NFTs and Trade marks, what you need to know
Interest in NFTs is rising and there are a number of companies filing trade mark applications for their NFTs.
According to Finbold, over 1200 NFT trade mark applications were filed in the USA in 2021.
This article focuses on NFTs and trade marks, particularly:
- what are NFTs
- why are they valuable
- ownership of NFTs
- examples of NFTs
- what are trade marks
- why register a trade mark
- benefits of registering a trade mark
- major brands that have filed trade marks for their NFTs
- how to file a trade mark in South Africa
- the relevant classes in which to file
What are NFTs?
So, what exactly are NFTs?
NFT is an abbreviation for “non-fungible token”. “Non-fungible” refers to something that is unique and cannot be replaced with something else. For example, Bitcoin and cash are fungible – it can be traded for another bitcoin or denomination of notes. You will have exactly the “same thing”.
NFTs are a digital asset, or a type of token, that cannot be reduced to a common denominator. In other words, each token is unique and has a distinguishable identity. NFTs are not interchangeable and are traded on a blockchain. They have become popular in many different industries as they provide an opportunity to create scarcity of non-physical assets.
According to the Collins English dictionary, an NFT is “a unique digital certificate, registered in a blockchain, that is used to record ownership of an asset such as an artwork or a collectable.”
Collins Learning managing director, Alex Beecroft, told the Guardian, “NFTs seem to be everywhere, from the arts sections to the financial pages and in galleries and auction houses and across social media platforms.”
Why are NFTs Valuable?
Now that we kind of understand what NFTs are, then why are they so valuable?
NFTs are valuable because they represent ownership of an entity or object, which is digital, in the physical world.
They create a digital scarcity that is not possible with traditional cryptocurrencies. This creates a new form of virtual property that can be traded and exchanged as if it were tangible goods. The value increases as the number of users increase.
Ownership of NFTs
One of the most important questions that need to be answered is who owns NFTs?
Non-fungible tokens are owned by whoever holds the private key and they cannot be transferred without an explicit agreement with the token holder.
Owning an NFT is not the same as owning the copyright or intellectual property. The NFT does not give you legal ownership over the underlying asset associated with that token.
When you buy an NFT, you get the keys to a non-fungible token. That token is yours to trade, hold or display in Decentraland or other 3D worlds or NFT marketplaces. (Decentraland is a 3D virtual world browser-based platform.)
The intellectual property of the underlying asset remains the property of the owner of the intellectual property unless the terms of sale of the NFT provide otherwise. For example, if you buy an NFT for Gucci handbags, the trade mark for Gucci remains with Gucci. When an unauthorised party tries minting, selling or reselling that Gucci NFT, using the underlying asset without the registered trade mark owner’s permission, this act may constitute trade mark infringement.
Nike, Quentin Tarantino and Birkin bags are all currently in separate lawsuits relating to the unauthorised use of their trade marks in NFTs.
This dilemma of the ownership of an NFT versus the ownership of intellectual property of the underlying media can be resolved if intellectual property owners expand their trade mark registrations to incorporate NFTs.
Examples of NFTs
NFTs can represent almost any virtual and physical property, provided that it is unique and with provable ownership.
Examples of NFTs include digital artwork, art, music, essays, games, digital collectables, domain names, event tickets, real estate, GIFs, memes and fashion.
What are Trade Marks?
Trade marks protect primarily brand names, slogans and logos.
A trade mark can take just about any form provided that it is:
• Capable of being represented graphically, and
Accordingly, trade marks can protect NFT brands and logos too.
Trade marks identify the goods or services of one person/entity and distinguish it from the goods and services of another.
By filing a trade mark for your NFT, you obtain exclusive rights in that mark (NFT) and no one else will be able to use or register a similar trade mark for their NFT. If this happens, you have legal recourse.
Why Register a Trade Mark
Every item that we buy, or service that we use, carries a trade mark. It is the trade mark that tells us why a particular product or service is different or better than another similar product or service.
As a result of this association with a product or service, trade marks acquire a value independent of the product or service to which it is applied. They are extremely valuable assets and deserve effective and comprehensive protection.
