Registering NFTs and Virtual Goods in the UK

As we learned to appreciate over the past year or so, virtual goods are intangible assets that can be traded within a virtual economy, worth whatever participants in the virtual market are willing to pay for them. Though a type of virtual good, NFTs have their own unique definition, which can now be found in the Cambridge Dictionary:

An NFT is a unique unit of data (the only one existing of its type) that links to a particular piece of digital art, music, video etc. and that can be bought and sold.

NFTs are essential tools in the metaverse, which is a fictional, immersive universe contained within the internet and facilitated by the use of virtual reality, augmented reality and other advanced internet technology. Over the past few years we have seen that the impact of the metaverse on the outside world has become very real, leading to various sectors entering the metaverse with the introduction of virtual stores, tailored events, try-on tools, and avatar influencers to name a few. Brands such as Louis Vuitton, Gucci, Nike, Nars, Levi’s Clinique, Coty, Dolce & Gabbana, Gap and Adidas have launched a variety of NFT projects and started to seek protection for their core virtual goods as part of their brand strategy.

The UKIPO PAN 2/23 Guidance

In response to the increasing prevalence of NFTs and the metaverse, multiple intellectual property offices, including the EUIPO, USPTO and most recently the UKIPO, have issued guidance as to how virtual goods and NFTs will be examined and regarded when it comes to trade mark protection.

The Practice Amendment Notice (PAN) published on 3 April 2023 by the UKIPO reflects much of the information included within the EUIPO and USPTO guidance, with the following main takeaways:

• NFTs will not be accepted by the UKIPO as a stand-alone term due to a perceived inherent vagueness. It is however, acceptable within Class 9 as a subtype under the umbrellas of the following acceptable terms:
  • digital art authenticated by non-fungible tokens [NFTs];
  • downloadable graphics authenticated by non-fungible tokens [NFTs];
  • downloadable software, namely, [list the type of goods], authenticated by non-fungible tokens [NFTs];
  • digital audio files authenticated by non-fungible tokens downloadable digital files authenticated by non-fungible tokens [NFTs].
• Both physical and digital assets authenticated by NFTs are recognised by the UKIPO, provided that any physical goods are clearly defined as being authenticated by NFTs. For physical goods authenticated by NFTs, these are still accepted under the relevant class:
  • artwork, authenticated by non-fungible tokens [NFTs] [Class 16];
  • handbags, authenticated by non-fungible tokens [NFTs] [Class 18];
  • training shoes, authenticated by non-fungible tokens [NFTs] [Class 25].
• NFTs that are retailed or provided using online marketplaces are accepted under Class 35 using the following terminology:
  • retail services connected with the sale of [insert specific good here] authenticated by non-fungible tokens; or
  • provision of online marketplaces for buyers and sellers of goods and services which are authenticated by non-fungible tokens.

For certain services relating to membership of a club or entry to an event, the service can be linked to an NFT, however, any such service would be regarded as an entertainment service and accordingly fall under class 41.

• Virtual goods fall under class 9 as by their nature all goods consist of data which is classified in class 9 of the Nice Classification system. However, it is imperative to make sure the virtual goods are clearly defined with adequate clarity and conciseness.
• Any service capable of being delivered through virtual means will be accepted under the same relevant class for the traditional/physical means of delivery for delivery via the metaverse, example terms being as follows:
  • education and training services provided via the metaverse [class 41];
  • conducting interactive auctions via the metaverse [class 35].

This excludes metaverse services that manifest very differently in the metaverse than they do when delivered in the physical world. For example, providing food or drink for consumption by an avatar within the metaverse would not be accepted under class 43, but may be covered by a more general classification (e.g. provision of a virtual reality or metaverse based simulation gaming service in class 41).

Conclusion

It is apparent that the metaverse is here to stay and be integrated in our economy. As the lines between the physical world and the digital world continue to erode and converge, the Nice classification is also evolving to accommodate and facilitate brand protection.

By Serena Totino and Rianna Prince