Do you really intend to offer NFTs, digital collectibles and virtual goods? If not, no trademark. | Katten Muchin Rosenman LLP

Editor’s note: This article is the second in a series by Katten Lawyers examining NFTs and various emerging legal issues raised by NFTs.

The NFT explosion has led to a “gold rush” of thousands of new US trademark applications covering NFT-based digital files, digital collectibles, and the like.

There are offensive and defensive motivations for brand owners to join the NFT trademark frenzy. Offensively, they may see NFTs as a legitimate business opportunity that they have concrete plans to exploit. Defensively, brand owners may be concerned about preventing unscrupulous third parties from using or registering marks without authorization. But do the owners of these trademark applications actually use the marks for these goods, or have one bona fide intend to do so? If not, the trademark registrations may not be worth the paper they’re written on.

At the time you file a US trademark application, you must either: (a) already be using the mark in US commerce for the goods and services listed, or (b) have a bona fide intends to use the mark for such products or services. Absent use or intention to use, the application is invalid. 15 USC § 1051; Swiss Grill Ltd. v. Wolf Steel Ltd.115 USPQ2d 2001, 2008-09 (TTAB 2015) (application invalid for lack of bona fide intend to use).

Third parties may challenge trademark applications or registrations for non-use or lack of bona fide purpose. In such challenges, the Trademark Trial and Appeal Board will look for objective evidence of use, or a firm and demonstrable intention to use the mark for the covered products or services. Some TTAB cases have required documentary evidence of plans to use the mark (i.ea big idea in the head may not count). See, e.g, Swiss Grill Ltd., 115 USPQ2d 2008-09. A purely “defensive” trademark application—with no use or intent to use, but rather only the intent to block third parties from registering the mark—is insufficient under US law. Likewise, a purely opportunistic trademark application to “plant a flag” in case the applicant might one day decide to offer the listed products or services—absent bona fide intent to use – is insufficient.

Given the intense “gold rush” for NFT trademark registrations, and the unique challenges of actually entering the NFT ecosystem, it seems likely that use and intent-to-use challenges will follow. At the time of writing, we have not found any reported TTAB decisions addressing lack of use or intent to use for trademark applications covering NFT products and services. But that is likely to change – and soon.

For more content on NFTs, check out this recent article on NFTs and the Enduring Allure of Digital Collectibles.