Branding in the Metaverse is all the rage. In the last three months alone, well-known brands like Nike, Converse, New Balance, Vineyard Vines, Tahari, Anthropologie, Hollister, Abercrombie & Fitch, and, even Walmart, have all filed applications with the United States Patent and Trademark Office for intent-to-use trademarks in connection with “digital goods;”# opportunistic filings by individuals not affiliated with name brands have appeared in Classes 9, 35, and 41# for both PRADA and GUCCI; and Metaverse Law, a clever California law firm has been diligently going through the motions in their attempt to trademark the very word on everyone’s lips.
But what is Metaverse, and why should you, the owner of the expertly cultivated flower brand, or producer of the most delicately infused edibles care?
Metaverse is a virtual world meant to support decentralized, persistent three-dimensional environments, and accessible by anyone with a smart phone, game console, virtual or augmented reality headset, or computer. To be more precise, it is many blockchain-enabled decentralized applications that support an economy of user-owned crypto assets and data. Just as consumers shop for items on the web, in the fully functioning Metaverse, Metaversenauts (think internauts but in the Metaverse) will be able to buy both the digital and the physical world items. For example, if wearing that fancy Nike sneaker is what gets their virtual blood pumping, they will be able to buy a pair of virtual shoes. If Metaversenauts would rather explore the three-dimensional models of those coveted kicks (hold them, wear them, go on a meta-run) before buying from their friendly neighborhood Nike store in the physical world, potentially avoiding making uninformed impulse purchases, they may do that as well.
While the technology supporting user-owned crypto assets and data speeds ahead, the legal limits of digital Metaverseconomy are yet to be defined. Thinking about Nike’s filing of a trademark application for a digital shoe in Class 9 (usually associated with digital applications), one must consider the enormous opportunity the Metaverse holds for cannabis brand owners who have been struggling to obtain federal protection for trademarks used in connection with THC and CBD goods and services.
The lawful use doctrine—the notion that a trademark cannabis be registered at the US Patent & Trademark Office if the goods and services in the application are unlawful—prevents owners of well-developed national cannabis brands form securing Federal Registration in connection with cannabis goods or services or even hemp goods that have not been approved by the FDA. Whether it is an up-and-coming startup, or a large operator with physical presence in numerous states, canna-brand owners are limited to state-based common law rights. Nonetheless, trademark attorneys working with cannabis brands on protecting trademark rights have found a way to secure trademark registrations at the federal level, albeit in connection with ancillary goods or services. However, the barrier to the development of rights at a federal level still causes problems, as there is nothing to prevent a new flower business in Florida from capitalizing on the goodwill garnered by an established brand of flower operating in Colorado. Trademark law is, after all, jurisdictional; meaning, intellectual property rights are limited to the geographical area where the mark is in use.
But what about the Metaverse? Like online presence, it is universal, meaning, the jurisdiction seems to be, well, everywhere the Metaverse can be accessed. With one important (and potentially game-changing) difference: while brand owners cannot sell their still-federally unlawful goods and services online and ship them across state lines, there is no legal restriction (yet) on selling cannabis goods or services within the confines of the virtual world. After all, the very thing that makes marijuana an illicit Schedule 1 substance –THC–is lacking altogether in the virtual space where humans cannot experience the physiological effects of the compound. USPTO has not yet established a review process for cannabis goods and services offered in the Metaverse. This trademark attorney finds it difficult to imagine a logical argument for refusal of a registration of digital cannabis flower, or digital cannabis infused cookies.
The lack of laws and regulations in this new jurisdiction, is, of course, not without issues. For now, anyone might at least attempt to claim rights in an established cannabis brand in the Metaverse—a move that would force most real-world bona fide owners to choose between pricey litigation with uncertain outcomes, and a (likely) painfully expensive buy-out of the usurper. For those familiar with bulk domain name purchasing, this may feel strangely familiar. Bulk filing of trademark applications may be more expensive, but the “business model” is the same. Against the specter of opportunistic brand grabbing, the fact that US trademark rights are use-based is both terrifying and encouraging. Terrifying because even without securing a federal registration for “digital goods,” brand pirates could begin amassing rights in the mark they use in the Metaverse before the bona fide real-world owner. Encouraging because (at least for now), few individuals or entities are ready to create and offer for sale digital assets that would bear trademarks.
What does this mean for cannabis brands? For now, it could mean a temporary reprieve from the shackles of state-rights based brand protection and everything that goes along with it. State labeling restrictions, for example, would not logically apply to virtual cannabis products sold in the Metaverse. The value of any trademark lies in the goodwill the brand collects, the recognition by consumers of the single source behind quality goods or services. If Brand A Gummies, sold in California, and bearing a California state trademark are offered as a digital asset in the Metaverse, Brand A has expanded its reach from the limited population of the Golden State to anywhere United States. Brand A is now accruing national goodwill, despite the physical goods being unavailable in every state.
