Trademarks for Virtual Goods and Services: The Next Frontier of Intellectual Property Protection

The “metaverse” is upon us, and it is forecasted to impact how businesses operate and how brand names are protected. An entire virtual world has opened for business and is quickly expanding. This virtual world has its own marketplaces for goods and services, just like we see in the real world, except they are digital. For example, luxury brands like Balenciaga are offering simulated 3D clothing for avatars, and healthcare providers are innovating how they conduct telemedicine to include virtual healthcare appointments. As this new frontier opens, businesses are filing trademark applications that cover virtual goods and services to secure and protect their brands in the virtual world. Goods and services are already being offered virtually. However, the virtual world is about to get a whole lot bigger. Facebook recently announced it would be changing its name to Meta Platforms Inc., or META for short. The CEO of Facebook, Mark Zuckerberg, is leaning into what is referred to as the “metaverse,” stating in a recent rebranding announcement, “Over time, I hope we are seen as a metaverse company.” The metaverse is the next iteration of the internet, which combines elements of both physical and virtual worlds, including an online economy and digital assets. Consumers will be able to access this metaverse by way of virtual reality using headsets or augmented reality through their smart devices. Spaces in the metaverse will mirror our real-world experiences, except we will interact using avatars. It sounds like science fiction, but it is the reality of our evolving digital age. So much so that businesses are taking stock in this marketplace by expanding their trademark portfolios to cover virtual goods and services.

Virtual Goods and Services

Luxury fashion brands are now offering branded virtual merchandise on gaming platforms. The fashion house Balenciaga released “skins” for the popular gaming mini-metaverse Fortnite. A skin is a graphic that changes the appearance of characters in a virtual reality setting. Think of it as a total head-to-toe makeover for an avatar. By partnering with Fortnite, Balenciaga offers digital versions of its branded merchandise to consumers. One Balenciaga “skin” on Fortnite costs approximately $15 USD, or 1,800 V-Bucks, a digital currency used on Fortnite. While these digital “skins” are sold at an accessible price point, the physical versions of these products are sold at a much higher price point. One physical Balenciaga/Fortnite co-branded T-Shirt costs $479 USD, with some physical apparel items costing up to $2,650 USD. This collaboration shows how companies can utilize their trademarks in the virtual world to cross-market goods in the physical world. It is also easy to envision virtual products from these luxury retailers being offered in “limited editions” at much higher price points.

When developing or expanding a trademark portfolio, it is important to consider that trademark rights are bound to specific international classes. For example, clothing items fall within International Class 25, and retail store services fall within International Class 35. However, what classes do virtual clothing and virtual retail services fall within? The answer depends on what specific goods or services are provided in the online virtual world. For example, Nike Inc. recently filed seven new U.S. applications to register its existing trademarks for virtual goods and services, including its house brand NIKE and its “swoosh” design logo. These applications cover a variety of “downloadable virtual goods” in Class 9; “retail store services featuring virtual goods” in Class 35; and entertainment services for “use in virtual environments” in Class 41. Nike filed these trademark applications based on an “intent to use” these marks, which could secure its priority date from the time of filing the applications, giving it a head start in this new virtual frontier.

Another example of a virtual service is “virtual healthcare.” There are presently more than two dozen U.S. pending trademark applications and a similar number of registrations that cover “virtual healthcare”. This is a noteworthy, but comparatively low number of trademarks compared to the number for corresponding non-virtual goods or services. (By way of comparison, there are presently over 25,000 registered marks in the U.S. that cover “healthcare”, and more than 1,500 that cover “telemedicine”.) This signals that “virtual healthcare” is an area with tremendous growth potential from a trademark perspective. These “virtual healthcare” services can fall primarily within Classes 9, 42, and/or 44, depending on how the services are provided. For example, the remote patient monitoring platform Current Health Inc. owns a U.S. trademark registration for CURRENT that covers different types of software for “virtual healthcare office visits” in both Class 9 and Class 42. Another healthcare platform, Healthie Inc., owns a registration for HEALTHIE that covers “virtual healthcare services” in Class 44. Depending on the nature of the “virtual services”, it is possible that a company may offer services within all three classes, thereby increasing the value and bandwidth of their trademark portfolios.

It is important to consult with an experienced trademark attorney when developing a description of virtual goods or services in a trademark application to make sure that you have a full scope of protection.

What does this mean for you?

When it comes to trademarks, there are only so many words, letters, symbols, and concepts for new businesses to use when developing their brands. Accordingly, trademarks are can be a rare asset, just like gold. As with the Gold Rush of 1849, businesses are rushing to utilize and protect their brands in the virtual world ahead of their competitors. With supply chain disruptions and the general acceptance of virtual work and entertainment spaces due to the COVID-19 pandemic, businesses are looking to the virtual world as a way to raise their profiles and stay ahead of the curve in the digital age. Securing trademark protection in the virtual world also helps to prevent unlicensed use by third parties and can increase the value of your business. Acquiring intellectual property on virtual goods and services is a way to monetize and leverage existing brands or develop new brands to offer products and services to consumers wherever they may be located. Please contact us if you are interested in protecting your intellectual property assets in the virtual world.