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The Blockchain Technology – Can NFTs and Digital Assets or the Metaverse be trademarked?

The buzz surrounding blockchain technology has grown in recent years, and many IP companies are looking into ways to take advantage of the special legal considerations in this area. Ongoing discussion surrounds the viability of trademark protection for these allegedly virtual goods and services.

Let’s look at what Blockchain is and what it means:

Blockchain is a decentralized digital tool for recording transactions securely. Within this kind of framework, NFTs (Non-Fungible Tokens) are used in this type of architecture to represent unique, indivisible digital assets like works of art, collectibles, or metaverse real estate. If we examine the definition of "Digital Assets" in its broadest sense, it includes many types of value held digitally, including the famous cryptocurrencies and NFTs. Staying in the same line, the metaverse is a virtual, interconnected universe where users can interact, work and own digital assets. To enable such transactions, the use of blockchain and NFTs is encouraged for ownership verification and trade, thus enabling a dynamic digital ecosystem.

Can we protect Digital Assets?

Generally, it is considered that as the number of nodes increases on a blockchain network, it becomes more secure. NFTs thrive on this unique ability and thus facilitate the creation of unique digital tokens, which thereafter represent ownership of digital assets. The good news is that NFTs are not limited to the virtual world and can be used to represent ownership of physical items. The connection between the digital space and virtualization is attracting a lot of interest for companies.

We cannot ignore the growing interest in the possibility of registering the ownership of intellectual property as assets due to NFTs becoming more prevalent. A very simple example would be:

Brands will most likely be interested in securing their virtual items through trademarking to prevent others from using their brand without permission.

Trademarking NFTs

By trademarking NFTs, companies will own the sole rights to these assets and prevent others from profiting off their IP. This was not possible some time ago, and ways of registering a trademark for such items were nonexistent. However, in April 2023, the Intellectual Property Office (IPO) updated its guidance (Pan 2/23) to recognize and grant trademarks for NFTs.

Guidelines by IPO

IPO has clarified its stance on NFTs, indicating that, on their own, NFTs will not be recognized as trademarkable assets. However, they may be eligible for consideration if they play a significant role in authenticating other virtual or physical goods. This recognition could apply to a range of underlying assets, including digital art, music, software, graphic design, virtual clothing, and accessories, where NFTs serve as a means of authentication and could thus be trademarked.

While NFTs predominantly pertain to virtual goods, it’s important to note that NFTs authenticating physical goods, such as tangible artworks, handbags, or shoes, cannot be trademarked according to the IPO’s guidelines. Nevertheless, there’s an openness to examining certain services offered within the metaverse context, like educational services and interactive auctions. However, not all metaverse-based services will meet the criteria for consideration, especially when the delivery of the service occurs in the physical world and the service is ordered within the virtual realm; for trademark eligibility, both the order and delivery of the service must originate from within the virtual world.

The bottom Line:

The IPO’s stance on trademarking NFTs underscores the evolving nature of intellectual property rights in the digital age. While NFTs themselves may not be trademarkable, their potential to authenticate various virtual and physical assets is a key consideration. This distinction reflects the dynamic correlation between emerging virtual spaces like the metaverse and the established legal frameworks governing intellectual property. The IPO’s willingness to explore trademarking within the metaverse for specific services and contexts demonstrates a recognition of the changing landscape of creativity and commerce, where the digital and physical realms meet.

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