Trademarks and the Metaverse: a UAE perspective
Technology, Media & Telecoms Focus
With the rapid advancement of virtual reality technology, a new marketplace has emerged and with this ushering in a unique set of virtual commodities.
Law Update: Issue 358 - Technology, Media & Telecoms Edition
Shernaz DesaRegional Trademark Manager,Intellectual Property
Zainab Aysha AhmedIntern,Intellectual Property
With the rapid advancement of virtual reality technology, a new marketplace has emerged and with this ushering in a unique set of virtual commodities requiring its own Intellectual Property protections. This article will specifically examine trademark registrations to protect virtual goods. Virtual goods are non-physical assets that can be bought and sold in an online community or marketplace such as the Metaverse. These can range from digital game currencies to avatars to NFTs.
Trademark protections are granted to businesses towards their goods and services to safeguard their individual brand identity. It is common practice for multiple registrations in various geographical locations to ensure sufficient protection from infringement. Trademark protection requires a trademark registration in the relevant country. Moreover, a trademark shall be registered for specific goods or services, as the protection will be limited to such goods or service. There is an international classification of goods and services, which is the Nice Classification that is administered by the World Intellectual Property Organization. Nice Classification has provided 45 classes that covers a number of goods and services. Currently, the UAE Trademark Office uses the 10th Edition of the Nice Classification of Goods & Services for trademark registrations which came into effect on 1st January 2012 and at the moment only offers singular class trademark registrations.
The uproar of the Metaverse in addition to crypto currencies, NFTs (NonFungible Tokens) and similar digital and virtual assets sprouting alongside has led trademarks offices around the world to recognise the need for trademark protection of these assets within the Metaverse. The 11th edition of the Nice Classification of Good & Services catered for exactly this and included the much-awaited virtual assets class amendments under Class 9 because these types of assets are treated as digital content or images.
There were some drawbacks with the 11th edition as it did not include prescribed description guidelines, or suggestions for virtual goods or NFTs and applicants had to resort to their own creativity when filing for the concerned trademarks. Consequently, risking potential objections and even rejections from the Trademark Offices. However, the amendments provided in the latest edition – 12th edition of the Nice Classification – entered into force on 1st January 2023, provides clarification on the description of the classification for virtual goods and even explicitly lists NFTs. It specifically states, "downloadable digital files authenticated by NFTS" and was added to the existing categories of goods in Class 9. Thus, making it easier to register virtual goods trademarks. A number of countries are adopting the latest edition; namely New Zealand updating their Intellectual Property Office guidelines and system to reflect these changes.
It is also possible to register trademarks for virtual goods outside of the list. Though, one should expect a longer waiting time for the initial examination of an application as offices have to carefully assess such applications more closely.
We are already witnessing companies with established and strong market recognition, particularly in the fashion, cosmetics, sports, and entertainment industries, filling trademarks for the respective virtual goods and services they offer on the platform. Hence, the UAE may wish to also get ahead of the curve in providing the means to acquire trademark protection for virtual goods.
However, it may be the case that the UAE will adopt the 12th edition of the Nice Classification at a later stage; perhaps as and when the trademark registration process becomes more standardised and clear overtime. Moreover, any existing and upcoming internationally established guidelines will serve applicants wishing to trademark their virtual goods in the UAE under the related class registration upon adoption of the Classification.
Despite the provision and clarification of virtual and digital assets’ trademark registration, a whole host of issues arise for which preventative guidance is needed. The landmark case of MetaBirkin in the US highlights an interesting paradox the world’s largest brands must brace for – copycat infringers riding the coat tails of their brands’ established goodwill within the Metaverse.
In November 2021, the MetaBirkin NFT creator, Mason Rothschild, was selling digital renderings of fur-covered Birkin bags on Opensea, an online NFT marketplace. The French fashion house, Hermes filed for a cease and desist against Rothschild at Manhattan Federal Court in December 2021 and in early February 2023, Hermes won their trademark trial over the ‘MetaBirkins’ NFTs. NFTs, fully known as non-fungible tokens, are unique assets used to verify ownership and authenticity of digital art on the Metaverse.
The jury found the Rothschild unauthorised creation of ‘MetaBirkins’ to be an infringement of the well-known and trademarked Birkin bag by Hermes and awarded Hermes $133, 000 in damages for trademark infringement and dilution, among others. Thereby, setting a precedent in clarifying how trademark law will apply to NFTs.
While the Metaverse is still developing, it has attracted and gained a notable foothold in a number of sectors. For protection on the Metaverse, brands have two options (1) register their corresponding trademarks under the virtual asset class or (2) in the case of Hermes, defend their brands’ goodwill and claim for infringement. The prior would prove to provide air-tight protection from infringement on the Metaverse as it would be a registered trademark that is enforceable. While the latter, can drag on and will not be an attractive option in terms of time and legal costs.
In a pioneering effort to attract foreign investment from companies associated with the Metaverse, Ras Al Khaimah’s government has announced plans to launch a free zone for digital and virtual asset companies. Free zones are bespoke economic areas offering attractive conveniences of single-window administration and complete ownership to non-resident and foreign corporations. Named the RAK Digital Assets Oasis, it will be the world’s first free zone exclusively devoted to virtual and digital asset companies.
Regulatory bodies in the UAE have begun legal efforts to streamline and supervise the virtual asset industry. For example, the regulator of The Abu Dhabi Global Market – the Financial Services Regulatory Authority – has published guidelines regarding its approach to virtual asset regulation and supervision. Furthermore, Dubai’s Virtual Assets Regulatory Authority has launched their Virtual Assets and Related Activities Regulations this year. These regulations aim to set forth a virtual asset framework and serve as a guiding authority for virtual assets across Dubai. Nonetheless, there still exists an imminent need for the classification of trademarks to be updated in order to allow for trademark protections for these incoming companies’ unique assets in the UAE.
Virtual reality is heavily prevalent in the mainstream narrative as digital and virtual assets will inevitably continue to grow in numbers and importance. As such, regulatory bodies must adapt and offer support according to this market and user needs. With the Nice Classification being revised every year, the UAE may need to adopt the latest edition and thus replace the outgoing 10th edition soon. Should they proceed in doing so, the UAE may also wish to consider developing a comprehensive approach in dealing with copycat infringers submitting trademark registrations for previously registered trademarked goods under virtual classifications to avoid infringers negatively impacting the concerned companies’ reputation and diluting their goodwill.
For further information, please contact Shernaz Desa.
Published in May 2023
