The Metaverse, non-fungible tokens: how to protect your brand in this “new world”

The “Metaverse” and non-fungible tokens (“NFT’s”), buzzwords often heard when one listens to the radio or reads newspapers, but “what do they mean?”

The Metaverse is a platform of online 3-D or virtually integrated environments that provide users with access to a virtual reality with virtual experiences, while NFT’s are defined as “cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other” (1). However, NFTs must not be confused with cryptocurrency and although they use the same underlying technology (i.e., Blockchain), they are better described as “digital collectors’ items”.

The Metaverse also creates a platform for e-commerce transactions. This virtual reality creates a novel experience for the consumer and presents an extremely profitable income stream for online shopping businesses. It is also believed that the Metaverse could one day support its own digital economy where its users will be able create virtual assets (goods) to buy and sell online.

With the creation of this “new virtual word” it has become important for brand owners to understand how to optimise their trade mark protection on this platform as it has created a unique shopping-commerce experience. That said, with this “new world” comes increased risk of misuse of intellectual assets and in turn the need for broader brand and trade mark protection to shield against the misappropriation of protected brands.

Although one could argue that our existing trade mark law should be sufficient to enforce trade mark rights in the Metaverse, trade mark applications for NFT and virtual marks increased by more than 500% between August 2021 and January 2022 at the US Patent and Trademark Office (USPTO).

With regards to how we would provide advice to secure adequate protection in this new space, we reviewed the specifications of some of the recent virtual trade mark filings at the USPTO. Most virtual reality marks which cover virtual goods in virtual spaces were filed in classes 9, 35 and 41. Depending on the brand (especially clothing brands) the specifications, may, read as follows:

Class 9: Downloadable virtual goods, namely, computer programs featuring footwear, clothing, headwear for use online and in online virtual worlds.

Class 35: Retail store services featuring virtual goods, namely, footwear, clothing, headwear; online retail store services featuring virtual merchandise, namely, clothing, footwear, headwear for use in virtual environments.

Class 41: Entertainment services, namely, providing on-line, non-downloadable virtual footwear, clothing, headwear for use in virtual environments.

Brands such as Victoria’s Secret, Ralph Lauren, Gucci, Louis Vuitton, Coca-Cola, Saint Laurent, Valentino, Balenciaga, Alexander McQueen, Prada and sports brands like Adidas and Nike, have filed for trade mark protection to cover their goods being sold as NFTs and being used in the Metaverse. McDonalds has also recently filed in class 9 for “Virtual food and beverage products. Downloadable multimedia files containing artwork, text, audio and video files and non-fungible tokens”.

Filing for virtual trade marks is no longer an option but a necessity, especially when you are selling your goods in the Metaverse. NFTs are extremely lucrative and to ensure that you are adequately protected in the virtual reality, a need particularly illustrated by the sharp increase in NFT-related litigation overseas, it is highly recommended that you update your trade mark portfolio to include virtual trade marks.

(1) Investopedia.com