Although the hype around Blockchain, Metaverse and Web3 has been overtaken by the hype around Artificial Intelligence, Web3 remains highly relevant for brands in various industries.
The rapid development of digital technologies has opened up new marketing dimensions, particularly with the emergence of blockchain-based Web3. This article looks firstly at the role of immersive marketing and brand development in virtual environments, namely the extended reach and deeper customer engagements enabled by virtual environments. Secondly, it addresses the legal challenges that arise as a result.
Immersive marketing: the new reality of brands
Immersive marketing refers to strategies that aim to fully immerse consumers in a brand world. Through virtual reality (VR) and augmented reality (AR), companies can create customized, interactive experiences that are deeply memorable. From virtual showrooms to AR campaigns – the possibilities are almost limitless.
Immersive marketing offers numerous benefits through the integration of blockchain technology and non-fungible tokens (NFTs). These technologies enable digital ownership, opening up new “phygital” experiences where physical and digital worlds merge. This enables companies to be closer to their customers and personalize their experience.
In addition to fashion and luxury brands, the gaming industry, artists, the automotive industry and sports players have also opted for Web3 as a marketing and sales channel.
Non-fungible tokens (NFT) as certificates of authenticity
An NFT is a unique digital certificate that is registered in a blockchain and serves to record ownership of an asset, for example a digital work of art, or that acts as a certificate of authenticity for a physical product (Swiss Federal Institute of Intellectual Property (IPI) Trade Mark Guidelines, Part 2 Section 4.16.2).
In combination with near field communication (NFC) chips or radio frequency identity (RFID) chips, NFTs are used by luxury brands as certificates of authenticity. They enable the traceability of original goods and thus serve to prevent and combat piracy.
Examples of such authentication platforms include the Zurich-based luxury tech start-up Vivents, which is also a marketplace, and the Aura Blockchain Consortium, which is driving forward the introduction of blockchain solutions for the traceability of original goods for the luxury industry worldwide.
Well-known examples from the field
Luxury Brands
Mercedes-Benz was one of the first car manufacturers to set up a VR showroom where online visitors can see detailed renderings of the latest and most luxurious exteriors and interiors.
Nike and their Nike RTFKT NFTs for digital sneakers, Prada and their Prada Timecapsule, Balmain and their limited edition NFTs X SPACE RUNNERS are just a few of the many examples of successful marketing on the web3.
Luxury brand Lalique created the phygital perfume “Les Muses Rose Nebula” in collaboration with Vivents. With its global digital strategy, Lalique aims to create unique and exclusive experiences for an engaged and technology-savvy target group. Keller Schneider was able to provide trademark support and ensure that Lalique pursues an adequate protection strategy.
Sports
Sports organizations and clubs are also using NFTs to increase fan engagement and generate new revenue streams. Through NFTs, fans can own digital memorabilia, participate in virtual events or receive exclusive access. One example of this is NBA Top Shot, a platform where fans can buy, sell and trade official NBA collectibles that include digital video clips of game highlights. The Swiss Ice Hockey Federation SIHF launched ice hockey pucks “Eisgenoss”, which allow owners to unlock exclusive content, participate in unique digital experiences and access certain rights associated with the Eisgenoss via Vivent’s blockchain platform.
Art
Blockchain technology and NFTs allow artists to market their digital and physical artworks directly without relying on intermediaries. NFTs secure ownership of digital artworks that would otherwise be easily copied. In addition, NFTs can serve as digital certificates for physical artworks, making it easier to trade them online and therefore worldwide. In the field of art, securing the top level domain (TLD) .io is of great importance. Keller Schneider also has the necessary experience in this area.
Legal aspects in virtual environments
General Terms and Conditions (GTC)
Due to the ongoing development, there is still no legal certainty regarding the legal categorization of NFTs and smart contracts. It is therefore highly recommended to check the general terms and conditions of the application providers in order to understand your own rights and obligations. For their part, it is important for the providers of blockchain-based solutions to have GTCs that reflect the facts and provide legal certainty and clarity regarding the rights and obligations of the parties involved. It is also important to clearly define the applicable law and the place of jurisdiction.
