The Metaverse increases the permeability of the borders between different digital environments and the physical world. Imagine stepping into a space where you can interact with virtual objects in real life with real-time information. This is a big step forward for technology and creates numerous business opportunities, but how does one protect their brand and intellectual property in this new world?
Due to the protection they provide, trade marks may be the intellectual property right that attract the most interest and present the newest opportunities for commercial gain to businesses. Many of the world's most identifiable brands have filed applications to register their trade marks for use in the virtual world and by way of non-fungible tokens (NFTs). 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 trade marks in the Metaverse.
NFTs are essentially digital assets powered by blockchain technology. A NFT is a unique, non-divisible token, often linked to an object (i.e. collectable, digital art or in-game asset), which uses blockchain technology to record ownership and validate authenticity.
Protecting a brand through trade marks in respect of NFTs and virtual goods will not only be useful with regards to the Metaverse, but also generally across new technologies and digital content trends. Recently, French luxury brand Hermès sued a digital artist for his series of MetaBirkin NFTs on the basis that the images infringed Hermès' copyright.
New opportunities exist for brands in the Metaverse, and thus the need for brand protection.
EUIPO Guidance on NFTs and Virtual Goods
In response to the sudden increase of trade mark applications containing terms relating to virtual goods and NFTs, the European Intellectual Property Office (EUIPO), which has responsibility for EU trade mark registrations, has issued guidance on its approach to classifying virtual goods and NFTs. This approach is set out in the 2023 draft Guidelines (the main point of reference for users of the EUIPO system).
The EUIPO defines NFTs as “unique digital certificates registered in a blockchain, which authenticate digital items but as distinct from those digital items”.
The EUIPO stated that virtual goods and NFTs fall under Class 9 of the Nice Classification list. This is because they are treated as digital content or images. Class 9 includes mainly apparatus and instruments for scientific or research purposes, audiovisual and information technology equipment, and safety and life-saving equipment. Services relating to such goods will be classified in line with current practice.
When applying 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, namely virtual clothing). For NFTs, the digital item authenticated by the NFT must be specified. In the 12th Edition of the Nice Classification, which will be released in 2023, the term "downloadable digital files authenticated by non-fungible tokens" will be added into Class 9.
The increasing volume of these types of applications shows that NFTs are a valuable tool for brand recognition and gaining protection for the intellectual property. It will be vital in the future for brands to protect and control their trade marks in the Metaverse and online. The EUIPO's guidance note provides clarification for applicants seeking this type of protection.