Class 46 is pleased to reproduce, with permission, this article from EUIPO’s August 2022 newsletter to user associations, concerning trade mark and design applications for virtual goods, non-fungible tokens and the Metaverse

The EUIPO has witnessed a recent increase in the number of EUTM applications covering goods such as virtual goods and non-fungible tokens (NFTs) with over 300 applications containing the term non-fungible tokens this year alone.

As these emerging technologies develop and become more popular as commercial spaces, they throw up novel issues in the sphere of IP protection.

A primary concern for individuals and companies who create IP for or within the Metaverse is how to effectively enforce IP rights there. This, in turn, raises the question of the best way register IP assets. As regards trade mark protection, many questions arise such as:

• Which goods and services should be protected when doing business in the Metaverse?
• How can virtual goods and NFTs goods and services be expressed clearly and precisely for classification purposes?
• How will these virtual goods and services be treated when it comes to the absolute grounds examination (i.e. what are they? what exactly do they do?)?
• What approach is right for the comparison of virtual goods and services in relative grounds proceedings?

Indeed, at this stage, there are still probably more questions than answers. There are certain areas, however, where the EUIPO is paving a way in a measured manner. As part of its ex officio checks it must take an approach on classification and absolute grounds. Approaches in other areas, such as inter partes, will develop in line with arguments and evidence provided by parties to the EUIPO. 

How to apply for the correct goods and service to be used in the Metaverse?

When it comes to the implications for IP practice at the EUIPO, the relevant IP Knowledge Circles (which gather experts across the departments) are tasked with giving guidance to examiners on particular cases where required and with developing approaches for consultation with stakeholders including user associations and national IP Offices in the consultation process for the Guidelines. (From 15 June to 3 October the Guidelines are open for comments from stakeholders.)

The approach to classification at the EUIPO that is currently applied places virtual goods in Class 9 because they are seen as recorded content or digital images. The fact that they may reference the corresponding real-world object virtual clothing for use in computer games, for example does not determine their classification. The term virtual goods itself, however, is not acceptable as such at the EUIPO because it lacks clarity and precision. It is necessary to state the content or image the virtual goods relate to, such as downloadable virtual goods, namely, digital art.

In light of the developments in this area, the Nice Classification will incorporate new goods. The term downloadable digital files authenticated by non-fungible tokens will be added to the alphabetical list for the 12th Edition, which will come into force in 2023. Non-fungible tokens are understood as a unique digital certificate, registered in a blockchain, that is used to record ownership of an asset such as an artwork or a collectible (Collins). Importantly, the term is not understood to mean the digital asset itself. Therefore, the term non-fungible tokens on its own will not be accepted for classification purposes as its meaning is not sufficiently clear and precise.

To help with all of these matters, the Office will also make efforts with its partners to introduce more relevant terms into the Harmonised Database.

How are these goods and services assessed in absolute grounds examination?

When it comes to how these goods will be treated for absolute grounds examination, the first question is what exactly are the goods being examined?

Some basic principles must be applied. For example, many virtual goods merely depict real-world goods or they may imitate real-world goods in a virtual setting (e.g. a virtual dress for an avatar). In either scenario, a key aspect of such virtual goods is that they emulate core concepts of real-world equivalents and the assessment of absolute grounds must take this into account. Consequently, a sign which amounts to no more than a banal representation of real-world goods would normally not be perceived by the consumer as an indication of commercial origin for equivalent virtual goods.

And in case of conflict

Questions have been asked about how the EUIPO will treat comparisons of ‘virtual products’ with real-world equivalents.

The EUIPO cannot take a position on these questions in the abstract. In relative grounds proceedings, the Office is restricted in its examination to the facts, evidence and arguments provided by the parties (Article 95(1) EUTMR).

Future opponents will have to demonstrate why these goods are similar by setting out the Canon criteria and other factors that may be relevant to this assessment and future applicants will, of course, have the chance to rebut those arguments.

It is true that the similarity of the goods and services is a matter of law that must be assessed ex officio by the Office (even if the parties do not comment 16/01/2007, T-53/05, Calvo, EU:T:2007:7, § 59). Nevertheless, this ex officio examination is restricted to well-known facts. The novel situations here cannot be regarded as well-known facts (09/02/2011, T-222/09, Alpharen, EU:T:2011:36, § 31-32).

Designs

The Office has recommended that applicants provide a physical product indication for designs only intended for virtual environments in order to facilitate searches in the registered Community design databases. However, with a legislative reform on the horizon set to provide greater clarify for such designs, guidance may be better tailored to these technological developments.

Other areas

There are other areas where these new technological developments will require adjustments and analysis. For example, establishing jurisdiction where disputes relate to activities in the Metaverse, concepts of ‘use’ and how responsibility for infringement might be allocated between the various actors (i.e. the owners or controllers of the platforms versus those that use it in an infringing manner).

Things will undoubtedly become clearer as the courts deal with these issues in specific infringement scenarios based on concrete facts, arguments and rights.

Meanwhile, business would be well advised to review their IPR portfolios and identify possible shortcomings. In this respect, SMEs may take advantage of the Office’s SME Fund, which is a grant scheme designed to help EU small and medium-sized enterprises with their IP rights.

For more information, please contact: information@euipo.europa.eu

MARQUES thanks EUIPO, and specifically the User Associations Team, for granting permission to share this article. Read more about this topic here and here.