As mentioned in an earlier piece, the last year has seen a surge in the number of trade mark applications for virtual goods and services. According to a recent report, the rise of the metaverse and non-fungible tokens (NFTs) has raised Class 9 of the Nice Classification (including computer hardware and software) to second place by the end of 2021. This seems a good time to take a closer look at the current filing trends before the EUIPO.

The issue can be approached from different angles. On the one hand, there are owners of established brands that wish to protect their trade marks from being usurped by third parties in the digital space and leave the door open for their own future projects. These companies are likely to already have protection for their IRL products and are now considering whether they need additional protection for virtual goods. While voices have been raised that, say, “clothing” in Class 25 should also cover “virtual clothing”, it is by no means certain that the offices and courts will follow this approach. An article published on the IP Helpdesk of the European Commission already addressed this issue.

This may explain the current trend of companies filing for trade mark protection in Class 9. The list of established brand owners that have filed trade mark applications seeking protection in respect of “NFTs” or “virtual goods” is long, including familiar names such BULGARI, HEINEKEN, LA ROCHE-POSAY, LEVI’S, PIRELLI, PUMA, RED BULL and TOMMY HILFIGER. More than 700 EU trade mark applications are currently pending that claim protection for either “NFTs”/“non-fungible tokens” or “virtual goods”. To put this into perspective, there are only approximately 380 EU trade marks in total that have already proceeded to registration in respect of specifications containing those items.

The classification experts have also been considering how the terms relating to the virtual goods and services should be worded. The UKIPO classification team has been inundated with trade mark applications for NFTs and goods/services in a metaverse filed in the last few months. While there is no established practice yet, the trend is clearly not going anywhere so there is an obvious need for setting up clear framework to protect the most valuable brands in the virtual world. Some suggestions include adding "downloadable software, namely” (Class 9) before terms such as non-fungible tokens, virtual clothing and accessories, interactive characters, avatars and skins etc. For Class 42, the specifications could include “providing online non-downloadable virtual goods, namely”. Similar items have also been accepted by the EUIPO.

Having protection for such virtual items in Class 9 or Class 42 should, the argument goes, allow the registrant to bring a so-called double identity in the sense of Article 9(2)(a) EUTMR against third-party use of their mark in the virtual space (use of identical mark on identical goods or services), improving their position in several regards:

• First, brand owners would neither have to prove the reputation of their brand, which is – apart from obvious global brands – quite time consuming and can be challenge both administratively and financially.
• Second, brand owners will not have to show that consumers are confused as regards the commercial origin of the products. This may be a particular obstacle where the NFTs are not being offered precisely for the product in respect of which the brand is known to consumers (and registered).
• Third, relying on double identity allows trade mark owners to attack the use of their brand even in scenarios where it may be difficult to prove that the designation is being used trade mark (i.e. not to indicate commercial origin), as long as the other functions can be harmed.

On the other hand, there are companies and creators ready to enter Web 3.0 and seeking trade mark protection for the launch of their own NFT collection and virtual goods. For the most part, the above holds also true for these undertakings. In addition, however, they should also make sure to apply for trade mark protection in respect of the actual “real-world” products they may wish to bring on the market once their collection has gathered momentum. Typically, such products would include clothing items branded with the logo or name of the project. But there are no limits to the imagination as future NFT holders may also be keen to buy branded toys, sport articles or other IRL collectibles. Needless to say, leading brands in the NFT sphere, such as “BORED APE YACHT CLUB” or “BAYC” lead the pack with Yuga Labs holding several parallel applications/registrations for both virtual and IRL goods.

From a brand perspective, it is important to understand that a transition can and probably will occur in both directions, i.e. IRL brand entering the virtual space and the expected metaverse, as well as “virtual brands” setting foot in real life. As consumers wish to bring their online personality into line with their real-life experience, both scenarios are likely to increase. And in either case, brand owners need to make sure to have the adequate trade mark protection in place. To discuss this topic in more detail, please get in touch with our brands & advertising teams across our European offices.