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NFTs, Branding & Trademark Protection?

Every company should prioritize safeguarding its intellectual property through proper registration of intellectual property rights. New technologies should always be protected, either by securing a (utility) patent or by keeping closely guarded trade secrets. Innovations often lead to the introduction of new products and services, which are frequently marketed under trademarked brand names. Additionally, questions may arise regarding the availability of a generic name for a particular product or service or whether the invention has introduced something entirely novel that is not yet categorized within the Nice Classification, the widely adopted international system for classifying goods and services used by most IP offices for trademark registration.

Therefore, we will explore whether the (virtual) products and services associated with NFTs are already encompassed within the Nice Classification for trademark applications.

Trademark protection for an NFT on an Online Marketplace

OpenSea is a profit-driven online platform specializing in tokenized assets, encompassing digital art and other assets secured by the Ethereum blockchain, among other offerings. Users can create wallets and collections through the Open Sea marketplace, where NFTs are available for purchase, auction, and sale. Open proudly proclaims itself as the “world’s first and largest non-financial transaction marketplace.” Given the well-established nature of online marketplaces, which have been in existence for many years, it is not surprising that such a service already falls under the pre-approved terminology found in the alphabetical list of the Nice Classification (“provision of an online marketplace for the buying and selling of goods and services”).

This suggests that a trademark for an NFT marketplace can potentially be protected within the existing framework of the Nice Classification.

Trademarks safeguard digital artistic creations:

For artistic products, trademarks can be officially registered. This can be succinctly expressed by acknowledging that the Nice Classification offers pre-approved terminology for various types of innovations categorized by their material composition (e.g., common metal in class 6, precious metal in class 14, paintings in class 16, and so forth). The actual artwork itself is eligible for trademark protection. Tokenizing the artwork does not impact the selection of the products or services for which the artwork will serve as a brand identifier. Often, the objects of interest involve retail items (e.g., T-shirts, bags, screensavers, etc.). Another possibility arises when tokenized artwork functions as a brand for a company’s products or services. In such cases, it’s crucial to safeguard the trademark for these entities.

Both the content associated with NFTs and the NFTs themselves may incorporate trademarks that could be infringed upon during the creation and sale of NFTs.

Trademark Law and the Safeguarding of NFTs

Trademark law shields trademark owners from unauthorized use that may lead to consumer confusion. Moreover, it’s prohibited to utilize any name, symbol, image, or emblem that could potentially confuse the origin, affiliation, or endorsement of a product or service.

Consequently, the utilization of trademarks or closely resembling imitations of trademarks within NFTs might constitute an infringement on the trademark rights of a third party.

The Growing Concern of Trademark Infringement in the Realm of NFTs

As NFTs continue to gain traction, businesses aiming to associate their brands with these digital assets should be increasingly mindful of potential trademark infringement issues.

Arguably, any unauthorized utilization of a trademark, or any phrase or image that could be mistaken for a trademark, in conjunction with an NFT can give rise to concerns regarding trademark infringement.

This may encompass the unlawful incorporation of a trademark within the NFT, such as in the metadata or the underlying content. Even though the utilization of a trademark may not necessarily confuse the origin, source, or sponsorship of the product, creating an NFT that incorporates a well-known and easily recognizable trademark does entail the risk of dilution. Both state and federal laws offer protection to trademarks that have attained a certain level of popularity, safeguarding them from activities that might “dilute” their ability to function as distinctive trademarks by diminishing their uniqueness or associating them with content that could harm their reputation.

You may be interested in Legal viewpoints on trademark disputes in the United Arab Emirates

Concerns Regarding Licensing Intellectual Property for NFTs in Commercial Use

The extent to which a trademark licensee can incorporate a trademark into an NFT hinges primarily on the specific rights granted by the license.

For instance, a license permitting the use of the trademark across all media would likely extend to its usage in association with an NFT. Conversely, a license limited to specific use cases may not offer sufficient protection to the licensee in the event of a claim of unauthorized trademark usage in connection with an NFT.

Furthermore, as previously mentioned, uncertainties arise when a license exclusively permits usage within designated activities, leaving questions about whether NFTs fall within these categories.

You may also read Trademark Protection in the UAE: Strategies for Brand Safety

For instance, a license allowing the use of a particular mark in the context of advertising, marketing, or the sale of specific products or services may not adequately cover the creation of an NFT, as NFTs are arguably distinct entities from other goods and services.

This article aims to provide a broad overview of the subject matter. For personalized guidance related to your specific situation, it is advisable to consult experts. Our legal team at GA in Dubai specializes in handling trademark infringement cases and is available for further consultation.

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