Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. The global NFT market size is expected to grow from USD 3.0 billion in 2022 to USD 13.6 billion by 2027, at a Compound Annual Growth Rate (CAGR) of 35.0% from 2022 to 2027. According to the recent report published by Morgan Stanely, Luxury-branded non-fungible tokens could become a $56 billion market by 2030 and could see “dramatically” increased demand thanks to the metaverse.
One of the main advantages of NFTs is that they allow people to own intellectual property. When intellectual property is included in a blockchain, it is easier to monitor ownership. It is also easy to ensure that the IP owner is not violating the IP of others. For example, a fashion designer can design a garment and then embed it in a blockchain smart contract. Besides that, the consumer will be able to use the blockchain to authenticate the design and confirm that it has not been replicated. Many well-known luxury brands are already implementing advanced blockchain technology to battle counterfeiters. You can read more about the process in our article: Brands are introducing new Blockchain Technologies to fight Counterfeit.
In 2022, more than 5,800 trademark applications filed with the U.S. Patent and Trademark Office (USPTO) for NFTs and related technology, over two and a half times more than the 2,087 recorded in 2021. Following this trend, a number of prominent brands across all industries are expanding their trademark portfolio to cover digital assets.
Beauty & Fashion
In February 2022, L’Oreal filed 17 trademark applications related to NFTs. These applications encompass some of the company’s most popular brands, including Redken, Maybelline, Kiehl’s, and others. If successful, the trademarks are to cover:
- Interactive website for virtual reality game services; entertainment services.
- Digital media, namely, collectables, art, tokens, and non-fungible tokens (NFTs); NFTs featuring collectable digital items, images, photographs, art, videos or audio recordings used with blockchain technology; digital tokens used with blockchain technology to represent a collectable item, for data storage.
- Retail store services and online store services in relation to virtual goods.
While L’Oreal has not made any big moves in the virtual world, these trademark filings potentially indicate an intention for the company to set up shops in the metaverse to sell its virtual products as well as create NFTs for its brands.
French luxury brand, Hermes, has filed its first trademark application to protect its name in the Web3 space in August of 2022. This application followed after a lawsuit against Metabirkins founder Mason Rothschild in January for allegedly using the brand’s Birkin name to make money from sales and resales for his NFT Metabirkins collection. The lawsuit gave the company the necessary push to extend its IP protection to the realm of digital goods.
Besides NFTs and virtual reality, the trademark application also covers retail store services featuring digital wearables, an online marketplace for buyers and sellers of virtual goods, and financial services, including providing electronic transfer of a virtual currency for use in connection with digital collectables and NFTs.
Gucci was among the first luxury fashion houses to sell NFTs. In June 2021, Gucci auctioned off its first NFT in an online auction hosted by Christie’s for $25,000 as one of the most expensive items the brand has ever sold. Later, in January 2022, Gucci partnered with digital character brand Superplastic to launch a SuperGucci non-fungible token (NFT) collection. Most recently, the company has filed five more trademark applications covering:
- Digital marketplace for virtual assets, virtual goods, and digital media
- Virtual currency and electronic transfer, along with the exchange of virtual currency
- Financial brokering of virtual goods and crypto-collectables;
- Virtual fashion shows
- Authentication, issuance, and validation of digital certificates
- Software to display and transfer NFT-backed digital goods and virtual assets
- Virtual clothing, accessories, belts, headgear, bags, backpacks, wallets, handbags, computer & phone cases, jewellery, furniture, artworks, perfumes, games & toys, cosmetics, real estate, eyewear, watches, chronometric instruments, and more.
In February 2022, Victoria’s Secret filed four applications for digital collectables and media developed using blockchain technology, as well as online clothes and media for usage in virtual worlds. Additionally, Victoria’s Secret will offer “entertainment services, namely, providing online, non-downloaded clothing, undergarments, footwear, headwear, eyewear, bags, fashion accessories, photos, images, videos, and recorded footage for use in brutal environments and virtual fashion shows.”
According to the U.S. Patent and Trademark Office, Nike filed applications on Oct. 27 for “Nike,” the brand’s famous slogan “Just Do It,” and its swoosh logo. The following day, two more applications for the “Air Jordan” and “Jumpman” logos were filed. In total, seven different applications have been submitted in the period between October and November of 2021.
Since then, Nike has continued to file requests to protect trademarks in “downloadable virtual goods” and related services. The applications surged with the recent lawsuit against the sneaker resale marketplace StockX LLC, which Nike accused of minting non-fungible tokens that use its trademarks without approval and selling them at inflated prices. The registration of trademarks in the virtual world provides Nike extra protection in the event others attempt to use the brand in an unlicensed way.
Food & Drink
According to the U.S. Patent and Trademark Office, Walmart filed seven trademark applications on Dec. 30, 2022. The applications encompass concepts like “virtual goods” across product categories such as furniture, toys and sporting gear, along with downloadable software for managing cryptocurrency portfolios or establishing an electronic wallet. Walmart is not just considering providing these services to the public but also to other brands and businesses in the form of a platform as a service (PaaS). In other words, it plans to help other brands launch crypto-collectables, crypto-art and application tokens.
The fast-food giant filed ten trademark applications to the US Patent and Trademark Office (USPTO) on February 4, covering both McDonald’s and McCafe for a virtual restaurant to deliver food in the metaverse and in real life. McDonald’s has also applied for its own intellectual property to cover “entertainment services,” specifically virtual and real-world concerts and events.
NFTs and Intellectual Property Law
The rapid growth in the popularity of NFTs and associated trademark applications, however, goes hand in hand with the emerging trademark issues concerning NFTs. Non-Fungible Tokens, like any other form of intellectual property, must meet a certain level of distinctiveness to be registered as a trademark. Additionally, in order to obtain a needed level of protection they need to be registered in all relevant classes and jurisdictions. You can read more about Trademark Law issues surrounding NFTs in our article Trademark perspective on NFTs: New, Fabled and Thrilling. While we can certainly expect more companies getting involved with digital assets, it goes without saying that creators should consult with a trademark attorney for guidance on navigating the ever-changing digital space. To learn more about trademark options for NFTs and other digital assets, contact an experienced trademark attorney today.