Trademark, Metaverse and NFTs

January 2023

The RealTime Omnibus research conducted by YouGov in late 2022 reveals that among Hong Kong residents who intend to make financial investments in the next 12 months, one in eight (12%) are looking to invest in NFTs. In another survey conducted by, Hong Kong is crowned as the most crypto-ready region around the world, followed by the United States at second place and Switzerland at the third. There is little doubt that the crypto assets industry in Hong Kong is flourishing.

NFTs, or non-fungible tokens, are crypto assets on a blockchain with unique identification codes and metadata that distinguish them from each other. The underlying assets of NFTs can be anything that can be digitalized. NFT as an asset is gaining importance with the development of the metaverse, which, simply put, is a digital space where participants can engage in all sorts of lifelike virtual activities, from shopping, travelling, sporting, to attending classes, concerts, exhibitions, business meetings, and even dating.

The metaverse includes both fantasy worlds as well as virtual worlds that give the participants a real-world-like experience. This gives rise to the issue about whether brands with trademarks registered for real-world goods and services can protect their trademarks in the virtual worlds that imitate real-world experience.

In terms of trademark protection, businesses providing services are perhaps less impacted by the development of the metaverse. If their trademarks are registered for, say, “education services” or “entertainment services” or “retail store services”, the registrations should in theory cover education services or entertainment services or retail store services delivered by whatever means, in the physical world or in the metaverse.

The situation is less clear when it comes to trademarks for goods. Will a trademark registered for “shoes”, for example, cover the NFT version of shoes, since an NFT for shoes is a digital file rather than the shoes themselves?

The first significant case on the issue is the “Metabirkins” case. In 2022, French luxury goods brand Hermès sued digital artist Mason Rothschild for infringement of its famous trademark “Birken” by selling in the metaverse “Metabirkens” NFTs which are virtual recreations of the Hermès Birkin handbags. Started as a trademark infringement and dilution action, the complaint of Hermès is later amended to include claims of false description of origin, false description and representations, cybersquatting, injury to business reputation, misappropriation and unfair competition. The outcome of this case is closely watched by businesses and intellectual property lawyers around the world for guidance as to whether trademarks registered and used for real-life goods can protect the use of the trademarks in the metaverse.

With uncertainties lurking, in the meantime it is advisable for businesses wishing to develop or defend the market for branded virtual goods and services in the metaverse to apply for registration of their brand names as well as, for iconic product designs (such as the Birkin bags), images of the product, as trademarks in respect of virtual goods as well. Virtual goods can be expressed as “downloadable digital files in the nature of …………… authenticated by non-fungible tokens (NFTs) for use in virtual environments created for …………… purposes”, or “downloadable virtual goods, namely computer programs”, or “downloadable image files”, “downloadable audio files” etc., which fall in Class 9 of the International Classification of Goods and Services under the Nice Agreement. If the virtual goods and NFTs are non-downloadable, they can be expressed as “on-line non-downloadable virtual goods and NFTs” which fall in Class 42 of the International Classification. Businesses wishing to operate a market place for virtual goods should consider protecting their trademarks for “retail store services featuring virtual goods and NFTs” in Class 35 of the International Classification.

Going forward, it is hoped that governments around the world can legislate or adopt policies that the principles of protection of trademarks in the real-world are likewise to be adopted in the metaverse.