Virtual products, the metaverse, and non-fungible tokens (NFTs) have recently been expanding and receiving considerable attention from investors, the general public; as well as the art world – within the span of a year, NFT-backed virtual works of art have been reaching new height, from Beeple, Everydays: The First 5000 Days (March 2021 – US$ 69.3) to The Merge (December 2021 – US$ 91.8). Today, the most valuable living artist in history is a virtual work of art author (Pak, author of The Merge).

With the rise of this new market, numerous stakeholders have tried to expand the protection of these digital creations through trademark registration before the European Union Intellectual Property Office (EUIPO) or its national counterparts in the European Union. However, they also found that the current 11th Nice Classification lacked clarity and precision on that matter. Indeed, the “virtual goods” may represent an electronic version of an existing tangible goods, but the applicants were likely to face rejection from the trademark offices, as the classification as a “good” still requires a physical embodiment.

In June 2022, the EUIPO finally addressed this issue to provide clarity, by going on the record to consider virtual products (including NFTs, or more likely the underlying virtual works to which such NFTs would be appended) as digital content or images, hence belonging to Class 9 which encompasses instruments for science or research, audio-visual and information technology equipment, as well as security and safety equipment. This new approach is part of its 2023 draft Guidelines which aims at harmonising IP practices across the EUIPO, increasing predictability and ensuring compliance, consistency and coherence.

Consequently, virtual goods and NFTs will be added to the upcoming 12th edition of the Nice Classification. However, the EUIPO rightfully considers NFTs to be certificates, distinct from the virtual element they authenticate. A specific wording has been established in the draft directive, namely “downloadable digital files authenticated by non-fungible token”, the term “non-fungible token” being deemed, in and of itself, not acceptable by EUIPO without a proper link to the underlying asset.

The EUIPO is not going to further modify this Class to address all possible situation, but advises applicants to specify which content the virtual products are referring to, e.g.“downloadable virtual products, namely virtual pieces of furniture.

Concerning virtual services and NFTs, the actual principles are maintained and applicants need to refer to pre-established definitions.

This decision from EUIPO allows for the facilitation of virtual products and NFTs trademarks. Internal and external stakeholders have until 3 October 2022 to escalate observations on draft directives to the EUIPO.

First publication on the K&L Gates IP Blog in collaboration with Louise Bégué

K&L Gates ranked “Recommended” with Claude-Etienne Armingaud.

Source: Leaders League

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K&L Gates ranked “Highly Recommended” with Claude-Etienne Armingaud.

Source: Leaders League

K&L Gates ranked “Recommended” with Claude-Etienne Armingaud.

Source: Leaders League

Practice head:

Claude-Étienne Armingaud

Key clients

  • Kookai
  • Hyundai Motor Company
  • Nouvel Héritage
  • Nous – Concept Store
  • POC
  • Ravel Technology
  • AR24
  • Cybergun
  • Canal+

Work highlights

  • Assisted POC Sports with identifying and destroying counterfeit products seized by Belgian customs and implementing a successful process of customs enforcement of trade marks and intellectual property rights.
  • Representing Nous Concept in the defence of its trade marks in the context of litigation and subsequent trade mark fillings.
  • Assisting Jessy Séminor, a French start-up specialising in interior design, with various aspects pertaining to the development of its activities and the protection of its intangible assets and goodwill.

Source: Legal 500 – EMEA

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K&L Gates ranked “Highly Recommended” with Claude-Etienne Armingaud.

Source: Leaders League

K&L Gates ranked with Claude-Etienne Armingaud.

Source: Leaders League

Further to the adoption of the so-called Trademark Package at European level, comprised of Regulation no.2015/2424 (as codified by Regulation no.2017/1001 dated 14 June 2017) on EU Trademarks (the “Regulation”) and Directive no.2015/2436, harmonizing Member States’ trademark regime (the “Directive”), both dated 16 December 2015, France was due to update its internal regulatory framework.

The PACTE Act no. 2019-486, adopted on 22 May 2019, implemented the Trademark Package at long last. While the Regulation addressed EU aspects and is of direct enforcement within Member States, the Directive provided Member States with some leverage on the internal implementation.

These new aspects aim at simplifying the enforcement of intellectual property rights (“IPR”), for both trademarks and the patents, by creating administrative procedures, rather than having to introduce a judicial action before the courts.