Benefits of Registering a Trade Mark
• the exclusive right to use the mark
• registration provides an easy remedy (the action for infringement) whereby third parties may be restrained from using the same or closely similar marks
• registration acts as a deterrent to potential infringers
• the trade mark may be sold or licensed
• registration allows a trade mark owner or licensee to use the words ‘Registered Trade Mark’ or an abbreviation thereof such as ® in conjunction with the trade mark
• registration affords a prima facie (but not an absolute) right to use the trade mark concerned
• may be used to secure a debt
• and a registration can be used as a defence in infringement proceedings
Entities that have Filed Trade Mark Applications for NFTs
Who has filed NFT trade marks?
There are a number of companies, in different industries, that have filed trade mark applications for their NFTs.
Here are a few examples:
- Mattel Inc
- Entertainment Weekly
- Legend Pictures LLC
- Pottery Barn
- Estee Lauder Cosmetics Ltd
- Clinique Laboratories LLC
- Louis Vuitton
- Yves Saint Laurent
- Alexander Wang
- Converse Inc
- Lion’s Gate
Celebrities that have filed trade mark applications for their NFTs are:
- Dolly Parton
- LeBron James
- Logan Paul
- Kobe Bryant
How do you File a Trade Mark in South Africa?
Trade marks are registered at the South African Trade Marks Office (CIPC) and foreign registrations may be obtained should you wish to market your product/service in other countries.
Trade mark attorneys would require you to provide them with a copy of your intended trade mark (name, slogan, or logo) as well as details of all products or services that you intend to apply the trade mark to.
A trade mark application can only be filed by the applicant themselves (the owner of the trade mark) or by an authorised representative, being a practising attorney. There are specialised attorneys known as Trade Mark Practitioners who are experienced in filing and prosecuting a trade mark through to registration.
Trade Mark Registration Process
There are 6 Main Steps in Securing a Trade Mark Registration:
- Trade Mark Search
Prior to beginning with the registration process, we recommend that a search be conducted in order to determine whether there are any existing marks that may come into conflict with the proposed new trade mark.
- Filing the Application
In South Africa, trade marks are filed and registered in one or more of 45 classes of the Nice Classification, depending on the goods and/or services for which protection is required. Separate trade mark applications must be filed in each class of interest.
- Examination by the Trade Marks Office
All applications undergo examination by the Trade Marks Office to ensure that all formalities are met, to determine inherent registrability, and to investigate any possible conflict with prior registrations or applications.After examination, the Trade Marks Office will either accept the application or preliminarily refuse it or indicate the conditions subject to which it may be accepted.If there is a preliminary refusal or conditional acceptance, an opportunity is afforded to the applicant to make representations to the Registrar to overcome whatever objections have been raised or to deal with the application otherwise as circumstances may dictate.
At present, the examination procedure takes between nine and twelve months from the date of filing.
Once the trade mark application has been formally accepted, it is advertised in the Patent Journal for opposition purposes.
Third parties are afforded a three-month period within which to object or express an intention to object to the registration of the trade mark
This step only occurs if there is a conflict with a third party, who objects or expresses an intention to object to the registration of a trade mark.
- Registration Certificate
If they are no objections by third parties during the opposition period, or the possible objection has been resolved, the application will proceed to grant and a certificate of registration will be issued.
Relevant Classes in which to File NFTs
We’ve touched on the topic that a trade mark must be filed in the appropriate class, depending on the goods and/or services for which protection is sought.
When it comes to NFTs, what are the relevant classes?
As the concept of protecting NFTs as trade marks is relatively new, there is a bit of uncertainty in which classes the trade marks should be filed.
At the moment, the following classes are applicable:
Non-refundable token-based goods for use online and in online virtual worlds.
Digital tokens; non-fungible tokens; digital tokens based on blockchain technology.
Downloadable digital media such as music, files, audio recording, video recording and artwork, digital assets, digital collectables, digital tokens, NFT’s and digital art.
Provision of an online marketplace and registry for buyers and sellers of digital assets.
Financial services such as non-refundable token trading; issuance of digital tokens.
Providing online non-downloadable virtual goods,
Providing online non-downloadable virtual goods authenticated by NFTs.
Providing temporary use of non-downloadable virtual goods and digital media such as digital art, photographs, videos, audio recordings, NFTs.
Providing non-downloadable computer software in the nature of non-fungible tokens (NFTs)
Non-fungible tokens (NFTs); platform as a service featuring software platforms providing access to non-fungible tokens; providing information for non-fungible tokens.
Ready to take the next step by registering your NFT as a trade mark, then please do not hesitate to contact us.