More importantly, while a registration in Class 35 for “retail services featuring digital cannabis goods” is not the same as a registration in Class 35 for “retail services featuring cannabis goods” in the real world, it could serve as a far broader shield against infringers than a registration in Class 25 for “t-shirts” or in Class 41 for “informational services.” Courts have historically viewed the similarity between marks, and the relatedness of goods and services as weighing heavily in favor of the likelihood of confusion. Thus, Metaverse canna-brand owners are more likely to defend against the inevitable onslaught of newly registered marks (in the world real or virtual) in the wake of the inevitable federal legalization. Moreover, given the ongoing application of Kiva# to conflicts between federal and state marks, brand owners can begin enforcing their rights against imposter brands’ identical or similar marks in state-legal use. To take advantage of this strategy, this trademark attorney has already helped brands like Landrace Origins, and Dubz Garden to file intent to use applications in Class(s) 9 for “Downloadable virtual goods, namely, cannabis goods, clothing, and headwear for use online and in online virtual worlds; Downloadable cannabis goods, clothing and headwear images authenticated by non-fungible tokens (NFTs)," and 35 for “Retail store services featuring virtual goods, namely, cannabis goods.” And what of proof of actual use required for obtaining a federal trademark registration? Attorneys at Horst Legal Counsel are currently working on a solution that will allow cannabis brands to show lawful use in the Metaverse without having to hire a team of UI designers and engineers.
My point is this: while registering your cannabis brand in the Metaverse will not make transporting physical cannabis goods in interstate commerce legal, it seems like the right step towards establishing national recognition of and protection for your brand, as we all await federal legalization.
© 2021 Belle Borovik
Connect: LinkedIn
Trademark and Copyright Attorney
Horst Legal Counsel
i Each brand filed for their respective mark. NIKE in Class 9 for “Downloadable virtual goods, namely, computer programs featuring footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories for use online and in online virtual worlds,” in Class 35 for “Retail store services featuring virtual goods, namely, footwear, clothing, headwear, eyewear sports bags, backpacks, sports equipment, art, toys and accessories for use online; on-line retail store services featuring virtual merchandise, namely, footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories,” and Class 41 for “Entertainment services, namely, providing on-line, non-downloadable virtual footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories for use in virtual environments;” CONVERSE in Class 9 for " Downloadable virtual goods, namely, computer programs featuring footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories for use online and in online virtual worlds,” Class 35 for “Retail store services featuring virtual goods, namely, footwear, clothing, headwear, eyewear, sports bags, backpacks, sports equipment, art, toys and accessories for use online; on-line retail store services featuring virtual merchandise, namely, footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories,” and Class 41 for “Entertainment services, namely, providing on-line, non-downloadable virtual footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories for use in virtual environments;” NEW BALANCE in Class 9 for " Downloadable virtual goods, namely, computer programs featuring footwear, clothing, sports bags, sports equipment, and accessories for use in online virtual worlds,” Class 35 for “Retail store services featuring virtual merchandise, namely, footwear, apparel, sports bags, sport equipment, and accessories for use online; online retail store services featuring virtual merchandise, namely, footwear, apparel, sports bags, sports equipment, and accessories,” and Class 41 for “Entertainment services, namely, providing on-line, non-downloadable virtual footwear, apparel, sports bags, sports equipment, and accessories for use in virtual environments created for entertainment purposes;” VINEYARD AND VINES in Class 9 for “Downloadable virtual goods, namely, computer programs featuring articles of clothing, belts, headwear, eyewear, eyewear accessories, bags, beverageware, phone accessories, fragrances and perfumery, jewelry, and towels for use online and in online virtual worlds,” Class 35 for “Retail stores services featuring virtual goods, namely, articles of clothing, belts, headwear, eyewear, eyewear accessories, bags, beverageware, phone accessories, fragrances and perfumery, jewelry, and towels for use online and in online virtual worlds; on-line retail stores services featuring virtual merchandise, namely, articles of clothing, belts, headwear, eyewear, eyewear accessories, bags, beverageware, phone accessories, fragrances and perfumery, jewelry, and towels for use online and in online virtual worlds,” and Class 41 for “Entertainment services, namely, providing on-line, non-downloadable virtual articles of clothing, belts, headwear, eyewear, eyewear accessories, bags, beverageware, phone accessories, fragrances and perfumery, jewelry, and towels for use in virtual environments;” TAHARI in Class 9 for “Downloadable