Due to the sheer volume of recent media coverage, readers of this blog are likely familiar with the “metaverse,” or the idea of a virtual world where users can interact with an immersive computer-generated environment, objects, and other users. But why does anyone care about trademarks in the metaverse? Put simply, trademarks are almost certain to insert themselves in several scenarios in these immersive environments that are designed to be an extension or replica of the real world, such as:
- Creation of virtual shops to buy branded “virtual” goods;
- Branded virtual services, such as fitness classes, concerts, performances, or sporting events;
- Product placement, such as virtual characters wearing branded virtual goods or display of virtual advertisements within the metaverse; and
- Real and virtual combination marketing, where buying a real-world product allows the user to obtain a copy of the product in the virtual world as well for use in the metaverse.
To this end, the USPTO has seen a significant increase in trademark filings in connection with “virtual” goods and services. The increase in filings is likely because brand owners are uncertain if their existing trademark rights in physical goods will extend to and provide adequate protection for use of their trademarks on virtual goods. Although a full discussion on the merits of each position is beyond the scope of this blog, the prevailing position among trademark scholars appears to be that trademark rights in real world goods likely extend to their replicas in the digital world ‒ but this position is far from certain at the current juncture.
Regardless of the merits of either position, there is a more important, immediate question on the minds of brand owners: should I file applications to protect my brands for goods and services in the virtual world? A quick look at the U.S. trademark register reveals that many major companies have already answered that question in the affirmative and have applied to register their marks in connection with virtual goods and services. For example, current pending applications at the USPTO cover “downloadable virtual goods, namely, computer programs featuring footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories for use online and in online virtual worlds” in Class 9 and “Entertainment services, namely, providing on-line, non-downloadable virtual clothing” in Class 41, among others. Thus, many trademark owners are not waiting for an answer from courts or Congress but are taking affirmative steps on their own.
The key consideration driving many of these filings is that trademark registrations are granted in connection with the goods and services being provided, and those goods and services are divided between forty-five (45) classes at the USPTO. For example, handbags most often fall in Class 18, clothing items generally fall in Class 25, and retail services typically fall in Class 35. On the other hand, computer software generally falls into Class 9 or 42. Thus, while an application for “footwear” would be filed in Class 25, an application for its virtual counterpart would be filed in Class 9 or 42. Although the classification of goods and services is not a deciding factor in a trademark confusion analysis, it is often a consideration in trademark monitoring and enforcement efforts. For example, brand owners will often allow similar (or even identical) brands to “co-exist” with their own brands, so long as the goods and services offered under the trademarks are sufficiently distinct and offered in different channels of trade. Thus, a company that offers bread under a mark likely will not care if the identical mark is used by a faucet/sink company.
To provide a bit of color on the above, we can imagine a scenario where a major shoe manufacturer owns multiple trademark registrations for footwear, which would fall in Class 25. Traditionally, that company may not have closely monitored new filings in Class 9, much less enforce their trademarks against new third-party applications for related marks covering items like computer software in Class 9. However, because “virtual shoes” offered in the metaverse would likely fall in Class 9 (“downloadable virtual goods, namely, computer programs featuring footwear”), the major shoe manufacturer may now find itself in a position where it needs to rely on its Class 25 registrations to enforce its trademark rights against a newly filed third-party application in Class 9. Unfortunately for the manufacturer, we can envision scenarios where a factfinder would deem Class 25 footwear distinct from Class 9 software goods, especially if the shoe manufacturer hadn’t historically enforced its trademark rights against similar third-party marks in Class 9.
Given the uncertainty as to how protection for real world goods and services will translate to the metaverse, the increase in recent filings makes sense. Brand owners are being proactive, to minimize the uncertainty as to whether their existing registrations will be sufficient to prevent the use and registration of identical or related marks on goods and services formerly considered unrelated. Applying for registration of marks for virtual goods and services may also cost less than opposing “squatters” attempting to register a company’s valuable marks. Applications covering virtual goods and services may therefore help brand owners minimize the risk of third-party claims of superior trademark rights for virtual goods, at least until the courts provide firm guidance as to whether trademark registrations covering real world goods also protect their virtual counterparts.
In sum, brand owners should consider whether third parties will likely imitate their brands in the virtual world, and whether they operate in a space that is likely to be popular in the metaverse. If the answer to either question is yes, a trademark application for virtual goods and services may be a wise investment. But brand owners should also keep in mind that filings at the USPTO require the execution of a declaration confirming the applicant’s bona fide intent to use the mark for goods and services in U.S. commerce. And, while any virtual goods and services application could initially be filed on an “intent-to-use” basis, brand owners would have to file evidence of use of the brands for virtual goods and services within 3-4 years of filing. Brand owners should also consider ramping up their monitoring efforts in connection with virtual goods and services, to avoid third parties capitalizing on their goodwill in the virtual space. Of course, Faegre Drinker attorneys would be happy to analyze these complex questions and provide guidance as to whether applications for virtual goods and services, or other monitoring and enforcement efforts, would be a wise investment for your brands.