Board of Appeal provides further guidance on rules surrounding trademark system abuse
16th June 2022
Traditionally a marketplace may have been defined as “An open space in a town or city where goods are bought and sold.” In recent times the word “marketplace” is more commonly associated with online activity and more likely to be defined as “a platform where third party companies can sell their products or services to customers.” In 2022 with the possibilities of Web3.0 and the metaverse, the concept of a marketplace is evolving further.
So what does a marketplace in the metaverse look like and how does it operate? The metaverse has been described as a place parallel to the physical world where people can spend their digital life, a shared digital space that is interactive, immersive and three dimensional. The metaverse would typically incorporate your own avatar and digital assets, so people can buy goods and services, socialize with friends, and attend meetings and concerts, effectively living in a digital world. Trading is carried out through NFT marketplaces in the metaverse. An NFT (Non Fungible token) is a digital identifier using blockchain technology to authenticate and to track the ownership of a digital asset. The NFT market is booming, assisted by the increased demand for digital artworks and involvement of mainstream influencers and gaming communities. According to the 2021 NFT Market Report (released by blockchain data company Chainalysis), the NFT market has grown to over $40 billion in value.
The metaverse and NFT marketplaces provide incredible opportunities for brand owners, including new revenue streams, potential for licensing opportunities, the ability to reach a younger demographic and collaborations to raise brand profile. This is big business and brand owners are getting on board.
Nike recently acquired RTFKT, a creator of digital sneakers. The digital sneakers can be used in video games, but they can also be tied to physical versions of the shoe. The first range of digital sneakers called “cryptokicks” were launched in April and Nike have applied to register the CRYPTOKICKS trademark.
In 2021 Dolce & Gabbana created an NFT collection that launched during Venice Fashion Week and sold for over $5.5 million. The owners of the NFTs also received real-world versions of the items.
In terms of collaboration to raise brand profile, Puma and Man City recently collaborated with digital artist Musketon. As part of the celebrations for the ten year anniversary of Man City’s first premier league title, the Belgian artist Musketon created a unique digital design which also features Puma’s ULTRA football boots. Both the NFT and the physical limited edition boots were launched on May 13, 2022.
While affording big opportunities, the metaverse and NFT marketplaces also raises a number of headaches for brand owners such as the issue of digital counterfeits, unauthorised use in the virtual world and infringement. Companies are starting to take action against unauthorised use, most notably in the MetaBirkins case. In this case Hermes has alleged Trade Mark infringement against the digital artist Mason Rothschild following his sale of NFTs in the form of digital images which he called MetaBirkins. The designer created 100 digital faux fur Birkin-shaped handbags. According to the NFT marketplace Rarible, the collection has sold for over $1 million. An application for dismissal filed by Rothschild has been refused by the NY federal court, so the case will proceed to trial and will be closely followed by practitioners as it may answer some questions on how Trade Mark law will be applied to digital goods.
One obvious question arsing is whether there is similarity between physical and virtual goods? Many brand owners are taking precautionary measures by filing new applications for their key brands for virtual products and services. These measures will strengthen their position to prevent unauthorised use of their brands by third parties and also ensure that they are able to use and licence their own brands for NFTs.
Nike filed a series of new Trade Mark applications in 2021 including “downloadable virtual goods” in Class 9, “retail store services featuring virtual goods” in Class 35 and also covering “Entertainment services, namely providing on-line, non-downloadable virtual footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories for use in virtual environments” in Class 41. Last month the sports retailer Lululemon filed a trademark application in the U.S for its brand name covering NFTs, encrypted transactions, metaverse retail stores, metaverse sports classes, and virtual clothing.
Apart from filing new Trade Mark applications to cover the use of Trade Marks in the metaverse, brand owners will also have to consider ways to monitor any unauthorised use. When policing online environments, brand owners should include NFT marketplaces and other virtual world uses. There are a number of new companies offering specific services particularly in the metaverse such as the tech start up CounterFind that recently launched what they call the first automated NFT solution for brand owners.
While no one can predict the future success of the metaverse, at this stage brand owners should consider a review of their practises in terms of filing trade mark applications and enforcing their Trade Marks against unauthorised use in the virtual marketplace. The metaverse already offers incredible opportunities for brands however brand owners should be aware of the potential pitfalls of entering this virtual sphere without adequate Trade Mark protection in place.
Interested in learning more about the rules surrounding trademark system abuse? A recent case, covered by our own S… https://t.co/1Le48rYiql
Curious about the implications of the metaverse and NFTs on trademark filing and enforcement? Our trademark attorne… https://t.co/gx5xxCVUJs
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