Trademarking NFTs: Difference from Traditional Trademarks

A trademark can be any word, phrase, symbol, or design identifying the commercial source of a product or service. Trademark rights arise through using a mark in commerce to distinguish goods or services. Benefits of federal trademark registration include: 

• National presumption of ownership 

• Legal presumption of validity 

• Ability to sue for infringement 

• Official notice to others of trademark rights 

Examples of famous trademarks include Coca-Cola®, McDonald’s® golden arches, Apple’s® logo, and Nike’s® Swoosh symbol. These marks denote a single commercial source that consumers recognize. 

Trademarks related to NFT projects identify and distinguish the content associated with branded NFTs. However, the nature of NFTs poses unique challenges for trademark owners. 

Challenges with Trademarking NFTs 

NFTs strain traditional notions of trademark validity due to: 

1. Anonymous creators: Validity could be challenged for brands focused on anonymity without a named commercial entity. 
2. Content for single editions: The majority of branded NFT initiatives revolve around single pieces or limited editions. 
3. NFTs as goods and services: An NFT can represent both digital artwork (a good) and a smart contract service executing sales and transfers on the blockchain. 
4. Commercial use ambiguity: While traditional trademark use is associated with the sale of goods or services, non-traditional trademark transactions may not always be represented by NFTs. 

When filing a trademark application for branded content in connection with NFT offerings, special care is needed. The USPTO has provided some guidance on these issues. 

USPTO Guidance for NFT Trademarks 

In January 2022, the USPTO issued a document titled Non-Fungible Tokens (“NFTs”) and Intellectual Property Considerations. This guidance addresses various IP issues posed by NFTs. 

For trademark validity, the USPTO provided two key points: 

• Use in Commerce Requirement: An applicant using a mark with an NFT satisfies the use in commerce requirement when the mark is used or displayed in connection with the online NFT marketplace where the content is offered for sale. 

• Use with Underlying NFT Asset: The use of a trademark with an underlying NFT asset offered for sale constitutes use of the mark in connection with goods or services under the Lanham Act. 

Selling or displaying a branded NFT through an online NFT marketplace meets the commercial use standards for federal trademark registration. This clarification helps NFT creators claim IP protection more confidently. 

Elements of the NFT Trademark Process 

To seek federal registration for NFT trademarks, follow these steps: 

• Classify the NFT: Most NFT marks qualify for registration under these classes: 

• Class 9: Downloadable non-fungible collectible digital assets 

• Class 35: Online retail store services featuring digital collectibles 

• Class 42: Non-fungible token design, minting, and storage services 

• Searching: Assess any likelihood of confusion with existing marks. Evaluating possible marks early helps avoid receiving an initial refusal. Anticipating potential grades in advance aids in preventing an initial rejection.  

• Getting the Application Ready: Name the commercial source, categorize the products or services, show the branded picture or logo, and explain how the mark is used in commerce.  

• Review Process: A reviewing attorney assesses the application based on legal requirements, commercial use validity, and distinctiveness, among other factors. They could send out letters of rejection or clarification asking for an answer. 

• Registration Granted: Upon fulfillment of all legal requirements, a federal registration with exclusive national rights is certified by the USPTO. 

• Monitor and Renew: Registered marks must be monitored for potential infringement and continually renewed. 

Strategic Considerations for New Applications 

For new NFT trademark applications, consider these strategies: 

• Make a claim about the mark’s colors and design by highlighting visual components such as logo images and highlighting the mark’s unique colors and design. 

• Specify goods and services: Carefully classify the commercial nature (goods vs. services) of the underlying NFT asset and connect it to the application’s use of trademarks. 

• Update specimen evidence: Provide URL links and images showing the use of the branded NFT project across the online NFT marketplace as specimens to satisfy commercial use requirements. 

• Argue validity as early adoption: Emphasize adoption at the cutting edge for brands tied to digital assets to justify validity despite unusual IP scenarios posed by NFTs. 

Comparing Application Costs 

When considering NFT trademark registration, the financial investment must be weighed. How do the expenses stack up against conventional trademark applications? 

• USPTO fees: Registering marks starts at several hundred dollars for a single class, increasing with additional classes and components. Complex applications get exponentially more expensive. 

• Anticipated fee levels: NFT trademarks should expect similar fees to traditional marks. However, due to the digital realm’s legal complexities, hiring an experienced trademark attorney is advisable. 

DIY filing without a lawyer may undermine validity or leave openings for future counterfeiting, devaluing NFT assets tied to branding. An investment in professional support strengthens IP protection.