Trade Marks - An Overview of the Classification of Virtual Goods

Kaajal Nagindas, Senior Associate, Spoor & Fisher / Image: Supplied

In the digital landscape, virtual goods and services, such as video games, music, virtual currencies, clothing, and avatars, also require intellectual property protection. Trade marks, which traditionally protect tangible goods and services, are being extended to include the digital realm, and internationally trade mark laws are evolving to reflect this trend.

The Nice Classification is an international classification of goods and services applied for the registration of marks. It is administered by the World Intellectual Property Organization (WIPO) and is used by trademark registries around the world. The Nice Classification is divided into 45 classes, each of which covers a specific category of goods or services.

The purpose of the Nice Classification is to ensure that trade marks are classified in a consistent and uniform manner across different jurisdictions. This makes it easier for Trade Mark Offices to process trade mark applications and for businesses to search for trade marks that are relevant to their goods or services.

To classify virtual goods and services for trade mark purposes, an innovative approach is needed. Various national Trade Mark Offices have issued guidelines to accommodate these digital assets, and the Nice Classification now includes categories for virtual goods and services.

European Union Intellectual Property Office (EUIPO)

The EUIPO issued guidelines in terms of which class 9 is the appropriate class for “virtual goods” because they are treated as digital content or images.

The terms “downloadable goods” and “virtual goods” lack clarity and precision and must be specified further, for example, “downloadable goods, namely, downloadable multimedia files” or “virtual goods, namely virtual clothing” in class 9 or “retail of virtual clothing” in class 35.

Services that relate to virtual or downloadable goods, as well as services provided online or in virtual environments, will be classified in line with the established trade mark principles of classification, looking at the underlying nature of the service and considering its impact in the real world.

For example, transport services in class 39 involve moving a good or person from one physical location to another. A service that conveys an avatar from one location to another in a virtual reality game may emulate transport services but, in the real world, the purpose is entertainment, and it will be classified accordingly. Therefore, for example, “virtual transport services for gaming purposes” is classified in class 41.

The term “providing a virtual environment” is not sufficiently clear nor precise as it can relate to different areas of activities and classes. The term must be defined further, and examples of acceptable terms include the following: “providing a virtual chatroom” and “providing access to a virtual environment” in class 38 and “hosting of a virtual environment” and “maintenance of a virtual environment” in class 42.

Australian Intellectual Property Office

The Australian IP Office issued guidelines for the classification of virtual goods, along with the metaverse, non-fungible tokens (NFTs) and blockchain technologies. Virtual goods fall in class 9 as they are objects made of data that are used in online environments. Broad claims such as “virtual goods” and “downloadable goods” are not acceptable, and applicants are required to specify the exact nature of the virtual goods and must include the specification of the software, music, clothing, or image file. The following is an example of an acceptable clarification of virtual goods: “downloadable virtual clothing.”

Services relating to virtual goods will be classified depending on the nature of the service, for example: “online retail services for downloadable virtual clothing” in class 35; “entertainment services provided in virtual environments” in class 41 and “hosting virtual environments” in class 42.

To determine the trade mark class of interest, the Office assesses services offered in virtual environments depending on the impact of the service in the real world.

In most instances, when the purpose of the service and the real-world impact of the service are the same (whether delivered virtually or in person), the virtual service will be classified with its real-world counterpart. For example, “banking” and “educational” services will fall in classes 36 and class 41, respectively, considering that the impact of these services is the same. The method of delivery does not alter the outcome. The preference is to use the term ‘virtual environments’ over ‘metaverse’.

However, where the impact of the service in the virtual environment is different from the real world, the virtual service will fall into a different class. For example, a “virtual restaurant in an online environment providing virtual food” will be classified in class 41 as an entertainment service, rather than a class 43 restaurant service. Similarly, “virtual travel simulations” do not entail physical transportation, resulting in classification under class 41 entertainment service rather than class 39 transportation service.

