Intellectual Property Offices around the world are increasingly receiving applications containing terms relating to virtual goods and non-fungible tokens (NFTs). According to Michael Kondoudis, a trademark, and patent advocate, between January and August of 2022, the United States Patent and Trademark Office (USPTO) received 3,600 trademark applications for crypto and NFT-related goods and services. This is a 2.3% hike from the registration of 2021, which stood at 3,516. In addition, Metaverse and Web3 trademark filings have also witnessed a rapid hike in popularity, with nearly 4,150 applications since January.
This surge in applications is likely because brand owners are uncertain if their existing trademark rights in physical goods will extend to and provide adequate protection for using their trademarks on virtual goods. Although this is a relatively new issue that trademark law is yet to address in its full scope, there is an immediate question that requires an answer: Should business owners file a trademark application to protect their goods and services in the virtual world?
Why trademark virtual goods and services?
The rise of immersive virtual worlds, such as Metaverse, that provide digital representations of individuals, places and things makes the potential reputation risk for established brands producing physical products and services highly apparent. Recently, we have seen many cases of luxury brands such as Hermès, Nike, and Dolce & Gabbana being recreated and sold in the virtual realm by individuals outside the respective fashion houses. This can become quite problematic, especially if these replications will apply for their own trademarks with the intention of misleading the consumers. Combatting such bad-faith applicants comes with potentially huge legal fees and a drain on corporate resources.
These brand infringement attempts can be expected to increase in the upcoming future, and the best advice for both established and emerging brands is to consider extending their trademark application by including virtual goods and services. In order to ensure adequate protection, a key consideration should be the choice of the classes of goods and services indicated in the trademark application.
Trademark classes for virtual goods and services
Established by the 1957 Nice Agreement, NICE Classification defines 45 categories of goods and services, providing the basis for their assessment by intellectual property offices. The first 34 classes cover physical products (goods), and the remaining 11 classes contain services categories. Each class contains several thousand specific goods and services that also need to be defined on the trademark application. The choice of the right goods and services is arguably one of the most challenging parts of the trademark application process.
The number of the required classes of goods and services varies considerably between individual trademarks, depending on the scope of the brand’s operations. On average, owners of registered trademarks tend to register 2-3 classes; however, numerous well-diversified brands have registered their trademarks in over ten classes.
When it comes to virtual goods and services, most companies are filing for protection in relation to the following classes:
Class 09 - downloadable virtual goods, namely computer programs
Class 35 - retail store services and entertainment services featuring virtual goods
Class 42 - online non downloadable virtual goods and NFTs
Class 36 - financial services, including digital tokens
Virtual goods are most proper to Class 9 because they are treated as digital content or images. However, the term virtual goods on its own lacks clarity and precision, so it must be further specified by stating the content to which the virtual goods relate (e.g. downloadable virtual goods, namely, virtual clothing). The 12th edition of the Nice Classification is set to be adapted to this issue. In the new version, the following aspects will be incorporated in Class 9:
virtual good must be further specified by stating their content, such as: “downloadable virtual goods, namely, virtual clothing” for example;
NFTs must be identified as: “downloadable digital files authenticated by non-fungible tokens”, as the term non fungible tokens (NFT), on its own, is not acceptable for the French Office (INPI) and the European Office (EUIPO);
and, the type of digital item authenticated by the NFT must also be specified.
Experienced trademark lawyers can help you select the correct classification categories to protect your brand as you enter the digital marketplace. To learn more about trademark options for virtual goods and services and other digital assets, contact an experienced trademark attorney today.