UKIPO issues new trademark guidance on NFTs, the metaverse and virtual goods

On 3 April 2023, the UK Intellectual Property Office (UKIPO) issued much-needed guidance on how digital goods and services – namely non-fungible tokens (NFTs), virtual goods and services delivered in the metaverse – should be classified for trademark purposes.

NFTs

The UKIPO defines an NFT as “a unique unit of data (the only existing one of its kind) that links to a particular piece of digital art, music, video, etc. and that can be bought and sold.“ An example of an NFT is the first ever tweet, which was sold by Jack Dorsey, co-founder of Twitter, for $2.9 million.

UKIPO states that the term “non-fungible token” is an insufficient specification. An NFT is inextricably linked to the associated asset, and without reference to that asset the terminology is inherently vague. Instead, wording specifying the asset and noting that it is authenticated by an NFT should be used; “digital art authenticated by non-fungible tokens [NFTs]”, for example.

NFTs should be registered in Class 9, which specifically includes “downloadable digital files authenticated by non-fungible tokens”. Since NFTs can relate to both physical and virtual assets, physical goods that are clearly defined as authenticated by NFTs will also be able to be registered in the classes relevant to the goods themselves. So, for example, ‘footwear approved by NFTs’ can be registered in class 25.

Virtual goods

Virtual goods are intangible objects that represent real assets. They are traded in online communities or games. An example is the virtual Gucci bag that was recently sold for $4,000 on the gaming platform Roblox.

The UKIPO has taken the opportunity to clarify a question raised by many IP professionals and brand owners: should virtual goods be registered in the classes applicable to their physical equivalent, or elsewhere? Since virtual goods consist entirely of data, the IPO considers that they should be registered in Class 9, regardless of the nature of the underlying goods.

The position regarding specifications for virtual goods mirrors that for physical ones. The term “virtual goods” is too vague; to proceed to registration, the virtual goods must be clearly defined. The UKIPO provides the terminology “downloadable virtual clothing, footwear or headgear” as an example of an acceptable specification in these cases.

Virtual Services, including those offered in Metaverse

Since the pandemic, many services traditionally offered in person, such as training, have been delivered online. The UKIPO has confirmed that the appropriate class for a virtual service is that of the corresponding real service. The specification must refer to the services and the fact that they are delivered online. ‘Education and training services provided by virtual means [class 41]’ is given by the IPO as an example.

UKIPO defines the metaverse as “a form of digital reality, where people can access virtual worlds and interact with others.” An example of the metaverse in action is the game “Fortnite”, where players create their own virtual world and share experiences with other players, such as attending concerts organized by famous musicians.

UKIPO recognizes the potential for services provided in person or online to be delivered through the metaverse and confirms that they will be treated in the same way. So the relevant class will be the one relevant to the underlying service, and the wording should refer to both the service and the mode of delivery – “conducting interactive auctions via the metaverse [class 35]”, for example.

However, UKIPO notes that this approach may not work for all metaverse services. For example, selling food or drink in the metaverse would not be considered the same as in real life, so class 43 would not be appropriate. The IPO considers instead that such services may be more suitable for Class 41, as they represent general “entertainment services”, namely providing a virtual reality or gaming service.

The challenge of change

We live in an increasingly digital world, and brands that want to interact with their consumers must do so both in real life and virtually. The sale of the virtual Gucci bag and the popularity of Fortnite’s concerts indicate a growing consumer demand for virtual goods and services and highlight the need for businesses to protect their brand identity in the virtual world.

While UKIPO’s recent guidance provides welcome clarity on its current approach, the office specifically notes the fast-moving nature of the technology landscape and the ongoing need to review and update guidance as technology evolves. In these circumstances, identifying the relevant trademark classes and drafting clear, accurate specifications remains a challenge for brand owners and IP professionals.

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Author: kate3155