What Trademark Owners Should Know About the Metaverse and NFTs

The intellectual property implications must be considered as businesses investigate prospects in the digital sphere, particularly about trademark rights in computer-generated virtual reality environments and non-fungible tokens (NFTs).

The Metaverse: What is it?

The phrase “metaverse” is a portmanteau (combination) of the words “metaphysical” and “universe.” The world is included in a computer-generated virtual reality. It will be a fully immersive experience because it will be built on the internet.

Users communicate with one another in the Metaverse using avatars of themselves or different characters. They can look around this communal area, converse with one another, participate in various activities, play games, and go shopping.

What are NFTs?

NFTs are a class of tokens or digital assets that cannot be broken down into a single number. To put it another way, every token has a distinct identity. NFTs are traded on a blockchain but are not interchangeable. They have gained popularity because they offer a chance to make non-physical assets scarce across various sectors.

Because they signify ownership of a digitally created thing or entity in the physical world, NFTs are valuable.

With regular cryptocurrencies, they cannot generate the same kind of digital scarcity. As a result, a brand-new virtual property is created, one that can be traded and exchanged like actual regular items. As the user base grows, so does the value.

Why are the Metaverse and NFTs gaining popularity?

Because it enables people to escape from their everyday lives and travel to new locations with pals, the Metaverse is gaining popularity. NFTs are gaining popularity for various reasons, including the ability to construct one’s universe in which one can do whatever one pleases.

The most crucial of these is that they outperform all other token types in terms of security and maintenance ease. They also offer the consumer a lot of utility, which raises its long-term value.

What connection exists between NFTs and the Metaverse?

The virtual reality environment known as the Metaverse was made possible by blockchain technology. One digital asset that can be produced on the blockchain is called an NFT. These assets include everything from digital artwork to virtual land. As a result, users can both construct and explore their individual and personalized worlds.

Who owns the NFTs and the associated intellectual property?

NFTs cannot be transferred without the explicit consent of the token holder and are the property of whoever has the private key.

Owning an NFT does not equate to owning the accompanying copyrights or intellectual property. The underlying asset linked to that token is not legally yours if you use the NFT.

Unless the terms of the sale of the NFT specify otherwise, the intellectual property of the underlying asset remains the property of the intellectual property owner. To use and capitalize on the digital content on the NFT platform, however, you would receive an implicit IP right.

For instance, if you purchase an NFT for Gucci handbags, Gucci retains ownership of the trademark, but you receive the implicit IP right to use the digital material.

It may be considered trademark infringement when an unauthorized party attempts to mint, sell or resell that Gucci NFT is utilizing the underlying asset without the registered trademark owner’s authorization.

When deciding which court of law has jurisdiction over a specific claim involving an NFT, the domiciles of the seller, buyer, and NFT platform should be taken into account.

When producing an NFT, the author must ensure that no one else’s privacy or intellectual property rights are violated.

Who has filed trademarks for the Metaverse and NFTs?

The Metaverse, Nike, Crocs, Hot Wheels, Bazooka, Walmart, and McDonald’s have all registered trademarks.

Trademark applications for their NFTs were submitted by Mattel Inc., Nike, Puma, McDonald’s, Estee Lauder, Louis Vuitton, Prada, Walmart, L’Oreal, and NYSE.

Dolly Parton, LeBron James, and other celebrities have submitted trademark applications for their NFTs.

What does all this mean for Trade Mark Owners?

A universe called the Metaverse will coexist with our own. As a result, the trademarks that we currently use in the real world must also be protected in the Metaverse. For their rights to be recognized in a virtual marketplace like the Metaverse, Trade Mark Owners should consider expanding the scope of their brand protection to include virtual goods and services.

There is some confusion regarding the classes in which trademarks should be registered because the idea of trademark protection for the Metaverse or NFTs is still relatively new.

At the moment, the following classes apply to the Metaverse:

  • Class 9: Downloadable virtual goods for use in online virtual worlds.
  • Class 35: Retail store services featuring virtual goods for use in online virtual worlds and virtual retail stores.
  • Class 41: Entertainment services for virtual environments created for entertainment, including virtual concerts and performances.

Currently, the following classes are applicable for NFTs:

  • Class 9: Non-refundable token-based goods for use online and in virtual worlds; non-fungible tokens; digital tokens based on blockchain technology.
  • Class 35: Provision of an online marketplace and registry for buyers and sellers of digital assets.
  • Class 36: Financial services such as non-refundable token trading; issuance of digital tokens.
  • Class 41: Providing online non-downloadable virtual goods.
  • Class 42: Providing temporary use of non-downloadable virtual goods/digital media and non-fungible tokens (NFTs).

Trademarks are territorial, so if a distinct Trade Mark Office and Judicial System are established in the Metaverse, you might need to obtain protection there just as you would need to do so in the various countries.