Virtual Trademarks: Protecting Brand identity beyond the Digital frontier

As the virtual world continues to expand, businesses across industries are recognizing the critical importance of safeguarding their brand identity. While legal restrictions are still catching up with this dynamic landscape, adopting best practices for trademark application becomes a proactive approach to protect intellectual property.

We provide you with actionable insights into best practices for brand protection. By embracing these strategies, companies can secure their brand equity and capitalize on the opportunities presented by the growing virtual market.

The MetaBirkin Case and the Risks of Inadequate Trademark Protection

The high-profile MetaBirkin case involved luxury fashion brand Hermès suing artist Mason Rothschild over his NFT project called "MetaBirkins." Rothschild created digital versions of Hermès Birkin handbags with modifications, leading to Hermès claiming trademark infringement and potential consumer confusion. The trial resulted in a federal jury finding Rothschild guilty and in February 2023 awarding Hermès $133,000 in damages. This case raised questions about the classification of NFTs as commodities or protected art, highlighting the clash between emerging technologies and established brands.

The Significance of Trademark Protection for Virtual Goods and Services

The MetaBirkin case underscores the risks businesses are facing by not opting for trademark protection for virtual goods and services. Without adequate safeguards, companies may experience dilution of their brand identity and the potential for consumer deception.

In a digital landscape where virtual goods and services hold significant value, protecting trademarks becomes essential for maintaining brand integrity and preventing unauthorized use or misrepresentation. The MetaBirkin case serves as a reminder of the importance of proactive trademark strategies in the realm of virtual assets.

Addressing Trademark Protection Challenges for Virtual Goods and NFTs

Organizations such as the European Union Intellectual Property Office (EUIPO) are actively working towards addressing the issue of trademark protection for virtual goods and NFTs. In July 2022, the EUIPO issued draft guidelines aimed at providing greater clarity on the classification of items related to virtual goods and NFTs. These guidelines, that entered into force on 31 March 2023, are expected to offer much-needed guidance for trademark applications in this rapidly evolving field. However, the current lack of established practices and precedents surrounding these types of infringements poses challenges for brand owners, especially in the absence of specific regulations.

Best Practices for Trademark Protection in the Virtual Realm

In the absence of clear regulations, brand owners must adopt proactive measures to protect their trademarks effectively. Here are some recommended best practices:

• If your company plans to enter the metaverse within the next 2-5 years, consider applying for trademark protection specifically for virtual goods and services.
• Protect your goods and services against unauthorized use in the metaverse by implementing a comprehensive trademark strategy.
• Follow best practices by classifying virtual goods under Class 9 and virtual services as subcategories within their respective service classes.
• Understand that adding a new class requires a separate trademark application.