The (EU) metaverse: trade mark protection and enforcement
The metaverse is a rapidly evolving space, and with it comes new challenges for trade mark protection and enforcement. In the real world trade marks protect brands by preventing others from using confusingly similar signs for similar goods or services.
But in the metaverse, where virtual goods and services can be easily copied and distributed, trade mark protection can be more difficult to enforce.
If you are unfamiliar with these terms our articles “Brand enforcement in the metaverse - time for a re-think?” and “Nice classification: virtual goods and NFTs” contain helpful information (see “useful links” at the top of page 03).
As a recap, the metaverse is a collective term for digital, 3D worlds of experience in which people come together to play, shop, meet colleagues or attend concerts. It is anticipated to reach one billion people by the end of the 2020s. The market potential is immense: the metaverse sector is expected to be worth $800 billion by as early as 2024. It is likely that there will be virtual 3D online markets with customisable avatars consuming almost all the goods and services we also use in the real world, from virtual clothing to education and social events. With the help of non-fungible tokens (NFTs) digital objects can be uniquely assigned to an owner. They represent a new form of digital deed that relies on blockchain technology and, inter alia, provide proof of ownership and provenance of the underlying digital asset.
There are still steps that companies can take to protect their brand in the metaverse. One important step is to register trade marks for virtual objects. Trade marks are divided into 45 classes of goods or services. Accordingly, their scope of protection is determined. However, classification is not always easy in the metaverse due to its vague nature and the lack of clarity about the nature of digital assets and related services, which may not have counterparts in the real world. Further, it is still unclear whether registrations for physical goods will also protect against virtual imitations.
Due to the increasing number of trade mark applications at the EU Intellectual Property Office (EUIPO) with terms relating to “virtual goods” and “non-fungible tokens (NFTs)”, the EUIPO issued initial guidelines on classification. Virtual goods and NFTs are to be treated as digital content or images (class 9). Services related to such goods are to be treated according to the established practice for the classification of services.
In the most recent (12th) edition of the Nice Classification, which took effect on 01 January 2024, the term “downloadable digital files authenticated by non-fungible tokens (NFTs)” was included in class 9 as well as certain other classes updated, that is:
- class 25: “clothing authenticated by non-fungible tokens (NFTs)”
- class 35: “retail services relating to downloadable digital image files authenticated by non-fungible tokens (NFTs)”; and
- class 42: “providing online non-downloadable computer software for minting non-fungible tokens (NFTs)“.
In this context it needs to be kept in mind that the terms “virtual goods/services” and “NFTs” are both not sufficiently clear when used alone. The term “virtual goods” must therefore be further specified by function, purpose and nature, indicating the content to which the virtual good relates (for example, downloadable virtual good, namely virtual clothing). Also “virtual services” must be further specified according to the nature and intended purpose of the service, taking into account its impact in the real world (for example, simulated travel services provided in virtual environments for entertainment purposes). For NFTs, the type of digital item authenticated by an NFT must be specified. In order to illustrate this, please see the classification examples in the table below.
|(Downloadable) virtual clothing in class 9
|Clothing in class 25
|(Downloadable) virtual handbags in class 9
|Handbags in class 18
|Retail of virtual clothing in class 35
|Retail of clothing in class 35
Leaders in this context are the online gaming platforms such as Roblox, Fortnite and Second Life, where players can experience life through a 3D, personalised avatar, wearing their favourite brands and buying digital outfits in virtual stores. In particular, famous fashion brands (such as Nike, Gucci, and Balenciaga) have discovered this new market and are working with gaming platforms offering digital wearables for avatars. Nike, for example, has brought its virtual mini-game “Nikeland” to Roblox, and runs its own virtual items store on the gaming platform.
Protection and enforcement in the metaverse
In addition to registering trade marks, brand owners should be vigilant about monitoring the metaverse for potential infringements. This includes monitoring websites, social media accounts, and other online platforms and marketplaces that are using confusingly similar signs in the virtual world. Most of these gaming platforms, like traditional online marketplaces, offer mechanisms for reporting and taking down IP right infringements.
But is a virtual shoe or handbag a (physical) shoe or handbag which would constitute a trade mark infringement? Hermès faced a situation where a digital designer was selling over 100 virtual “MetaBirkins”, inspired by its famous Birkin bag, on a metaverse marketplace. Having not extended the trade mark protection to virtual goods, it nevertheless won in the first substantive US decision on the scope of trade mark protection in the virtual world (Hermès International v Mason Rothschild, Case 1:22-cv-00384-JSR). The use was recognised as an infringement of the Hermès trade mark rights for physical goods.
Returning to the EU, and in the absence of case law, there are arguments for both sides, and maybe better ones for the assumption that virtual goods and corresponding physical goods can be recognised as being competitive or complementary and thus confusingly similar, even if the trade mark owner is not yet active in the metaverse.
Nevertheless, owners of well-known brands seem to be in a better position since trade mark protection is not restricted to the use of the sign for similar goods: the rights can be invoked on the basis of exploitation of reputation and dilution. However, the same questions apply, namely whether brands can leverage their real world reputation relating to virtual goods and services (which should be answered affirmatively).
In relation to the protection and enforcement of trade marks in the metaverse, there is one particular point to be cautious about, namely the relevant territory (EU member state). It is not yet clear what scope national trade marks will have in the borderless virtual universe. In a recent decision the General Court (13/07/2022, T-768/20, The standard (fig.), EU:T:2022:458) provided further guidance and ruled that only the place of use of the mark is relevant (including advertising and offering for sale) and not the place of provision of the goods/services. In the digital environment it will be crucial that the virtual goods/services, even if provided “abroad” in the metaverse, are targeting consumers in the EU, and that the advertising and offering for sale occurs in the relevant territory.
Companies can protect their trade marks in the virtual world, even if the products or services are not physical. However, as things currently stand, a number of questions are unanswered regarding the enforcement of trade marks protecting real-world goods against unauthorised use in the virtual world.
Companies should not rush to file trade marks covering virtual goods when they may have no genuine intention to use their mark online in that way. However, when they are planning to use it in the virtual universe, or want to prevent potential infringements, the metaverse should be part of their trade mark strategy. It is vital to review the territorial scope of the existing trade mark portfolio and extending the trade mark protection to virtual goods and services. Further, trade mark owners should take proactive steps to monitor and enforce their IP rights, including monitoring marketplaces and third party applications.
- Brand enforcement in the metaverse: time for a re-think?
- Nice classification: virtual good and NFTs
- Non-fungible tokens and the Metaverse, EUIPO: dycip.com/euipo-nonfungibletokens
- Nice Classification 12th edition (PDF): dycip.com/wipo-niceclassification-12