Clifford Chance

Trade Mark Protection in the Metaverse

On 28 October 2021, Mark Zuckerberg announced Facebook's rebrand to 'Meta' and set out Meta's plan "to bring the metaverse to life and help people connect, find communities and grow businesses", which greatly raised awareness of the metaverse. Since Meta's announcement, a number of well-known brands have sought to explore new opportunities presented by the metaverse.

The provision of goods and services in the 'metaverse' has presented a new question for many brand owners: do we need to broaden our trade mark protection to cover goods and services in virtual worlds?

In this article, we set out some considerations for brand owners considering whether to apply for trade mark protection for their brands in the metaverse.

Trade Mark Protection

Trade marks can be protected by registration in most countries around the world. In most cases, a trade mark confers protection for specific goods and/or services covered by the registration. Most countries are subject to a uniform trade mark classification system in respect of goods and services (the Nice Classification), which is made up of 45 'classes' comprising various types of goods and services. Classes 1-34 cover goods, and classes 35-45 cover services. For example, Nike Innovate C.V. (Nike) owns a UK trade mark registration for "NIKE" (no. UK00002343143) which covers "footwear" in class 25. The trade mark registration enables Nike to oppose the registration of subsequent trade mark applications for identical or confusingly similar marks applied for in respect of similar goods, and to file trade mark infringement proceedings in respect of use of the same. UK law also allows owners of trade marks with an established reputation to prevent the registration and use of trade marks which take unfair advantage of their brand, or which cause detriment to their brand, even where the relevant goods or services are not similar.

Brands Seeking Trade Mark Protection in the Metaverse

A number of well-known brands seeking to explore new opportunities presented by the metaverse/NFTs have filed related trade mark applications. Examples of such trade mark applications in the UK include:

• an application by the owner of the "CAPTAIN MORGAN" flavoured rum brand, which includes protection for "NFTs featuring collectible digital items, images, photographs, art, videos or audio recordings" (in class 9) and "providing on-line, non-downloadable virtual services related to non-alcoholic and alcoholic beverages" (in class 41);
• an application by the owner of the "GYMSHARK" brand, which includes protection for "providing gymnasiums and fitness centres in metaverses" (in class 41); and
• an application by the owner of the high-end "CREED" perfumery brand which includes protection for "downloadable multimedia files containing artwork, text, audio, and video relating to perfumery [and] fragrances…authenticated by non-fungible tokens (NFTs)" (in class 9) and "providing online, non-downloadable virtual perfumery [and] fragrances…for use online and in online virtual environments" (in class 41).

A number of such trade mark applications have also been registered by the UK Intellectual Property Office (UKIPO). Examples include:

• a trade mark registration owned by Nike in respect of the "NIKE" brand, which includes protection for "downloadable computer programs featuring virtual goods, namely, footwear, clothing [and] headwear…for use online and in online virtual worlds" (in class 9) and "providing on-line, non-downloadable virtual content featuring footwear, clothing [and] headwear [etc.]…for use in virtual environments" (in class 41); and
• a trade mark registration owned by Gianni Versace SRL in respect of the luxury "VERSACE" clothing brand, which includes protection for "downloadable digital assets and electronic data files provided with non-fungible tokens (NFTs)" (in class 9) and "non-downloadable virtual goods, services and assets including footwear, clothing, headwear…furniture, and accessories for use in virtual environments" (in class 41).

EUIPO Guidance

On 27 June 2022, the EU Intellectual Property Office (EUIPO) published guidance on "virtual goods, non-fungible tokens and the metaverse" which it stated was in response to the EUIPO "increasingly receiving [trade mark] applications containing terms relating to virtual goods and non-fungible tokens (NFTs)". The publication provides guidance on the EUIPO's approach to EU trade mark filings covering related goods/services.

The EUIPO's approach to trade mark filings relating to NFTs and virtual goods and services is further specified in the EUIPO's draft Guidelines for 2022. The EUIPO has set a deadline of 3 October 2022 for stakeholders to provide comments on its draft Guidelines.

The draft Guidelines state that all material that is downloadable (including "virtual goods") should fall within class 9, which "includes publications, music…pictures, photographs, films…and digitised information in general". However, the EUIPO considers that the term "virtual goods" (on its own) lacks clarity and precision, and so must be further specified by stating the content to which the virtual goods relate (e.g. "virtual goods, namely, virtual clothing").

The draft Guidelines further state that the term "non-fungible token" will not on its own be accepted by the EUIPO as part of an EU trade mark specification and that it will require the type of digital item authenticated by the NFT to also be specified (e.g. "downloadable digital art, authenticated by an NFT").

With respect to services, the draft Guidelines further provide that "services which are applied for in relation to such virtual or downloadable goods will be classified in line with the established principles of classification", giving the following indicative example: "provision of an online marketplace for downloadable digital art images authenticated by non-fungible tokens [NFTs] in Class 35".

UK

The UKIPO has not yet published any guidance on UK trade mark applications relating to the metaverse or NFTs. However, in April 2022, the UKIPO published an indicative list of research priorities for 2022 to 2023, which includes "consideration of the opportunities and challenges of the Metaverse to the IP framework".

