The Metaverse increases the permeability of boundaries between different digital environments and the physical world. Imagine entering a space where you can interact with virtual objects in real life with real-time information. It’s a big step forward for technology and creates many business opportunities, but how do you protect your brand and intellectual property in this new world?
Because of the protection they provide, trademarks may be the intellectual property right that attracts the most interest and presents the most up-to-date opportunities for business gain. Many of the world’s most recognizable brands have applied to register their brands for use in the virtual world and through non-fungible tokens (NFT). From fashion brands such as Louis Vuitton, Gucci, Valentino, Nike, and Adidas to fast-food vendors KFC and McDonald’s, these brands are preparing for the use of their iconic brands in the metaverse.
NFTs are basically digital assets powered by blockchain technology. An NFT is a single, non-divisible token, often tied to an object (i.e. a collectible, digital artwork, or game asset), that uses blockchain technology to record ownership and validate authenticity.
Protecting a brand through trademarks with respect to NFTs and virtual goods will not only be useful with respect to the metaverse, but also generally across new technologies and digital content trends. Recently, French luxury brand Hermès sued a digital artist for its series of NFTs MetaBirkin on the grounds that the images infringed Hermès’ copyright.
New opportunities exist for brands in the Metaverse, and hence the need for brand protection.
EUIPO Guidance on NFTs and Virtual Goods
In response to the sudden increase in trademark applications containing terms relating to virtual goods and NFTs, the European Intellectual Property Office (EUIPO), which is responsible for European Union trademark registrations, has issued guidance on its approach to classifying virtual goods and NFTs. This approach is set out in the draft 2023 guidelines (the main point of reference for users of the EUIPO system).
The EUIPO defines NFTs as “unique digital certificates stored in a blockchain, which authenticate digital elements but are distinct from these digital elements”.
The EUIPO has declared that virtual goods and NFTs fall under class 9 of the Nice Classification list. In effect, they are treated as digital content or images. Class 9 mainly includes apparatus and instruments for scientific or research use, audiovisual and computer equipment, as well as safety and rescue equipment. Services relating to these goods will be classified in accordance with current practice.
When applied to the EUIPO, the terms “virtual goods” and “non-fungible tokens” are both unacceptable on their own. Instead, the content to which the virtual goods relate must be specified (i.e. virtual goods, i.e. virtual clothing). For NFTs, the digital element authenticated by the NFT must be specified. In the 12th edition of the Nice Classification, which will be published in 2023, the term “downloadable digital files authenticated by non-fungible tokens” will be added to class 9.
The growing volume of these types of applications shows that NFTs are a valuable tool for brand recognition and intellectual property protection. It will be vital going forward for brands to protect and control their brands in the metaverse and online. The EUIPO guidance note provides details for applicants wishing to obtain this type of protection.