The new version of the Nice Classification, the 12th edition, came into force on 1 January 2023, carries new categories for registration of trade marks in relation to NFTs and is used being by several national trade mark offices including the EUIPO and IP Australia. The UK IPO has drafted new guidance also.
A new item, "downloadable digital files authenticated by non-fungible tokens" included in Class 9, has been entered into the Nice Classification, among several new terms, due to an increasing number of applications with terms relating to virtual goods and non-fungible tokens (NFTs) filed around the world.
The metaverse undoubtedly represents a new era in the field of trade mark filing. The growth of the metaverse has raised important issues within intellectual property and trade marks and has prompted companies such as Louis Vuitton, Nike, and Crocs, to file new trade mark applications to cover metaverse-related activities.
Traditionally, a trade mark distinguishing shoes is protected in classes 25 and 18 (this latter is claimed as the goods included are considered similar to those belonging to class 25). Recently, there has been an increase in the applications protecting downloadable virtual goods and NFTs. For example, it had been unclear whether classes 25 or 18 were appropriate for solely virtual shoes (designed to be worn by digital ‘avatars’ in the metaverse).
Different national trade marks offices are taking slightly different approaches to guide applicants.
The EU
The EUIPO has issued guidance which will enter into force buy the end of March on how the above-mentioned goods would have been classified and on the approach, the EUIPO would take in line with the established principles of classification of goods and services.
The EUIPO has expressly made clear that class 9 is the appropriate one for "virtual goods" because they are treated as digital content or images. However, applying the IP Translator ruling by the Court of Justice of the EU (CJEU), "virtual goods" on its own may lack clarity and precision so must be further specified by stating the content to which the virtual goods relate (e.g. "downloadable virtual goods, namely digital clothing/footwear"). When registering for NFTs, applicants have to specify the type of digital item authenticated via the NFT "downloadable music authenticated by NFTs".
Meanwhile there have been a couple of attempts to protect the term ‘metaverse’ as a trade mark in the EU. The Second Board of Appeal of EUIPO (BOA) dealt with this question for the first time in two recent decisions concerning the trade marks METAVERSE FOOD (R2357/2022-2), in classes 5, 29, 30 and 32 and METAVERSE DRINK (R2356/2022-2), in class 32. The EUIPO rejected both applications, due to the lack of distinctiveness. The applicant appealed the decision arguing that that the applications referred not to virtual goods but to physical goods in the real world. The BOA dismissed the appeals holding that the term ‘METAVERSE’ refers to a virtual space. The signs had the meaning ‘food in a virtual space’ and ‘drink in a virtual space’. Further, according to the BOA, the Metaverse is not only avatars, alternative reality, and virtual products - it is also another version of e-commerce. On that basis, the BOA found that the marks will be understood as indications that the goods are offered or can be purchased in a virtual space, and that ‘METAVERSE FOOD’ and ‘METAVERSE DRINK’ will not be perceived as an indication of commercial origin but only as information of a general nature about the goods in question.
These decisions of the BOA allow the conclusion that the term ‘metaverse’ is descriptive and non-distinctive and thus cannot be monopolized and registered by one single entity. That said and taking into account the mentioned decisions, what will happen to the various trade marks consisting of, or containing ‘metaverse’ which have been granted by the EUIPO? Applying the reasoning of the BOA to these and similar trade marks means that they should be considered non-distinctive and therefore can be subject to nullity actions. We wait to see how will these inconsistencies be resolved by the EUIPO.
Australia
IP Australia (the Australian IP office) has not issued specific guidance on applying for virtual goods. However, it has pre-classified a number of new items which will it accept in trade mark applications relating to virtual goods. For example:
• “Downloadable multimedia files containing artwork authenticated by non-fungible tokens [NFTs]” in class 9;
• “Downloadable digital files authenticated by non-fungible tokens [NFTs]” in class 9;
• “Retail services for virtual goods” in class 35; and
• “Graphic design of goods authenticated by non-fungible tokens [NFTs]” in class 42.
UK
Likewise, the UK IPO has yet not issued specific guidance on the classification of trade mark applications for NFTs or virtual goods, although it is currently preparing a new Practice Amendment Notice on the "classification of NFTs, virtual goods and services provided in the metaverse".
Without further guidance the issue then arises as to whether trade marks for real world goods can be used to prevent use in relation to virtual goods of the same type. From a UK law perspective, this issue has not been explored by the courts in any detail as of yet. However, in line with the Italian court's decision in the Juventus case that we reported on recently here, the UK courts may hold that the minting and marketing of NFTs that reproduce a registered trade mark in the metaverse may still infringe that registered mark on the basis of taking unfair advantage under section 10(3) of the UK Trade Marks Act 1994 (UKTMA). An alternate ground of protection for "well known" marks may be section 56 UKTMA which provides added protection for such marks.
Herbert Smith Freehills can provide advice and support when identifying and tailoring essential goods/services specifications to include in trade mark applications.
To read more about the role of IP in NFTs both in their creation and the policing of this new digital asset, read other blog posts in our IP in NFTs series and in particular our post Strategies for protecting your brands and products in the metaverse. A briefing outlining the key considerations relating to IP and NFTs is also available to download here in PDF format.
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