EUIPO on trade marks and designs in the metaverse

Over the past few years, there has been an increased interest in the metaverse (see IPKat posts here) and NFTs, non-fungible tokens (see IPKat posts here).

From a trade mark perspective, the appropriate classification of goods and services has also been in the spotlight. In this sense, the European Union Intellectual Property Office (EUIPO) published in June 2022 the practical approach taken for classification purposes (see IPKat post here). The Office underlined that the 2023 draft Guidelines (see here) will set out such a practical approach (see here the draft of Trade Marks Guidelines, section “6.25 Downloadable goods and virtual goods”), on which stakeholders can still comment before 3 October 2022.

EUIPO also announced that, so far, the Office has registered the following applications related to NFTs and the metaverse:

In this context, EUIPO held the webinar “Trade marks and designs in the metaverse: legal aspects/EUIPO practice” some days ago. The speakers were Kelly Bennett and Thom Clark from the Legal Department. Here is TechieKat’s report on the event!

Metaverse, virtual goods & NFTs

The metaverse was referred to as the “immersive and constant virtual 3D world where people may interact through an avatar”. It was also highlighted that, so far, there is no all-encompassing metaverse.

Fashion, gaming, entertainment, education, and e-learning industries are likely to benefit from the metaverse due to its features (e.g., selling and purchasing virtual goods to accessorise avatars; participating in virtual activities).

NFTs were referred to as “unique digital certificates registered in a blockchain, which authenticate digital items”. Likewise, it was stressed that NFTs are not the authenticated digital items but rather the certificates thereof.

Trade marks

EUIPO has faced an increase in EU trade mark applications covering NFTs and downloadable virtual goods (the latter are treated as digital images or content for classification purposes). The most used classes are 9, 35 and 41.

The terms virtual goods and NFTs on their own are not acceptable, as EUIPO indicated in the practical approach for classification purposes, published in June 2022. Thus, it is required to specify the relevant content for virtual goods and the type of digital item authenticated by the NFTs. The following accepted examples were provided:

Class 9: Downloadable virtual goods, namely, computer programs featuring footwear and clothing for use online and in online virtual worlds.

Class 9: Downloadable virtual goods, namely, digital art.

Class 9: Downloadable music authenticated by NFTs.

Class 35: Providing an online virtual environment for trading virtual art and virtual art tokens.

Class 41: Entertainment services, namely, providing virtual environments in which users can interact for recreational, leisure or entertainment purposes.

Challenges regarding absolute grounds for refusal, the use requirement to maintain the rights, and the comparison of goods & services in inter partes proceedings were discussed. In this sense, relevant questions were raised but without a definitive answer so far:

Is the perception of the relevant consumer the same in the metaverse?

Should the concepts of distinctive character and descriptiveness applied to physical goods apply to virtual goods? (Bearing in mind that “a key aspect of virtual goods is to emulate core concepts of real-world goods”).

How to prove the use of virtual goods (only in the virtual world, physical world, or combined use)? What about the relevant territory?

When comparing virtual vs physical goods/services to assess the similarity, do the so-called CANON factors apply by analogy? (Canon, C-39/97, ECLI:EU:C:1998:442, para. 23, stating the factors to be taken into account when comparing goods or services: inter alia, their nature, intended purpose, method of use, and if they are complementary or in competition with each other).

Designs

Digital designs used in online environments may comprise icons (static and dynamic), animated characters, holograms, screen displays, projections, videogames, virtual interfaces, voice user interfaces and virtual spaces.

Challenges involving designs in the metaverse were also addressed. As such, relevant queries were raised but without a conclusive answer for the time being:

Can virtual designs be protected under Article 3 of the Community Design Regulation (CDR)? Does the definition of a product (any industrial or handicraft item) limit the protection to only physical products? It was highlighted that digital designs such as icons, graphic user interfaces and the like are eligible for registration as per EUIPO guidelines, para. 4.1.3 (see here).

Does the usage of a protected design (unregistered/registered) in the metaverse amount to use under Articles 10 and 19 CDR? It was indicated that usage in the metaverse might constitute use in accordance with Article 19 CDR.

