UK Intellectual Property Office clarifies on legal framework governing NFT registration

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  • The UK Intellectual Property Office (IPO) has issued a Public Advisory Notice (PAN) to clarify acceptable terms and classifications for NFTs.
  • As NFTs become more popular, governments and regulatory bodies are exploring ways to regulate their use, including connection with IP.
  • Overall, intellectual property law is a critical component of the legal framework that governs the use and regulation of NFTs

The Public Advisory Notice (PAN) issued by the UK Intellectual Property Office (IPO) addresses the classification of non-fungible tokens (NFTs), virtual goods, and services provided in the metaverse. Classifying these new forms of goods and services is complex and requires a nuanced approach. The IPO has issued this PAN to provide clarity to customers applying for UK trademarks and copyright containing these terms. This addresses the nexus between the new technologies and property law.

NFTs need regulation too

NFTs primarily represent the ownership of a digital asset, such as a unique piece of digital artwork or an audio file. They comprise an entry on a blockchain inextricably linked to the related asset. Specific terminology related to NFTs, such as “digital art authenticated by non-fungible tokens [NFTs]” and “downloadable graphics authenticated by non-fungible tokens [NFTs],” will be accepted in class 9 by the IPO. However, a term without indicating the asset the NFT relates to will not be accepted as a classification term because it is inherently vague.

NFTs authenticating physical goods will be accepted in the appropriate goods class. For example, if an NFT authenticates a handbag, it will be classified under Class 18, which covers leather goods, instead of Class 9. The IPO recognizes that NFTs can authenticate anything, including physical goods. Therefore, physical goods explicitly defined as being authenticated by NFTs will also be accepted in the appropriate goods class.

Virtual goods primarily consist of data, such as digital images, classified in class 9 of the Nice Classification system. The IPO will only accept virtual goods if they are explicitly defined. For instance, “downloadable virtual clothing, footwear, or headgear” and “downloadable virtual handbags” are acceptable terms in class 9.

Metaverse services classification 

Virtual services, including those provided in the metaverse, have also seen an increase in trademark applications. The IPO will continue to accept services delivered via virtual means. Examples of acceptable terminology include “education and training services delivered by virtual means [class 41]” and “conducting interactive virtual auctions [class 35].” The metaverse is a form of digital reality where people can access virtual worlds and interact with others. The IPO will accept services provided through the metaverse in the same class as traditional delivery forms.

The classification of NFTs, virtual goods, and services in the metaverse is a new and rapidly developing area of intellectual property law. The IPO acknowledges that new developments will arise and aims to update its guidance as necessary. The PAN clarifies the acceptable ways to frame these terms and the correct class in which they fall. However, the IPO acknowledges that other uses of NFTs and services offered in the metaverse will be evaluated case-by-case.

If the IPO examiner considers the applied specification vague, a statement of objection will be issued as part of the examination report. The applicant will have two months to file written observations in response and have the right to request a hearing.

Are NFTs IP?

Intellectual property encompasses original creations of the mind with some value, such as inventions, literary and artistic works, symbols, names, images, and designs used in commerce. Creators or owners of these assets are granted legal protection through intellectual property rights, allowing them to control the usage of their creations and derive financial benefits from them.

In contrast, NFTs are unique digital tokens representing ownership of a particular asset. NFTs are verified on a blockchain, providing a permanent and transparent ownership and transaction history record. Due to their unique digital nature, NFTs frequently represent digital assets such as artwork, music, and other creative content.

NFT + Intellectual Property

NFTs can represent ownership of intellectual property rights, including copyright or trademark. For instance, an artist can create digital artwork and use an NFT to represent ownership of the copyright to that artwork. A collector or investor who purchases the NFT becomes the copyright owner, having the authority to determine how the artwork is utilized and distributed.

Recognizing that using NFTs to represent intellectual property rights is a relatively new and evolving area is essential. The legal implications of using NFTs in this manner are still under examination. Nevertheless, as Non-Fungible Tokens become more popular and widely used, they will likely represent and transfer ownership of various forms of intellectual property.

An NFT regulation pitfall

Intellectual property (IP) law is very important in regulating NFTs. This is because NFTs can represent ownership of various forms of intellectual property, such as copyright, trademark, and patent.

To ensure the legal and ethical use of NFTs, individuals must consider intellectual property laws. For instance, creating an NFT representing ownership of a copyrighted work without the copyright holder’s permission constitutes copyright infringement. Likewise, creating an NFT that violates a trademark or patent also violates intellectual property law.

Moreover, the rise of NFTs has brought up some legal and regulatory challenges. For instance, there are questions about the enforceability of IP rights in the context of NFTs and concerns about the use of NFTs in money laundering and fraud. As a result, governments and regulatory bodies worldwide are exploring ways to regulate NFTs, including their use in connection with intellectual property.

NFT Regulation is important

Overall, intellectual property law is a critical component of the legal framework that governs the use and regulation of NFTs. IP law protects the rights of creators and owners of intellectual property. At the same time, it promotes innovation and creativity by ensuring the legal and ethical use of NFTs.

Intellectual property law is essential when dealing with NFTs, as they can represent ownership of various forms of intellectual property. The classification of NFTs, virtual goods, and services in the metaverse is a complex and evolving area of intellectual property law. The UK Intellectual Property Office (IPO) issued a Public Advisory Notice (PAN) to clarify acceptable terms and classifications for these new goods and services. As they become increasingly popular, governments and regulatory bodies are exploring ways to regulate NFT use. Including their connection with intellectual property. Intellectual property law promotes innovation and creativity and ensures the legal and ethical use of NFTs. While regulation efforts have focused on cryptocurrency, the NFT space also requires focus.

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Kudzai G Changunda
Kudzai G Changundahttp://www.about.me/kgchangunda
Finance guy with a considerable interest in the adoption of web 3.0 technologies in the financial landscape. Both technology and regulation focused but, of course, people first.