WHAT DO THE METAVERSE AND NFTS MEAN FOR TRADEMARK OWNERS?
The metaverse refers to an immersive digital world where users can interact with different spaces, people, and things using digital avatars. It creates virtual settings that mimic the real world where people can deal with, wear, and touch branded goods and services. In this setting, would the use of a trademark infringe the rights of the trademark owner for those equivalent goods or services in the real world? The question is yet to be answered by the courts, but definitely an important one for trademark owners to consider. Also, as the NFT (“Non-Fungible Token”) industry, which involves digital assets that can be used across different metaverse spaces, continues to flourish, should trademark owners start expanding their trademark filings to secure their trademark rights and presences in the metaverse?
Merriam Webster defines an NFT as a unique digital identifier that cannot be copied, substituted, or subdivided that is recorded in a blockchain and that is used to certify authenticity and ownership. In other words, an NFT is the digital version of a certificate of authenticity, embodied in the blockchain. A trademark can be “any word, phrase, symbol, design, or a combination of these things” that identifies and distinguishes the source of goods or services from competitors in the marketplace. Federal trademark law provides many protections for trademark owners, including the ability to sue for infringement where third-parties use their trademarks in ways that will likely confuse consumers about the source of the goods or services. Therefore, trademark laws protect brand owners, including brands that do businesses in the metaverse and businesses that sell NFTs, who can be protected by their registered trademarks when someone else uses the same or similar name or logo.
Although to most people the metaverse and NFT still represent mysterious new arenas of potential opportunities, there have certainly been signs of the momentum of their rising popularity. Therefore, trademark owners must be mindful of the potential for infringers, many anonymous and foreign-based, to prey on their trademark rights in the metaverse or using NFTs.
Lately, there has been a trend of blockchain and NFT-related trademark filings by large global companies. For brand owners, particularly those well-known in consumer goods markets around the world, it seems wise to consider securing trademarks in the metaverse space to get their foot in the door, and as a powerful defensive strategy to combat infringers in the metaverse, especially in first-to-file jurisdictions where trademark squatting is prevalent and it is critical to file early.
For example, Nike Inc. applied for a suite of new trademark applications in the US for some of its most well-known marks including NIKE, Just Do It, and the AIR JORDAN logo, covering various goods and services in classes 9 and 42, including downloadable virtual goods in class 9 and retail store services featuring virtual goods in class 42. Crocs, Inc. applied for a trademark in classes 9 for downloadable digital media, namely, digital assets, digital collectibles, digital tokens, and non-fungible tokens (NFTs); class 35 for retail store services and online retail services featuring virtual goods…provision of an online marketplace and registry for buyers and sellers of digital assets, digital collectibles, digital tokens and non-fungible tokens (NFTs); class 41for entertainment and amusement, namely, provision of online non-downloadable virtual goods for use in virtual environments; and class 42 Providing temporary use of non-downloadable digital media, namely, digital assets, digital collectibles, digital tokens and non-fungible tokens (NFTs). NBA Properties, Inc., applied for registration of NBA TOP SHOT for “Downloadable virtual goods, namely, computer programs for the creation and trade of digital collectibles using blockchain-based software technology and smart contracts, featuring players, games, records, statistics, information, photos, images, game footage, highlights, and experiences in the field of basketball.” Opensea, which calls itself “The largest NFT marketplace” filed for trademark registrations in Class 35 for services including “providing an online marketplace for buyers and sellers of crypto collectibles” and in Class 42 for services including “creation of online retail stores for others in the nature of web-based service that allows users to create hosted crypto collectible and blockchain-based non-fungible token stores.”
As the examples above demonstrated, many businesses have existing trademark registrations for their goods and services, but trademarks specific to the metaverse and NFTs may be getting more and more important now. The United States Patent and Trademark Office (the “USPTO”, as well as other trademark offices around the world) places goods and services into different “classes” under which the trademarks are classified. Most of these goods and services in “traditional” classes do not cover digital goods and services in the metaverse or NFTs (which the USPTO classifies in classes 9 and 41, amongst others). As a result, it is important that businesses consider filing for relevant trademark applications for their goods/services in the appropriate classes to receive the desirable scope of protection.
It can be argued that existing trademark registrations for physical goods or services may cover the digital goods or services in the metaverse, but there are currently no statutory laws or case law that can confirm such argument yet. There are some newly filed cases, like the lawsuit that Nike filed against StockX’s NFT collection “Vault” that contains Nike’s trademark, and the complaint Hermes filed against Mason Rothschild for its NFT collection “MetaBirkin,” but these cases have not yet been adjudicated by courts. Thus, if your company is thinking of expanding your business into the metaverse or NFTs, it would be worthwhile to consider filing for relevant trademarks in order to be protected against infringement in these new arenas.
Lastly, a word of caution for any trademark owner thinking about expanding their business into the metaverse and NFT industries, be cautious when using any third-party trademarks or copyrighted work in an NFT (be careful when your logo was created by an independent contractor!). If any third-party’s brand name, logo, copyrighted work, or product is used in connection with creating an NFT, written permission (proper license) from the owner must first be obtained, or else you risk putting yourself in legal hot water.