Is the availability of an unregistered Community design in the metaverse the same as the public availability established in Article 11(2) CDR?

Do the current design representation requirements of Article 4 of the Community Design Implementing Regulation (CDIR) suffice for digital designs? It was stressed the means of representation allowed: drawings, photographs, computer-made representations -but only static views, emphasising that the actual protection is conferred up to 7 static views-. Likewise, 3D computer-animated designs are accepted but only for reference purposes. It was also highlighted that description is permitted but not considered to determine the scope of protection. Lastly, the challenges for representing disclaimed features were underlined (e.g., are broken lines suitable?).

Are there classification issues of the new products used in the metaverse (e.g., is class 14-04 [screen displays and icons] of the Locarno Classification suitable for 3D clothing)?

As regards the indication of products established in Article 36(2) CDR, EUIPO provided recommendations when applying for the registration of designs to be used in the metaverse:

1. When the design is intended to be used in a virtual environment or both (physical and virtual) environments: indicate the physical and virtual products.
2. When a 3D design is incorporated into a physical product: only indicate the physical product.

Comments

The metaverse as conceived (a fully immersive experience involving online virtual worlds where users interact using avatars, supported by diverse technologies such as artificial intelligence, virtual reality and augmented reality) has not entirely developed yet inter alia due to hardware and software requirements (i.e., so far, existing technologies and equipment would facilitate limited and mixed-reality experiences in diverse online virtual platforms) and the lack of governance standards (i.e., platforms apply their own terms of use).

Despite the foregoing, the increase in trade mark and design applications related to the metaverse and NFTs has posed interesting queries and further challenges, as highlighted during the event held by EUIPO. The Office aims to tackle such questions, and internal working groups on metaverse are already in place. Likewise, related webinars will be carried out in the upcoming months (e.g., blockchain & metaverse -IT aspects-).

In all this, the practical approach published by EUIPO in June 2022 to deal with the concerns about the correct classification of goods and services in trade mark applications has been generally welcomed by IP practitioners.

In this context, progress has been made in harmonising the description of goods related to NFTs. This is because the advance electronic publication of the 12th edition of the Nice Classification (see here) that will enter into force on 1 January 2023 already incorporates in class 9 “downloadable digital files authenticated by non-fungible tokens” (Basic No. 090918). However, it should be noted that there is no harmonisation yet among IP Offices worldwide regarding the description of virtual goods and related services. For instance, see the accepted descriptions in classes 9, 35 and 41 for UK IPO here (if needed, search for “virtual” and then click on search) and for USPTO here on TMclass (if required, select USPTO and then click on search).

As regards designs, the advance electronic publication of the 14th edition of the Locarno Classification (see here) that will also enter into force on 1 January 2023, already includes in class 14-04 “augmented reality graphical user interfaces [for screen display]” (ID No. 105098), reflecting WIPO’s response to current trends around the metaverse.

Lastly, it’s foreseen that the metaverse and NFTs will continue in the spotlight not only regarding trade mark and design applications but also in enforcement matters, as demonstrated by the following proceedings widely covered by the media (started in the United States of America, California and New York Districts) and which merit close attention due to the interesting issues raised: Hermès International et al. v. Rothschild, Case No. 1:22-cv-00384, related to trade mark infringement and the sale of NFTs of “MetaBirkins” -pending: motion to dismiss plaintiffs’ complaint denied-; Nike, Inc. v. StockX LLC, Case No. 1:22-cv-00983, regarding trade mark infringement and the sale of NFTs which could be exchanged for Nike sneakers -pending: discovery period extended-; and Miramax, LLC v. Tarantino, Case No. 2:21-cv-08979, involving copyright and trade mark rights -concluded: just settled in September 2022-.

Watch here the recorded version of the webinar. The presentation is available here.

Credits:
The first image is by tunnelmotions from Pixabay.
The third image is by Gordon Johnson from Pixabay.
The fourth image is by TecnoCad_3D from Pixabay.
The fifth image is by Riki32 from Pixabay.