By incorporating appropriate license clauses, the rights holders can use smart contracts to receive license fees for each resale. Smart contracts are software designed to automatically execute actions in accordance with the terms of the underlying agreement (often the underlying GTC).
Web3 domain names
The enforcement of trademark rights in the event of unauthorized domain name squatting is significantly more difficult in Web3 due to the lack of a central administrative and dispute resolution organization (comparable to ICANN and WIPO for Internet domain names) and the multiple anonymity of the parties involved in Web3. In many cases, the “first come, first served” principle applies.
It is therefore crucial for holders of intellectual property rights active in Web3 to secure corresponding Web3 domain names at an early stage.
Top level domain .io
In the field of art, securing the .io TLD is of great importance. Due to its similarity to “I/O”, the TLD .io is intended for products in the IT industry including NFT platforms or other Web3 applications. “I/O” (input/output) refers to any process, program or device that transfers data to or from a computer. Keller Schneider has the necessary experience in this area to support its clients.
Trademark classification of products and services
For trademark and design owners who wish to use their trademarks and designs in virtual environments in connection with the distribution of virtual goods and/or services, it is important to work out the trademark and design strategy, examine their own IP portfolios and, if necessary, register trademarks for virtual goods and/or services.
Trademark owners who are not yet planning any marketing or distribution via Web3 applications in the near future are also faced with an important decision, especially if the trademark is not well-known within the meaning of Art. 15 MSchG and therefore does not enjoy cross-class trademark protection. Without such extended trademark protection, the question arises as to whether a defensive trademark application makes sense. Such an application prevents third parties from claiming the trademark in virtual environments. On the other hand, the use of a trademark must be commenced within 5 years of registration. Otherwise the risk of cancellation action by third parties arises. The question of whether use of the trademark in the analog world is sufficient for use of the trademark to preserve rights for the claimed virtual goods and services has not yet been clarified in case law.
In connection with Web3, the following Nice classes can be considered for Swiss trademarks (IPI Trademark Guidelines, Part 2 Section 4.16.2):
– Class 9 for virtual goods, which must be specified in more detail; examples of permissible wording : “downloadable virtual clothing”, “downloadable virtual toys”, “downloadable virtual building materials”
If non-fungible tokens are to be classified in relation to goods, the goods
that are authenticated by NFTs must be named. Examples of permissible formulations: “downloadable digital image files authenticated by non-fungible tokens [NFTs]
files”; ‘downloadable virtual shoes authenticated by non-fungible tokens [NFTs]’.
In the case of services, a distinction must be made as follows: In principle, the means by which a service is provided has no impact on the classification of the service. For example, financial advice is classified in class 36, regardless of whether the service is provided in person, by telephone, online or in a virtual environment. However, this does not apply if the purpose or result of a service changes due to the means or place of its provision. Transportation services or catering services, for example, do not have the same purpose or result in a virtual environment and must be classified in the appropriate class 41.
Examples:
– Class 41: “Entertainment services relating to material processing provided in virtual environments”, “Training services relating to material processing provided in virtual environments”, “Catering services simulated in virtual environments for entertainment purposes”, “Entertainment services provided in virtual environments”
– Class 42: ‘Online provision of non-downloadable software for minting non-fungible tokens [NFTs]’
– Other services provided in virtual environments include classes 35, 36 or 38 (chat rooms).
Conclusion
Blockchain, Metaverse and Web3 open up unprecedented opportunities for brands to create immersive and customized experiences for their customers. Companies that use these technologies can build deeper customer relationships and significantly expand their reach. Particularly exciting are the applications of NFTs as certificates of authenticity that safeguard the value of both digital and physical products. Real-life examples such as the innovative projects of Mercedes-Benz, Nike and Lalique show the enormous potential of these technologies.
However, the integration of Web3 and NFTs brings with it a number of legal challenges. Brand owners have to deal intensively with applicable laws and regulations, particularly with regard to general terms and conditions, Web3 domain names and the classification of goods claimed by their trademarks. Securing rights at an early stage and clear legal protection are crucial to operating successfully in the virtual space.
Keller Schneider is there for you to help you master legal aspects and make the most of opportunities. With our comprehensive knowledge and experience in trademark law, we support you in the legal protection of innovative projects, including in (new) digital technologies.
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