Brand protection in the NFT and blockchain spheres

Features of TM

The TM object can be any designation or combination of designations, for example, the brand name or logo of a company that sells goods or provides services related to NFTs. It can also be the name of the NFT product itself or a slogan related to the sale of NFT products or the provision of services.

Now more and more companies that already have registered TMs are registering their names and logos for goods and services related to the metaverse.

So, even NBA Properties, Inc. in the USA has applied for registration of TM NBA TOP SHOT (6629616) for downloadable virtual goods.

Here are some things you should do before registering:

• Search for similar TMs and brands. The NFT project, as well as other brands, has the risk of receiving objections from third parties regarding registration or a request to cancel TM registration. Therefore, it is worth searching for similar TMs by the name or logo of the project in the databases in the territory where the TM will be registered. In addition, cases related to the illegal use of brands in NFT tokens have already been heard in the courts. In 2022, a New York court ruled in favor of Hermes International in a trademark infringement lawsuit by artist Mason Rothschild, who created NFT bags as part of the MetaBirkins project that resemble the Birkin model owned by Hermes International. The artist was ordered to pay the fashion brand compensation in the amount of $133,000.
• Determine who will be the owner of TM. Quite often, the question of determining the TM owner for NFT projects becomes problematic. This is because some NFTs are managed by a Decentralized Autonomous Organization (DAO), which has no centralized leadership. Before registering a TM with a DAO, it is a good idea to consult with a lawyer, as there is a possibility that such an organization will not be able to adequately protect the TM as its owner.
• Check whether the NFT products or services sold or offered by the company infringe the intellectual rights of third parties. An NFT is only a token of a commodity, but not the commodity itself. It is not excluded that someone else has intellectual property rights, including copyright to the NFT object. Then its sale without the permission of the author may cause a dispute and a lawsuit against the service provider. So, one of DC Comics’ freelance artists sold a Wonder Woman NFT without the company’s permission. After this incident, DC Comics informed all of their freelancers that such use of DC characters was not possible without express permission.

Classes

The most common legal issues are not directly in registering TMs for NFTs, but rather in which class of goods or services they will be classified.

The update of the Nice Classification (International Classification of Goods and Services), which entered into force on January 1, 2023, includes the term NFT in class 9 – “downloadable digital files authenticated by non-fungible tokens” (NFT).

However, without an indication of the asset to which the NFT refers, this position will be blurred. Therefore, as an example, the UK Intellectual Property Office advises adding to Class 9 the following items not defined in the official list: digital art authenticated by non-fungible tokens [NFT], downloadable graphics authenticated by non-fungible tokens [NFT], etc.

Since NFT products can be sold through online markets and marketplaces, it would be appropriate to register a TM in class 35 of the Nice Classification. For example, the following items can be registered in class 35: retail services related to the sale (e.g. virtual clothing, digital art, audio files) authenticated by irreplaceable tokens.

For example, Opensea, one of the largest NFT markets in the US, registered its TM in class 35 for services, including “providing an online marketplace for buyers and sellers of cryptocurrency collectibles” (5797815).

Depending on the assets to which NFTs belong, it is worth considering additional classes of the Nice Classification in each individual case. For example, in the case of selling virtual clothes or shoes, you should add the 25th class of goods. In it, you can add the following positions that are not defined in the official list: clothing authenticated by non-fungible tokens, and shoes authenticated by non-fungible tokens [NFT].

Additionally, NFT tokens can be identified as services. Therefore, it is possible to register a TM in the 42nd class of services. In the official list, this class includes the position “user authentication services using blockchain technology.” For example, the above-mentioned immutable token market Opensea has registered a TM in class 42 for services including “the creation of online retail stores for others in the form of a web service that allows users to create blockchain-based cryptocurrency collectibles and immutable token stores” (5797816). With the help of NFT, educational services can also be provided in the metauniverse, and then TM should be registered in class 41 of the Nice Classification.

How to choose a territory for NFT TM registration

When choosing a territory for registration of TM related to NFT, the following factors should be taken into account:

• Target market. Registering a trademark in the countries where potential customers are located is an important step in protecting the brand. If the majority of customers are in one country or region, TM registrations in that territory should be considered.
• The global nature of NFT. Non-fungible tokens (NFTs) are stored on a global decentralized network, and this raises questions of jurisdiction and territoriality. Therefore, it may be difficult to limit the use of NFTs within a specific jurisdiction and it is worthwhile to register TMs in the territory of several potential countries or regions of NFT use, taking into account the peculiarities of their placement on the Internet. For example, you can register a TM in the EU through the European Union Intellectual Property Office. Such registration will be valid on the territory of 27 EU member states.
• Business strategy and long-term plans. Long-term plans and business development strategies can influence the choice of territory for TM registration. For example, if there are plans to expand the business to new markets in the near future, it is worth considering the possibility of TM registration in these territories now.
• Location of the company of the manufacturer or service provider. Considering the location of the company is an important factor, as this is where most of the activities associated with the registered TM are likely to take place. If the company operates in several countries, it is important to register TM in each of them. In order to simplify the procedure for registering one TM in several countries and to minimize costs and time for registration, you can register a TM through the World Intellectual Property Organization.

Conclusions

Blockchain and NFTs open up new opportunities and benefits for brand owners. In order to keep your brand competitive and prevent disputes over its use by others in the meta universe, you should register it for NFT products and NFT services.

TM registration in these areas has its own peculiarities, given that NFT is a relatively new technology and its capabilities are not fully explored. In each individual case, it is necessary to correctly choose the TM owner, carefully check whether the use of NFT tokens will not violate the intellectual property rights of others, and choose the most appropriate classes for TM registration. In order to avoid mistakes and problems, it is best to consult a lawyer.

When choosing the territory of TM registration, you should take into account such factors as the target market, business development strategy and plans, and the location of the company.

In addition, it is important to take into account the global nature of NFTs, since this factor significantly affects the choice of territory for TM registration.

Posted by MC.today

Link to the article in Ukrainian