software, namely, computer and video game software; virtual reality software for interactive entertainment and virtual reality gaming; downloadable software to enable the uploading, posting, showing, displaying and sharing of information in the fields of virtual communities, electronic gaming and entertainment via global communication networks or other communications networks with third parties; downloadable software for e-sport games; downloadable mobile applications for e-sport games; downloadable software featuring virtual currency, namely, computer programs featuring in-game tokens and currency for use in online web and mobile video games; downloadable software for use in creating and participating in virtual environments; downloadable software for sending and receiving electronic messages, graphics, images, audio and audio visual content via global communication networks; downloadable software for viewing non-fungible tokens (NFTs); downloadable software for use in electronically storing, sending, receiving, accepting and transmitting non-fungible tokens (NFTs); downloadable software for users to search, browse, view, and purchase virtual goods, namely, digital art and non-fungible tokens (NFTs); digital media, namely, digital collectibles, digital tokens, non-fungible tokens (NFTs), cryptocurrencies, and digital art; downloadable software for use in creating, editing and modifying avatars and virtual images that can be posted, shared and transmitted via multi-media messaging (MMS), text messaging (SMS), email, online chatrooms, global communication networks, and other communication networks; downloadable software for creating and broadcasting avatars across online social media and digital platforms; downloadable virtual goods, namely, computer programs featuring avatars, clothing, pets, vehicles, weapons, tools, toys, sporting equipment, emotes and gestures for use in virtual environments created for entertainment purposes; virtual reality headsets;” ANTHROPOLOGIE in Class 9 for “Downloadable virtual goods, namely, computer programs featuring clothing, footwear, headwear, eyewear, home decor, general house wares, furniture, cosmetics, cosmetics and personal care items, clothing and hair accessories, jewelry, handbags, sports bags, backpacks, electronics, rugs and gifts consisting of the aforementioned goods for use online and in online virtual worlds,” Class 35 for “Retail store services featuring virtual goods, namely, clothing, footwear, headwear, eyewear, home decor, general house wares, furniture, cosmetics, cosmetics and personal care items, clothing and hair accessories, jewelry, handbags, sports bags, backpacks, electronics, rugs and gifts consisting of the aforementioned goods for use online; on-line retail store services featuring virtual merchandise, namely, clothing, footwear, headwear, eyewear, home decor, general house wares, furniture, cosmetics, cosmetics and personal care items, clothing and hair accessories, jewelry, handbags, sports bags, backpacks, electronics, rugs and gifts consisting of the aforementioned goods,” and Class 41 for “Entertainment services, namely, providing on-line, non-downloadable virtual clothing, footwear, headwear, eyewear, home decor, general house wares, furniture, cosmetics, cosmetics and personal care items, clothing and hair accessories, jewelry, handbags, sports bags, backpacks, electronics, rugs and gifts consisting of the aforementioned goods for use in virtual environments;” HOLLISTER for “Downloadable virtual goods, namely, computer programs featuring bags, clothing, headwear, footwear, personal care products, swimwear and accessories for all of the foregoing for use in online virtual worlds;” ABERCROMBIE & FITCH application in Class 9 for “Downloadable virtual goods, namely, computer programs featuring bags, clothing, headwear, footwear, personal care products, swimwear and accessories for all of the foregoing for use in online virtual worlds;” WALMART application in Class 35 for “Provision of an online marketplace for buyers and sellers of downloadable digital goods authenticated by non-fungible tokens (nfts); provision of an online marketplace for buyers and sellers of downloadable digital art images authenticated by non-fungible tokens (nfts); providing an interactive website and computer application software for virtual reality game services; retail store services featuring virtual goods.”
ii The imposter applicants filed in Class 9 for “Downloadable virtual goods, namely, computer programs featuring footwear, clothing, headwear, eyewear, handbags, laptop bags, backpacks, luggage, briefcases, art, toys, jewelry, watches, hair accessories, pet collars, accessories and charms for use in online virtual worlds,” Class 35 for “Retail store services featuring virtual goods, namely, footwear, clothing, headwear, eyewear, handbags, laptop bags, backpacks, luggage, briefcases, art, toys, jewelry, watches, hair accessories, pet collars, accessories and charms for use in online virtual worlds,” and Class 41 for “Entertainment services, namely, providing on-line, non-downloadable virtual footwear, clothing, headwear, eyewear, handbags, laptop bags, backpacks, luggage, briefcases, art, toys, jewelry, watches, hair accessories, pet collars, accessories and charms for use in virtual environments created for entertainment purposes.”
iii Kiva Health Brands LLC v. Kiva Brands Inc., 439 F. Supp. 3d 1185 (N.D. Cal. 2020).
