Home Insights Navigating trade marks in a virtual world: IP Australia issues new guidance

Navigating trade marks in a virtual world: IP Australia issues new guidance

Read time
5  minute read
Date published
09 October 2023

IP Australia’s new guidance on classifying trade marks for a range of emerging technologies provides an important call-to-action for brand & product owners. Shannon Fati breaks down the changes.

IP Australia has released new guidelines on the trade mark classification of goods and services across a range of emerging technologies, including virtual goods, the metaverse and virtual environments, non-fungible tokens (NFTs) and blockchain.

The guidance comes in response to a surge in trade mark applications across each of these areas in Australia. It is anticipated that classification practices will continue to evolve to address the rapid pace of technological development, and to ensure there is a level of international consistency among trade mark offices globally. For companies currently operating in virtual environments or developing emerging technologies, or with future plans to, it may be advisable to seek registered protection of trade marks for the relevant virtual goods and services for defensive purposes.

What are the emerging technologies covered in this new guidance?

Virtual goods

Virtual goods are defined as digital copies of real-life goods which are to be used in online virtual environment. IP Australia has provided guidance that virtual goods are classified in Class 9 because they essentially consist of data and are therefore treated as digital content or images.

Applications to register trade marks in respect of virtual goods must specify the exact nature of the virtual goods – in other words, ‘virtual goods’ or ‘downloadable goods’ will be considered unduly broad for classification purposes. Accordingly, claims should include a description of the type of goods, for example ‘downloadable virtual clothing’ or ‘downloadable virtual food’. 

Services provided in relation to virtual goods will fall under different classes depending on their nature. For example, ‘online retail services for downloadable virtual clothing’ will be classified in Class 35.

The metaverse and virtual environments

The ‘metaverse’ refers to virtual or online environments where users can interact. IP Australia will accept goods and services claims that include the terms ‘metaverse’ and ‘web3’, but the term ‘virtual environments’ is preferred for its broad application to many contexts.  Generally, a virtual service will be classified consistently to its real-world counterpart if the effect or benefit to the consumer is the same whether provided virtually or in person – that is, ‘entertainment services provided in virtual environments’ for example will be classified in Class 41 as the inherent nature of the service does not change whether provided virtually or in person. 

There are exceptions though. For example, the provision of a virtual restaurant will be classified in Class 41 as an entertainment service as such services cannot be considered to provide the same benefits and experience as consuming real food at a physical restaurant (Class 43).

Non-Fungible Tokens

Non-Fungible Tokens (NFTs) are cryptographic units of data which are used to verify or record the ownership and authenticity of an underlying asset. IP Australia has provided guidance that NFTs are neither a good or a service, but rather a means of certification. Goods and services simply comprising of a claim for ‘non fungible tokens’ are not acceptable in Australia.

Physical items that are authenticated by NFTs will be classified according to their corresponding real-world goods. For example, ‘clothing authenticated by non-fungible tokens’ in Class 25 or ’downloadable digital files authenticated by non-fungible tokens’ in Class 9. Services featuring NFTs will generally be classified according to the nature of the service being provided such as ‘retail services relating to downloadable digital image files authenticated by non-fungible tokens’ in Class 35.

Blockchain technologies

Blockchain technologies are immutable shared ledgers which facilitate recording of encrypted blocks of data and are often used in the cryptocurrency, gaming and digital authentication fields. Claims for goods and services comprising ‘blockchain’ without further explanation will be unacceptable in Australia.  Instead, the goods or services should be drafted in a manner which emphasises that they are a feature of the goods or a means by which the services are provided. For example, ’downloadable computer software for blockchain technology’ in Class 9 and ’computer programming of smart contracts on a blockchain’ in Class 42.

Trade mark infringement considerations

Trade mark infringement in Australia requires the allegedly infringing mark to be substantially identical with, or deceptively similar to, another registered trade mark and applied to goods and services that are of the same description, or closely related, to those of the registered mark.

There have been no Australian decisions to date addressing whether a virtual item is sufficiently similar to a physical item for the purpose of infringement.

However, Australian legislation provides that if a registered trade mark is used without the authorisation of its owner in relation to goods and/or services which are unrelated to those for which the trade mark is registered, the trade mark owner may still establish infringement if:

  • because the trade mark is well-known, use of that trade mark is likely to be taken as indicating a connection between the unrelated goods and the trade mark owner; and
  • for that reason, the interests of the trade mark owner are likely to be adversely affected.

Australian Consumer Law provisions may also assist brand owners who are concerned about the misuse of their trade marks in the metaverse. Provided that a court is satisfied that a relevant misrepresentation (such as to the origin of the goods) has been made to Australian consumers, an Australian court may be prepared to order an injunction to restrain the misleading conduct and/or order the payment of damages.

At common law, the tort of passing off can be used to protect a brand, including an unregistered trade mark or the so-called ‘get-up’ of a product. Passing off requires the applicant to prove that:

  • because of the reputation/goodwill of the brand in Australia, the respondent’s conduct is likely to deceive consumers as to the origin of the goods or services; and
  • that as a consequence, the applicant will suffer damage to its reputation.

Owing to the more onerous requirements in establishing a claim in Australia based on the Australia Consumer Laws and passing off compared to trade mark infringement, we have seen an increase in both Australian and foreign clients registering trade marks in Australia for goods and services related to virtual environments.  Regardless of the manner in which companies might choose to enforce their rights, the issue of enforcement can be problematic, particularly if the alleged infringer is unable to be identified or is located outside of Australia.

Even if the infringer can be located, the relevant conduct must have occurred in Australia or be directed at Australian consumers. Typically, infringement can be established online if a website offers goods for sale in Australian Dollars, or there is evidence that an Australian person has purchased those goods online for delivery to Australia. This may be more difficult in the metaverse where cryptocurrencies are used, and the goods purchased are digital in nature (and so are not ‘sent’ to Australia in the usual sense).

Furthermore, the trade mark owner is at risk of having their registered trade mark removed (in full or part) if it is not used on all of the registered goods and/or services for a period of three years or more from the actual date of registration. There has not been any case law to date in Australia as to whether the use of a trade mark on physical goods or actual services would be sufficient to defend removal proceedings against a registered trade mark in respect of virtual goods and services.

Key takeaways

  • We recommend that clients review their portfolios and consider registering their trade marks for use in virtual environments. The mere presence of a registered trade mark may be sufficient to ward off potential infringers and, should enforcement be required, infringement of a registered trade mark is likely to be more easily established compared to reputation-based actions in accordance with the Australian consumer laws and passing off. 
  • With IP Australia flagging that classification practices in this fast-moving area will continue to evolve, brand and product owners are encouraged to monitor updates in this space. Griffith Hack will keep you updated on any future changes.