Navigating Trade Mark Protection Amidst Virtual Goods and Metaverse Expansion

Digital technologies including the metaverse, non-fungible tokens (NFTs), blockchain, and augmented reality are increasingly influencing how intellectual property, particularly trade marks, is cultivated and protected worldwide.

Earlier this year, the 12th edition of the Nice Classification—a globally recognized system for classifying trade mark registrations across 92 countries including Australia—came into force. This latest edition introduced explicit references to virtual goods and services, reflecting the growing importance of digital assets in trade mark law.

Notably, class 9 now encompasses “downloadable digital files authenticated by [NFTs]” and even “humanoid robots with artificial intelligence for preparing beverages,” a category already leveraged commercially by celebrities such as Kendall Jenner, who employed a robot mixologist to promote her tequila brand.

Following these updates, several IP offices worldwide, including the European Union Intellectual Property Office (EUIPO), the United Kingdom Intellectual Property Office, and the United States Patent and Trademark Office, issued guidance on trade mark classification for emerging technologies.

In August 2023, IP Australia released its own detailed guidance addressing virtual goods, the metaverse, NFTs, and blockchain technologies. This guidance clarifies how brands can enhance their digital presence and protect trade marks within virtual environments.

IP Australia’s guidance outlines specific considerations for registering trade marks related to emerging digital technologies:

Virtual goods typically fall under class 9, covering downloadable software and data. However, services connected to virtual goods may be classified differently—for example, class 35 includes “online retail services of downloadable virtual clothing.” Applicants are advised to avoid broad terms like “virtual goods” and instead specify the exact nature of the goods, such as software, image files, music, or clothing.

Regarding the metaverse and virtual environments, colloquial terms like “metaverse,” “web 3,” and “virtual environments” are generally accepted, with “virtual environments” preferred for its broader applicability. The classification depends on the service’s impact in the virtual context. For instance, virtual retail shopping or recreational activities like chess may align with traditional classifications, whereas a virtual bartender might be classified under class 41 (entertainment services) rather than class 43 (bar services).

NFTs and blockchain technologies, while not goods or services themselves, serve as unique digital identifiers certifying authenticity and ownership. IP regulation in this area is still evolving. The guidance emphasizes that trade mark applications involving NFTs or blockchain must specify the exact goods or services authenticated or related to the technology—for example, “downloadable digital image files authenticated by [NFTs]” in class 9 or “computer programming of smart contracts on a blockchain” in class 42.

Despite these clarifications, registering virtual goods and services remains complex. The EUIPO recently partially refused Burberry’s application to register its iconic tartan plaid print for virtual products, including NFTs, downloadable avatars, and virtual bags. The office found the mark lacked distinctiveness in the virtual context, applying the same principles used for physical three-dimensional marks.

Infringement issues in virtual spaces are equally challenging. Australia has yet to definitively address whether physical goods and services are considered the same or similar to their virtual counterparts for trade mark infringement purposes. However, international cases provide insight.

In January 2023, the Court of Rome ruled that Blockeras, a company selling NFT digital playing cards featuring famous Italian football players, infringed the trade marks of Juventus Football Club. Blockeras contended that Juventus’s registrations did not cover NFTs, but the court found infringement and consumer confusion, noting Juventus’s prior use of its marks in crypto and blockchain games employing similar technology.

Nike is also engaged in ongoing infringement litigation against StockX, an online shoe retailer that minted NFTs linked to Nike shoes. Nike alleges that StockX’s use of its trade marks in NFTs misled consumers into believing the NFTs were authorized by Nike. The case, initiated in February 2022, highlights the risk of third parties exploiting established brand goodwill through NFTs.

These international developments underscore the challenges brand owners face in registering and enforcing trade marks in virtual domains, even when they hold existing registrations for corresponding physical goods and services.

The IP Australia guidance provides valuable direction, but brand owners must take proactive steps. Recommendations include:

- Assessing potential virtual market opportunities and ensuring trade mark protection encompasses both physical and virtual uses.