UKIPO issues guidance on NFTs, trade marks for virtual goods

The United Kingdom Intellectual Property Office (“UKIPO”) has issued guidance on “the classification of non-fungible tokens, virtual goods and services provided in the metaverse.” Setting the scene in a practice change notice on Monday, which aims to “inform[ing] customers applying for UK trademarks about [its] approach to the classification of the above types of goods and services,” UKIPO says it has seen “an increasing number of applications for trade mark specifications containing these terms,” ​​and has received requests for guidance on “the acceptable ways in which these terms may be framed and the correct class they fall into.”

With the foregoing in mind, the UKIPO provides the following guidance for web3 trademarks…

Non-fungible tokens – NFTs serve as “unique and immutable digital certificates of authenticity of ownership for virtual or physical assets such as art, collectibles, and games” and are used “primarily to represent the ownership of that asset, though not necessarily the ownership of any underlying intellectual property, for example copyright”, according to UKIPO. Based on this, UKIPO states that “NFTs will not be accepted as a classification term, alone, [as] without an indication of the asset to which the NFT applies, the term is inherently vague.”

In terms of what the UKIPO will accept in terms of the type of terminology in Class 9, it includes: (1) Digital art authenticated by non-fungible tokens [NFTs]; (2) Downloadable graphics authenticated by non-fungible tokens [NFTs]; (3) Downloadable Software, viz [list the type of goods]authenticated by non-fungible tokens [NFTs]; (4) Digital audio files authenticated by non-fungible tokens; and (5) Downloadable digital files authenticated by non-fungible tokens [NFTs].

While NFTs mainly relate to digital assets, the UKIPO says that “it is possible that NFTs could be used to authenticate anything, including physical goods.” In light of this, it states that “physical goods that are clearly defined as authenticated by NFTs will also be accepted in the relevant commodity class,” for example: (1) Works of art, authenticated by non-fungible tokens [NFTs] [Class 16]; (2) Handbags, authenticated by non-fungible tokens [NFTs] [Class 18]; and (3) Trainers, authenticated by non-fungible tokens [NFTs] [Class 25].

Nevertheless, the UKIPO claims that NFTs “may be sold at retail and/or offered via online marketplaces, in the same way as other goods and services,” and the following language would be acceptable in Class 35: (1) Retail services relating to the sale of [e.g. virtual clothing, digital art, audio files] authenticated by non-fungible tokens; and (2) Providing online marketplaces for buyers and sellers of goods and services authenticated by non-fungible tokens.

Finally, in relation to certain services, for example, “it may be possible to link membership of a club or entry to an event to an NFT,” according to the UKIPO. “However, the service will fall within Class 41 as an entertainment service.” The IP body notes that “other uses of NFTs will be considered on a case-by-case basis.”

Virtual goods – “Unlike their physical counterparts, virtual goods are classified in Class 9 of the Nice Classification system,” according to the UKIPO, which says this is because “the goods they relate to are essentially data, such as digital images. ” But in the same way that the term “goods” or “goods made of x” would not be acceptable for physical goods due to the fact that such terms do not meet the requirement of clarity and conciseness, “virtual goods will be treated in the same way.” As a result, items will only be accepted if they are clearly defined.”

Examples of acceptable terms in Class 9 would be: (1) Downloadable virtual clothing, footwear or headgear; and (2) Downloadable Virtual Handbags.

Virtual services, including those offered in the metaverse – Moving on to virtual services, the UKIPO says that during the pandemic there was a proliferation of services … moving to being delivered virtually, via the use of internet-based applications such as video conferencing, etc. If a service is “that can be delivered via virtual means,” the UKIPO states that it will continue to accept such services, with examples of acceptable terminology: (1) Education and training services provided by virtual means [class 41]; and (2) Conducting interactive virtual auctions [class 35].

