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NFTs and Branding - is Trademark protection necessary

Considering NFTs and Branding – is Trademark protection necessary?

Every firm should prioritize the protection of its intellectual property by using properly registered intellectual property rights. New technology should always be safeguarded via the use of a (utility) patent or kept under lock and key (trade secrets). The new goods and services from innovation are often sold under a trademarked brand name. In addition, the question of whether a generic name already exists for such a product or service or if the invention created something completely new that is not yet reflected in the Nice Classification, the international classification of goods and services used by the majority of IP Offices for trademark registration, arises.

Thus, we will discuss whether the (virtual) products and services delivered in conjunction with NFTs are already included in the Nice Classification of trademark applications.

Trademark protection of an NFT at Online Market Platform

OpenSea is a for-profit online marketplace for tokenized commodities, which include but are not limited to digital art and other assets secured by the Ethereum blockchain. Users may build wallets and collections using the OpenSea marketplace. NFTs are available for purchase, auction, and sale. OpenSea bills itself as the “world’s first and biggest non-financial transaction marketplace.” Given that online marketplaces are a well-established business that has operated for many years, it’s unsurprising that such a service already has pre-approved terminology in the Nice Classification’s alphabetical list (“provision of an online marketplace for buyers and sellers of goods and services”).

It indicates that a trademark for an NFT marketplace may be protected under the Nice Classification’s current structure.

Find more about the New Trademark Law in the UAE

Trademarks protect digital works of art:

For products that are works of art, trademarks may be registered. It may be expressed simply by noting that the Nice Classification has pre-approved terminology for certain types of inventions categorized according to their material composition (e.g., common metal in class 6, precious metal in class 14, paintings in class 16, etc.). The artwork itself may be trademarked. Tokenization of the artwork does not affect the selection of the products or services for which the artwork will serve as a brand name. Frequently, the items of interest are retailing articles (e.g. T-Shirts, bags, screensavers, etc.). Another possibility is that a tokenized artwork will be utilized as a brand for a company’s goods/services. In this instance, the Trademark for such things must be safeguarded.

Both the works linked with NFTs and the NFTs themselves may include trademarks that might be infringed upon during the minting and sale of NFTs.

Trademark Law and Protection of NFTs

Trademark law protects trademark owners against illegal use in a way likely to create consumer confusion. Additionally, it is banned to use any name, symbol, picture, or device that is likely to raise confusion about an item or service’s source, association, or sponsorship.

As such, the use of trademarks or colorable imitations of trademarks in NFTs may infringe on the trademark rights of a third party.

You may want to know: Joint ownership of Intellectual Property (IP): FAQS

Possibility of Trademark Infringement and NFTs

As more firms concentrate their efforts on NFTs and attempt to attach their brands to them, trademark infringement worries are expected to grow.

Arguably, any illegal use of a trademark — or phrase/image that may be mistaken with a trademark — in conjunction with an NFT raises trademark infringement issues.

It may involve the unlawful integration of a mark inside the NFT (for example, in the metadata) or the underlying work. Even though using a mark is unlikely to confuse the source, origin, or sponsorship of the product, establishing an NFT that integrates a well-known and recognizable trademark carries a risk of dilution. State and federal laws both protect marks that have achieved a particular degree of popularity from activities that “dilute” their capacity to operate as a trademark by diminishing the mark’s uniqueness or connecting the mark with material that harms the mark’s reputation.

License concerns for commercial use of Intellectual Property in NFTs

A trademark licensee’s capacity to use a trademark in conjunction with an NFT is highly dependent on the license’s particular rights.

For instance, a license that allows the licensee to use the Trademark in any media would presumably authorize usage in conjunction with an NFT. On the other hand, a license limited to certain forms of use may not be wide enough to defend the licensee against a claim of unlawful trademark use in conjunction with an NFT.

Additionally, as previously noted, when a license enables usage solely in conjunction with specified activities, there are unresolved issues about whether an NFT falls under those categories.

For example, a license to use a certain mark in connection with the advertising, marketing, or sale of specific products or services may not be sufficient to cover a licensee’s production of an NFT since an NFT is arguably a distinct good from other goods or services.

The purpose of this article is to provide a general overview of the subject. Regarding your situation, you can seek expert guidance. HHS lawyers and legal consultants specialize in dealing with cases relating to the infringement of Trademark. You can contact us for further consultation.

M. Al Khatem

Trademark & Intellectual Property

M. Al Khatem is a senior Trademark and Intellectual Property (IP) expert in HHS Lawyers. He has handled some of the firm’s complex, high-profile cases – many involving the protection of trademark and IP rights.