By Kyle Migliorini
With the tremendous rise in interest in non-fungible tokens (NFTs), many trademark owners are concerned about whether or not they have adequate coverage for their goods or services. The recent Hermès v. Rothschild case gave an initial indication that courts will be receptive to arguments that NFTs can infringe another’s trademark, even if the plaintiff’s trademark is not used in connection with NFTs or virtual goods. However, trademark owners currently offering NFTs or intending to offer NFTs in the future should consider filing new applications to ensure they have adequate coverage for their activities.
From a trademark perspective, it is best to think of NFTs as data that exists on a digital ledger and that represents a particular digital or physical asset. Their main advantage is being unique assets that can be easily tracked on blockchain (the digital ledger), making transactions secure and reliable. For example, an entity could issue 500 digital basketball trading cards using NFTs with each NFT representing a particular trading card (e.g. #366 out of 500). This way, if an owner wanted to trade or sell a particular card, they could transfer the NFT to the new owner to prove the authenticity of the card.
NFTs are not only for the virtual space but can also be used to authenticate transactions involving goods in the physical world. For instance, a sneaker company could issue NFTs representing a new shoe that will be released in the future. A consumer could buy an NFT and then exchange it for the specific pair of sneakers which the NFT represents once the product is released. In this instance, the NFT acts as a guarantee of ownership, like a receipt.
Furthermore, NFTs could represent a universe of things, including but not limited to: collectibles, clothing, consumer products, artwork, digital land in a virtual world, a deed to a physical property, etc. Therefore, while NFTs may readily be associated with artwork as well as with social media, gaming, or clothing companies, the potential of NFTs is not confined to particular activities or industries.
As for filing new trademark applications, the authentication function of NFTs appears to be the primary focus of new descriptions added to the USPTO ID Manual, which includes the following in Class 9:
- Downloadable music files authenticated by non-fungible tokens (NFTs)
- Downloadable multimedia file containing artwork relating to {indicate field or subject matter of file} authenticated by non-fungible tokens (NFTs)
- Downloadable image files containing {indicate subject matter or field, e.g., trading cards, artwork, memes, sneakers, etc.} authenticated by non-fungible tokens (NFTs)
Therefore, if trademark owners are currently using or intend to use their marks in connection with NFTs, they may consider filing new applications with a similar description to those above. However, if an owner is not actually issuing NFTs, they could consider filing for tangential goods or services to try to register marks in the NFT space. For example, they could file an application for “providing online information” about NFTs in Class 41. While this would not provide protection for NFTs directly, it could potentially be helpful to have marks related to NFTs when enforcing marks against potential infringers.
While the rise of NFTs gives trademark owners new concerns, it also provides an opportunity to enter this space and to protect their marks in the virtual and physical worlds.