United Kingdom Intellectual Property Office (UKIPO)

The UKIPO has also published guidelines relating to the classification of NFTs, virtual goods and services provided in the metaverse. Unlike their physical counterparts, virtual goods are classified in class 9 because the goods to which they relate consist of data such as digital images. However, the virtual goods must be clearly defined with adequate clarity and conciseness. Trade mark applicants should avoid vague terms such as “virtual goods.” The UKIPO provides examples of terms that would be accepted such as “downloadable virtual clothing, footwear, or headgear” or “downloadable virtual handbags.”

In relation to virtual services, if a service is capable of being delivered by virtual means, such as via video-conferencing or instant messaging, the UKIPO will continue to accept these services in their original classes, such as “conducting interactive auctions via the metaverse” in class 35 and “education and training services provided via the metaverse” in class 41.

However, this is not possible for all “metaverse” services, for example when the metaverse service manifests differently in the metaverse than they do when delivered in the physical world. For example, whilst ordering food and drink inside the metaverse for delivery or consumption in the physical world would be categorised in class 43, providing food or drink for ‘consumption’ by an avatar within the metaverse, would not constitute a class 43 service and these types of services would be appropriately categorised into “entertainment services” in class 41, such as “provision of a virtual reality or metaverse based simulation gaming service”.

United States Patent and Trademark Office (USPTO)

The USPTO has provided the following guidance regarding the classification of virtual goods and services and below are examples of acceptable specifications.

Class 9: “Downloadable virtual goods in the nature of image files of sunglasses, jewellery, and handbags for use in online virtual worlds.”
Class 35: “Online retail store services rendered in a virtual environment featuring virtual goods, namely, furniture for use in online virtual worlds.”
Class 41: “Entertainment services, namely, providing online, non-downloadable virtual boats and airplanes for use in virtual environments created for entertainment purposes.”
Class 42: “Computing programming of virtual goods for use in virtual worlds.”

As with other countries, “virtual goods” must be specified and indicate the type of goods.

Regarding the likelihood of confusion, it is stated that the real and virtual goods must be compared based on the evidence of commercial relatedness between the real and virtual goods, along with the similarity of the marks.

Nice Classification updates

The 12th edition of the Nice Classification, which came into force on 1 January 2023, includes categories for registration of trade marks in relation to virtual goods and services.

The relevant classes are 41 (covering “online virtual guided tours”) and 42 (covering virtual computer systems through cloud computing”).

The updated 12th edition of the Nice Classification which comes into force on 1 January 2024, includes additional new categories for registration of trade marks in relation to virtual goods and services. The additional relevant classes and specifications include the following:

Class 9 – “downloadable application software for virtual environments”, “downloadable virtual clothing” and “virtual reality controllers”.
Class 35 – “Marketing through product placement for others in virtual environments” and “online detail services for downloadable virtual clothing”.
Class 36 – “Online banking services rendered in virtual environments”.
Class 38 – “Providing chat rooms in virtual environments” and “providing online virtual reality-based forums for work collaboration”.
Class 41 – “Entertainment services provided in virtual environments” and “simulated travel services provided in virtual environments for entertainment purposes”.
Class 42 – “Hosting software platforms for virtual reality-based work collaboration” and “hosting virtual environments”.

Key Take Aways

Guidelines on virtual goods and services for use in South Africa have not been published. However, the South African Trade Marks Office (CIPC) will apply the Nice Classification of Goods and Services. The Office may also be guided by the practice in other countries.

Virtual goods fall in class 9 because they are treated as digital content or images. Broad claims are not acceptable, and the virtual goods must be clearly defined, e.g., “downloadable virtual clothing.”

Virtual services will be classified with their real-world counterpart when the purpose of the service and real-world impact of the service is the same (whether delivered virtually or in person).

However, where the impact of the service in the virtual environment is different from the real world, the virtual service will fall into a different class, e.g., class 41 for “entertainment services”.

As the digital realm continues to develop and evolve, trade mark law evolves too, and the Nice Classifications and Trade Mark Offices will continue to evolve to keep pace with technological advancements.

By Kaajal Nagindas, Senior Associate, Spoor & Fisher