Filings indicate a potential boom for virtual marketplace offerings

When I imagined the future as a child, I thought of flying cars, not virtual worlds. But as web3 and non-fungible tokens gain in popularity, the major brands appear to be envisioning a virtual world where your avatar, dressed in virtual LULULEMON™ attire, sips a virtual SMOOTHIE KING™ beverage made with CHIQUITA™ bananas while cooking virtual TYSON™ chicken after taking your virtual kids to the virtual CHUCK E. CHEESE™.

If all of that gives you a virtual headache, there’s virtual TYLENOL™ (or virtual BLUE MOON™) for that. And if you happen to burn down the virtual kitchen, there’s PRUDENTIAL™ virtual insurance.

All jokes aside on the need for things like virtual MIRACLE-GRO™ pesticides, the trademark filings of virtual goods/services and NFTs — short for non-fungible tokens, which are digital assets generally using the same software as cryptocurrency — show a potential boom for virtual marketplace offerings. At the time of this article’s writing, there are currently 6,800 trademark records for virtual goods or services, and the vast majority (85%) have been filed since October 2021.

What does all of this mean? At this point, with 80% of the trademark filings based on the intent to use the trademark at a later date, it’s hard to tell what exactly is going on until we start seeing examples of use of the trademarks in actual commerce. But, we can tell a few key things.

First, while intent to use trademark applications — an application filed before the trademark is used in commerce — are common filings, the prevalence of this type of filing indicates that many of these brands have not started using their trademarks in the metaverse or virtually. PACSUN™ is unique as one of the trademark applications that has been used for virtual goods, in its case through Roblox, a global online platform popular with young adolescents. Not all brands have a large following with the Roblox user group, so it remains to be seen where we might find PURPLE™ virtual mattresses or other similar virtual products.

Second, we know the trademark filings in this area have increased drastically in the past eight months and that the new trademark applicants are often household brands. Recent lawsuits filed by Hermès and Nike for trademark infringement associated with the sale of NFTs may have sparked some concern for brands about the complication of enforcement in the metaverse of virtual goods and services if they only own trademarks for real world goods/services. Both of the defendants in those cases have made arguments challenging the infringement allegations.

Finally, NFTs are often associated with virtual good trademark applications, which indicates that some of these applicants are preparing to sell NFT-related multimedia to fans and/or use the blockchain to authenticate purchases of goods/services. This holds true with COACH™ digital art items, one of the other applications for NFTs and virtual goods that has been used in commerce. Coach launched 10 unique NFTs of eight characters in late 2021 that entitled the NFT owner to purchase a custom bag in 2022.

A number of other applications, like the ones for BAND-AID™ virtual first-aid products and PIZZA HUT™ virtual food products, indicate that some brands intend to allow purchasers of virtual goods to earn reward points for real world goods as well. It remains to be seen if the existence in the metaverse will lead to more sales, but both the sale of virtual and real world goods virtually could lead to sales tax liability for vendors.

Unfortunately, the larger questions about the nature of the virtual goods (and the trademark examination process for this use) remain unanswered until the brands start using the trademarks and filing examples of their trademark use with the Trademark Office.

Meredith Lowry is a Fayetteville patent attorney on the Wright Lindsey Jennings Tech Law team. She is obsessed with business, tech and trademarks. The opinions expressed are those of the author.