The metaverse and related technologies like virtual goods, non-fungible tokens (NFTs) and blockchain, represent a fundamental shift in how we interact with the internet, as the distinction between our activity online and in real life begins to blur. These emerging technologies present enormous opportunities for businesses, but bring with them a number of difficult legal challenges.

For some time, in Australia and many other jurisdictions, it was not clear whether current trade mark registrations for physical goods and services would sufficiently protect brands in the virtual world.  Over the past 12 to 18 months, many jurisdictional intellectual bodies including the European Union Intellectual Property Office, Korean Intellectual Property Office, United Kingdom Intellectual Property Office and World Intellectual Property Organization have released guidelines which clarify the appropriate ways to classify and describe goods and services relating to these types of emerging technologies. See, for example, our blog post on the guidelines released in the United Kingdom.

IP Australia Guidance

This month, IP Australia has finally released its own guidance, entitled Trade mark classification guidance: Virtual goods, metaverse, NFTs, and blockchain (Guidelines).

Whilst the Guidelines are very helpful for businesses with a presence in Australia, it is important to note that to ensure its Guidelines remain up to date and consistent with international norms, IP Australia will continue to develop its classification rules in line with emerging global trends and the actions of intellectual property offices in other jurisdictions.

The Guidelines are split into four sections:

• Virtual goods;
• Metaverse and virtual environments;
• NFTs; and
• Blockchain.

Virtual Goods

IP Australia intends to assess virtual goods in class 9, given they are objects made of data which are used in online environments. However, it considers claims for “virtual goods” or “downloadable goods” in isolation are too broad, likely because they risk creating unfair monopolies in class 9. As such, claims for virtual goods should claim the exact nature of the virtual goods, such as “downloadable virtual clothing” in class 9. 

This is an interesting position for IP Australia to take because, unlike other jurisdictions, Australia has resisted limits on broad claims for other categories of goods in class 9, such as “computer software”, “downloadable publications” and “downloadable multimedia content”.

Services relating to virtual goods will fall into classes outside of class 9 depending on the nature of the services, such as “online retail services for downloadable virtual clothing” in class 35.

Metaverse and Virtual Environments

IP Australia prefers the phrase “virtual environments” to words such as “metaverse” or “web3” due to its broad application to many contexts. IP Australia also intends to assess services offered in virtual environments on a case-by-case basis, depending on the impact of the service in the real world.

For example, where the purpose of the service and the real-world impact is the same whether provided virtually or in person, the virtual service will be classified in the same way as its real-world counterpart. Examples include class 36 banking services (where real funds are sent and received) and class 41 education services, given the impact of these services is the same regardless of whether they are offered online or offline.

Conversely, where the impact of services in a virtual environment is different to the real world (such as travel simulations or virtual restaurants which offer virtual food), these would be considered as a class 41 entertainment service (as opposed to a class 39 transportation service or class 43 restaurant service).

NFTs

IP Australia notes that NFTs are a means of certification rather than a good or service. As such, it considers that claims for “NFT” or “non-fungible token” as goods in isolation are not acceptable, and applications must specify the exact nature of the goods being authenticated. Examples include:

Class 9: downloadable digital image files authenticated by non-fungible tokens [NFTs].

Class 9: downloadable digital music files authenticated by non-fungible tokens [NFTs].

For the same reason, services relating to NFTs must also be adequately specified, such as:

Class 35: retail services relating to downloadable digital image files authenticated by non-fungible tokens [NFTs].

Class 42: providing online non-downloadable computer software for minting non-fungible tokens [NFTs].

IP Australia intends to consider NFTs which are linked to physical assets and are used to demonstrate ownership of real-world goods such as art or fashion differently. Where NFTs authenticate physical items to demonstrate ownership of real-world goods, these will be classified in the appropriate goods class. For example, real-world vintage designer handbags authenticated by non-fungible tokens [NFTs] would be classified in class 18, the same class in which the handbags themselves would be classified.

Blockchain

IP Australia intends to assess blockchain technology as a feature of goods or the means through which services are provided. As such, claims for “blockchain” in isolation will be rejected. Instead, IP Australia recommends claims in technology-related classes such as:

Class 9: downloadable computer software for blockchain technology.

Class 36: electronic funds transfer provided via blockchain technology.

Class 42: computer programming of smart contracts on a blockchain.

Practical Implications 

Forward-thinking organisations are already making plans for how they intend to protect, exploit and defend their IP rights in this new digital environment. Considering these issues now will ensure that businesses are ready for whatever these emerging technologies may bring. We encourage our clients, particularly those who have or are considering expanding into the metaverse and digital spaces, to consider expanding their trade mark portfolios in line with IP Australia’s guidelines.