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The European Union Court of Justice confirmed the intellectual property rights owned by the French company “Forge de Laguiole”, but solely in areas in which it pursued an actual business activity.

A decision (Judgement dated 5 April 2017 of the Second Chamber of the EU Court of Justice, No C-598/14Szajner”) dated 5 April 2017 of the European Union Court of Justice (“EUCJ”) put an end to the longstanding series of court decisions about the Laguiole trademark before the European Union jurisdictions (“EU Jurisdictions”), on which relied the right for French company “Forge de Laguiole” to keep using its business name. This decision also gave the EUCJ the opportunity to clarify the application of national case law by the EU Jurisdictions within the framework of proceedings based on Article 8 (4) of Council Regulation (EC) No 207/2009 dated 26 February 2009 on the Community trade mark (the “Regulation”).

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As stated in a previous article published in the Trademark and Unfair Competition Bulletin1)“FR – Creation of a new industrial property right in France : « The Geographical indication of industrial and handicraft products »”, … Continue reading, the Act no. 2014–344 on consumer protection, named “Hamon Act” and dated March 17, 2014, created a new industrial property right: the “Geographical Indications protecting Industrial Products and Crafts” (or “Indications Géographiques protégeant les Produits Industriels et Artisanaux”, hereinater, “IGPIA”) in order to include industrial and handicraft products in the scope of the protection of geographical indications.

In the same article, the authors highlighted the fact that prior to the implementation of the aforementioned provision, there was a lack of protection since a third party could use the name of a famous place or city and register it as a trademark to misleadingly sell handicraft products under that name.

Introduction to the Laguiole case

A famous example was the “Laguiole cutlery” case where a third party, among others, was using the famous French city name of “Laguiole” as a trademark to flood the market with knives made in China under that brand. Following the scandal that ensued, the Laguiole municipality launched an action against several companies and legal persons that had registered 27 trademarks in total, on the ground that such use of “Laguiole” was deceptive.

Indeed, the trademark “Laguiole” had been filled in almost all trademarks’ classes and therefore the Laguiole municipality was prevented from using such trademark for its own activities, and in particular for its renowned cheese and cutlery.

After a first instance ruling, the Paris Court of Appeal rejected the Laguiole municipality’s action in 2014 which was subsequently presented to the French Supreme Court (“Cour de cassation”).

The Cour de cassation ruling
By a ruling dated 4 October 2016, the Cour de cassation overturned parts of the ruling of the Court of Appeal and welcomed the argumentation of the Laguiole municipality.

Indeed, the Cour de cassation considered that the use of the “Laguiole” trademark by the defendants was misleading and confusing to consumers since the products sold under that trademark were not manufactured in such place.

In addition to such argument based on consumer protection laws, several arguments grounded on trademark law were also favorably received by the Cour de cassation. However, as such Court only has jurisdiction over legal qualification but not on facts, the end of this saga will be written by the Court of Appeal to which the case has been remanded to for the final ruling.

This Court of Appeal will hopefully close the ongoing debate. However, such Court of Appeal may also side with the initial Court of Appeal ruling. In such a case, the Cour de cassation may have to hear the case again.

Nevertheless, such litigation intervenes in a context where IGPIA have effectively become protected. Even if Laguiole was not among the five applications filed for IGPIA in France (out of which only one has been granted so far), the broad power given to geographical indications with the adoption of the European Regulation No 2015/2424 amending the Community Trade Mark Regulation and the European Directive No 2015/2436 approximating the laws of the Member States relating to trade marks may have an impact on players’ practices.

Indeed, according to these Regulations, the national right granted on geographical indications through IGPIA or otherwise conferred by the courts, may materialize a ground for refusal for not only trademarks applications but also European trademarks. There is thus a strong incentive to seek this protection by any means necessary.

In collaboration with Clémence Marolla.

First publication in the K&L Gates Trademarks & Unfair Competition Bulletin, 1/2017 – Avril 2017

References

References
1 “FR – Creation of a new industrial property right in France : « The Geographical indication of industrial and handicraft products »”, Olivia Roche and Claude-Etienne Armingaud, TM and Unfair Competition Bulletin, no. 2/2014 (14)