value of their NFTs or other virtual assets? Or imprison them virtually?
All these questions remain unanswered, but it will be intriguing to see how things play out.