UK Issues NFT Trademark Guidance for the Metaverse

The UK Intellectual Property Office (UKIPO) has recently released updated trademark guidance that aims to shed light on the intricate world of non-fungible tokens (NFTs), virtual goods, and the metaverse. This comprehensive guidance seeks to provide much-needed clarity on the appropriate classification of these digital assets in the metaverse. Coincidentally, the International Trademark Association (INTA) has also recognized the significance of NFTs and the metaverse by publishing two white papers specifically addressing trademarks within these contexts.

Given the redoubled focus on intellectual property rights (IPR) law in light of the development of Web3 technologies, the question arises whether the United States Patent & Trademark Office (USPTO) should adopt a similar approach and issue guidance on the classification of NFT trademarks within the metaverse. Such guidance would undoubtedly serve the interests of trademark owners and applicants who are navigating this emerging landscape.

By establishing clear guidelines for trademark classification in the metaverse, the USPTO would ensure that the rights of trademark owners are adequately protected and enforced within this virtual realm. Moreover, with the proliferation of NFTs and virtual goods, there is a pressing need to develop a standardized framework that reflects the evolving nature of intellectual property assets in the digital age. USPTO should embrace a forward-thinking approach similar to those of the UK IPO and INTA, thus fulfilling its role as a trailblazer in the field of trademark classification and safeguarding the rights of brand owners in the metaverse and concerning NFTs.

Background

In April 2023, the UK Intellectual Property Office (UKIPO) issued important guidance regarding the classification of non-fungible tokens (NFTs), virtual goods, and services within the metaverse. As the metaverse gains prominence and these digital assets become more prevalent, the UKIPO’s guidance provides clarity and establishes a framework for understanding their legal and intellectual property implications.

The guidance begins by defining and classifying NFTs, virtual goods, and services. NFTs are digital assets that represent ownership or proof of authenticity of a unique item or piece of content. Virtual goods encompass items or assets within the metaverse that possess value and can be bought, sold, or traded. Virtual services refer to digital services provided within the metaverse, such as the design, creation, or customization of virtual goods. UKIPO’s guidance highlights the importance of considering intellectual property rights when dealing with NFTs, virtual goods, and services. Intellectual property rights, including copyright, trademark, and design rights, may be applicable to the creation, sale, or use of these assets. The guidance emphasizes the need for creators and users to understand and respect existing intellectual property laws and obtain necessary permissions or licenses when dealing with copyrighted works, trademarks, or other protected content.

According to the guidance, NFTs will not be accepted as a classification term alone, as “without an indication of the asset to which the NFT relates, the term is inherently vague.” However, UKIPO would accept certain terminologies such as digital art, downloadable graphics, and downloadable software that is “authenticated by NFTs.” UKIPO suggests analyzing the characteristics and functions of these assets to establish whether they should be treated as digital representations of real-world assets, standalone digital assets, or entirely virtual creations. The classification can influence various legal considerations, including taxation, consumer protection, and the applicability of existing intellectual property frameworks. The UKIPO’s guidance emphasizes the need for compliance with relevant regulations, including data protection and consumer protection laws, when dealing with NFTs, virtual goods, and services. As these assets involve the collection and processing of personal data, creators, and platforms need to adhere to data protection requirements. Additionally, consumer protection laws should be considered to ensure transparency, fair trading, and appropriate redress mechanisms within the metaverse.

The guidance issued by UKIPO follows similar, albeit less extensive, guidance issued by the EU Intellectual Property Office (EUIPO) in June 2022. This guidance sets the main principles regarding goods and service classification for trademark applications covering NFTs. According to these guidelines, NFTs and virtual goods would be treated as digital content or digital visuals. However, since the sole term “NFT” or “virtual goods” does not sufficiently identify the subject of the registration, the content to which NFTs and virtual goods relate must be further specified in the application.

Aside from UKIPO and EUIPO, INTA has published two white papers about the metaverse and non-fungible tokens (NFTs), which call for harmonization of the classification of trademarks in these emerging digital ecosystems. These papers include specific recommendations to help brand practitioners keep pace in these fast-changing times. This paper recommends that the current approach of the USPTO and EUIPO of establishing Classes 9, 35, 41, and 42 as the main Nice Classifications to protect virtual goods/services should be considered when crafting filing strategies. Per this report, some stakeholders appear to be in favor of establishing a new Nice Class 46 for digital goods and services, while others have argued for virtual goods to be registered under the same classes as their non-virtual or physical goods counterparts. The report notes: ‘These possible solutions, among others, should be studied by INTA committees to identify and establish the proper approach so that INTA can advocate on behalf of brand owners. The NFT report also recommends that INTA should develop model legislation that can be adopted by countries so that they could amend or adapt their existing frameworks to facilitate the commercialization of rights through NFTs. It further recommends that a global trademark dispute resolution policy (akin to the WIPO Uniform Domain Name Dispute Resolution Policy) should be adopted in collaboration with the World Intellectual Property Organization (WIPO) for the emerging digital ecosystems of NFTs and the metaverse.