Although the UKIPO is yet to provide guidance on trade mark applications relating to the metaverse/NFTs, it is clear from the examples of the "NIKE" and "VERSACE" trade mark registrations referenced above, that the UKIPO is willing to grant trade mark protection in relation to metaverse and NFT related goods/services.

US

The United States Patent and Trademark Office (USPTO) is also yet to provide any guidance on trade mark applications relating to the metaverse/NFTs. However, on 9 June 2022, the US Senate Committee relating to intellectual property matters wrote to the USPTO and the US Copyright Office requesting the offices to undertake a joint study to consider intellectual property implications arising from NFTs. On 8 July 2022, the USPTO and the US Copyright Office responded to the request, confirming that the offices would undertake a joint study. The study is envisaged to cover various intellectual property issues concerning NFTs, including what intellectual property protection can be afforded to NFTs (although, it is unclear at this stage to what extent the report will cover trade mark protection relating to the metaverse/NFTs). Pending publication of the study, the treatment of some recent applications for virtual goods may provide an indication of the USPTO's future practice.

On 24 June 2022, the USPTO sent an office action to Nike Inc. in connection with its US trade mark application for "JUST DO IT" covering "virtual goods, namely…footwear, clothing [and] headwear…for use online and in online virtual worlds" (in class 9). The USPTO stated that Nike Inc. must further clarify the goods and services covered by the trade mark application, as the scope of protection is unclear. In particular, the USPTO considers that references to goods/services "in online virtual worlds" is unclear. Nike Inc. has until 23 December 2022 to respond to the office action, otherwise the application will be treated as abandoned.

Unlike the UKIPO and the EUIPO, which only examine trade mark applications on absolute grounds, the USPTO also examines applications on relative grounds (i.e. taking pre-existing third party rights into account). Even where a brand owner's existing trade marks do not specifically designate metaverse/NFT related goods or services, the USPTO has indicated that it will likely refuse third party trade mark applications for well-known brand names in respect of such goods or services. For example, two US trade mark applications were filed in November 2021 for "GUCCI" (no. 97112038) and "PRADA" (no. 97112054) in relation to metaverse/NFT-related goods and services by applicants unaffiliated with the owners of the well-known brands. In late August 2022, the respective USPTO trade mark examiners provisionally refused to register the applications based on (a) the 'false connection' suggested between the respective applicants and the prior registrations owned by the well-known brand owners, and (b) a likelihood of confusion and/or identity with earlier "GUCCI" and "PRADA" trade mark registrations. In particular, the USPTO considered that (i) the prior registrations included broad coverage (e.g. "retail store services") which would encompass related narrower specifications (e.g. "retail store services featuring virtual goods"), and (ii) the goods/services applied for were merely virtual versions of the goods/services covered by the prior registrations.

Comment

The metaverse presents new opportunities for trade mark owners to exploit their brands. However, the metaverse is still in its infancy and it may take a number of years before brand owners have more clarity from trade mark offices and courts around the world.

As metaverse/NFT applications are examined by various trade mark offices, the descriptions of goods and services will likely become more homogeneous between jurisdictions. However, at present, there does appear to be a lack of consistency in approach (e.g. the UKIPO appears to be open to accepting trade mark applications relating to "virtual environments", whilst the USPTO has indicated that it considers that "online virtual worlds" lacks clarity).

Certain jurisdictions, such as the US, require a trade mark applicant to have used its trade mark in relation to the goods or services covered by its application, or to file a declaration of 'intent to use' in respect of the same. Therefore, brand owners need to consider whether they genuinely do envisage offering metaverse or NFT related goods or services prior to filing their related trade mark applications.

When it comes to enforcing their existing rights, owners of UK and EU trade marks with a reputation that cover 'real world' goods are likely to be able to rely on the extended scope of trade mark protection in the metaverse. This could prevent the use or registration of signs which take unfair advantage of, or are detrimental to, the distinctive character of their existing 'real world' registrations. However, it is yet to be tested whether e.g. a 'virtual' shoe would be considered to be a similar good to a real world shoe for the purposes of infringement under Section 10(2) of the UK Trade Marks Act or Article 9(2)(b) of the EU TM Regulation.

The approach adopted by the USPTO so far has been favourable to brand owners. As noted above, it appears to consider that brand owners can rely on their prior registrations for real world goods and services to provide protection for their virtual counterparts in some cases. However, it is unclear to what extent other territories will adopt the same approach.

Brand owners will also need to consider in which territories they should apply for trade mark protection or whether their existing jurisdictional coverage is sufficient. The trade mark system is tied to real world geographical locations, but it will be difficult to determine where infringement takes place in the metaverse. Many national laws eventually developed principles for determining the location of web-based acts of infringement, although this process took decades, and the laws are still not harmonised internationally.

As a result of the differing approaches to trade mark specifications, use requirements and enforcement issues, advice will likely need to be sought by brand owners in a number of jurisdictions, in order to ensure local law requirements are addressed.

Due to the raft of legal issues presented by trade mark rights in the metaverse, brand owners should be proactive in considering whether their existing trade mark protection is sufficient in the context of the evolving virtual environment, particularly if brand owners are considering offering goods or services relating to the metaverse or NFTs.