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

Practice head(s):Claude-Etienne Armingaud

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K&L Gates ranked “Recommended – Band 2” with Claude-Etienne Armingaud.

Source: Leaders League

Italian law no.12/19 dated 11 January 2019 (the “Law”) came into force on 13 February 2019 and cemented the legal enforceability of electronic timestamping performed through blockchain technologies.

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Amidst the international tidal wave caused by the entry into force of the EU General Data Protection Regulation (“GDPR”) in May 2018, many half, or even false truths have been spread about hindrance on a global scale of innovative technologies. However, we must keep in mind that Europe has adopted a long-standing position of technology-neutral regulations and data protection is no exception.

Indeed, from a GDPR perspective, no technology would be prohibited or regulated by nature – only its application to a specific purpose may be regulated, inasmuch as it involves personal data -whether relating to the participants and miners or the payload data itself- and falls within its broad geographical scope (see our previous Alert for more details).
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The French Autorité des Marchés Financiers has recently published a synthesis of the contributions it received in response to its public consultation on Initial Coin Offerings (ICOs) to obtain stakeholder views on how these new types of blockchain offerings might be regulated.

The consultation included a presentation of ICOs, a warning on the risks they present, a legal analysis of ICOs with respect to the rules overseen by the AMF and the regulatory options proposed by the AMF. Respondents were invited to give their views on all of these points.

The English version of the synthesis can be found here, the French version here and our previous coverage of the consultation can be found here.

First published on K&L Gates Fintech Law Blog.

On 26 October 2017, France’s Financial Markets Authority, the “Autorité des Marchés Financiers” (“AMF”), published a discussion paper focusing on initial coin offerings (“ICOs”) that highlights the (many) dangers that arise from these unregulated transactions and discusses the regulation options that it currently foresees.
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Further to the adoption of Act no.2016-1691, dated 9 December 2016, on Transparency, Anti-Corruption and Modernization of Economic Life (“Sapin II” – see our compliance coverage here) and the public consultation whose results were made public on 30 August 2017 (see our coverage here), the French Ministry of Finance published a draft document aiming at adapting the French legal framework to the use of blockchain technology.

The proposed draft (which may be accessed here in French) address the possibility, for company, to register in a “shared electronic registry”:

  • Negotiable debt securities;
  • Units or shares of undertakings for collective investment;
  • Capital securities issued by corporations and debt securities other than negotiable debt securities, provided that they are not traded on a trading platform

The conditions under which such registration would possible expressly exclude any item admitted to the operations of a central depository or delivered in a system for the payment and delivery of financial instruments. In addition, the bylaws of the issuer must expressly provide for the possibility to use such shared electronic registries.

In any case, the French regulatory framework would subject to French law whenever the issuer is headquartered in France or the issuance itself is already governed by French law.

Additional technical measures will subsequently be devised by a supplementing Decree, in order to provide the required safeguards.

While assessing the relevancy of a blockchain framework for corporate titles remains difficult in the absence of such technical details, all players are welcome to provide the Ministry with observations on the proposed framework until 9 October 2017.

First published on the K&L Gates Fintech Law Blog with Emilie Oberlis.