Given that the metaverse is a form of digital reality, where people can access virtual worlds and interact with others, the UKIPO takes the position that “there is no reason, in principle, why a service that can be delivered by virtual means cannot be delivered within the metaverse .” For example, the UKIPO points to “a training service can be offered through, attended to and delivered within the metaverse.” As such, it says it will accept services provided through the metaverse in the same class as more traditional forms of delivery, with examples of acceptable terms: (1) Educational and training services provided through the metaverse [class 41]; and (2) Conducting interactive auctions via the metaverse [class 35].

On a final note, the UKIPO claims that “it may not be possible to take the same approach for all ‘metaverse’ services. This is because the manifestation of that service in the metaverse may not fall into the same class as the traditional form of delivery. For example, while it may be possible to order food and drink within the metaverse for delivery or consumption in the physical world, a metaverse avatar “consuming” food and drink in the metaverse would not constitute a Class 43 service. Where supply via the metaverse is specifically mentioned, but where it is not immediately obvious that the service sought can be provided within the metaverse, clarification will be sought from the censor.”

Services that “contrary to the above paragraph may actually be covered by a more general category of services, in that what is actually offered is the access to a virtual world or metaverse for entertainment purposes.” As such, language such as “entertainment services, namely the provision of a virtual reality or metaverse-based simulation game service,” may be appropriate.

THE BIGGER PICTURE: UKIPO guidance on NFTs and the metaverse follows similar efforts by the US Patent and Trademark Office (“USPTO”) and the European Union Intellectual Property Office (“EUIPO”) in August and September 2022 respectively. While the boom in trademark applications for registration in the The “quintessential” metaverse classes of goods/services that we saw in late 2021 and early 2022 have stabilized, the relevant trademark authorities are still largely working through the large number of web3-focused applications for registration, most of which were submitted on the basis of intent of use.

A few recent examples that illustrate the state of affairs: Retailer Moda Operandi was recently granted a notice by the USPTO for its January 2022 registration application for “MODAVERSE” for use in connection with “online retail services featuring downloadable digital clothing authenticated by non-fungible tokens (NFTs), among other things.”

Watchmaker Audemars Piguet is facing backlash from the USPTO over its application to register the source-indicating elements on the Royal Oak bezel for use on “fungible and non-fungible token-based goods and downloadable virtual goods, namely watches and chronometric instruments for use online and in online virtual worlds” (in classes 9, 35 and 41). In an Office action in November, an examining attorney from the USPTO stated that the mark – which the mark characterizes as consisting of “a configuration of a clock face together with a frame which has a circular inner shape and an octagonal outer shape with slightly rounded sides together with eight visible screws placed at the angles of the octagonal shape and forming an outer ring around the glass of the dial” – does not indicate the source of [Audemars’] goods and services, to identify and distinguish them from others.”

And yet, a USPTO examining attorney argued in a non-final case last month, in which it asked Yuga Labs to change some of the language in an application to register “BAYC” for use on NFTs, including that “a non-fungible token or NFT is not a good in trade,” and instead consists of “downloadable units of data stored on a blockchain (a digital database, or ledger, that can simultaneously be used and shared within a large decentralized, publicly accessible network ) that authenticates and proves ownership of digital or physical objects.” With a little more background, the examiner states that “an NFT is not the digital or physical item itself, nor does it contain the digital or physical item; rather, it only contains information about the item. It can be compared to a certificate of authenticity/ownership for a physical object.”

“Since NFTs are not commodities in commerce and are similar to a certificate of ownership and authenticity,” the USPTO attorney states that “applicants must specifically identify the underlying digital or physical elements represented by the NFT for proper classification and identification.” Yuga Labs’ answer will come in June.

As for examples of EUIPO activity, in February the trademark office refused to green light part of a trademark application Burberry filed for its well-known “check pattern” for use on web3/metaverse-related goods/services. According to the EUIPO examiner, “A combination of elements forming a check pattern is obvious and typical of the goods and not significantly different from other check patterns commonly found in commerce,” feedback which seems to suggest that trademark applications for registration for virtual goods can are essentially examined in the same way as applications for these marks for use in connection with their “real world” equivalents.