IP and Metaverse : Virtual Goods and Trademarks

Introduction : The digital economy is rapidly transforming from a marketplace confined to websites and e-commerce platforms into immersive virtual environments where users can purchase, sell, display and interact with digital assets. A shopper today can buy a pair of sneakers, put them on an avatar and walk that avatar through a virtual store that looks remarkably like the flagship outlet on the high street. The metaverse can be defined as interconnected virtual spaces that have created entirely new commercial opportunities by enabling businesses to market virtual clothing, accessories, luxury goods, gaming equipment, artworks and even real estate.

Unlike conventional e-commerce, the metaverse allows consumers to own and use digital products through avatars while simultaneously interacting with other users in persistent virtual environments. This technological transition has compelled brand owners to rethink the manner in which intellectual property rights, particularly trademarks, are protected. 

This blog traces how brands are extending their trademarks into virtual environments, examines the classification regime that has emerged for virtual goods and services, discusses the recent global filings and disputes that are shaping Indian strategy and closes with a practical roadmap for brand owners entering the metaverse.

Legal Provisions

A. The Statutory Framework in India

Although no specific statute currently governs the metaverse, the Trade Marks Act, 1999 provides a comprehensive legal framework for extending protection to virtual goods and services through its existing provisions. The Act’s Section 2(1)(zb) defines a trademark broadly as a mark capable of distinguishing the goods or services of one person from another, including shapes, packaging, and colour combinations, which is sufficiently expansive to encompass digital products and virtual services. Furthermore, Section 18 permits any proprietor to apply for registration in respect of goods or services. This provision is considered technologically neutral, meaning it does not restrict registration to tangible products despite being enacted before the emergence of the metaverse.

Once registered, Section 28 grants proprietors the exclusive right to use the mark and the authority to institute infringement proceedings against unauthorised users in virtual spaces. Statutory protection is further strengthened by Section 29, which prohibits the use of identical or deceptively similar marks likely to cause consumer confusion. Finally, Section 27 preserves the common law remedy of passing off, enabling businesses to restrain the unauthorised commercial exploitation of their goodwill in the metaverse even in circumstances where specific registrations for virtual goods may not yet exist.

B. The Nice Classification and Virtual Goods

India follows the Nice Classification, an internationally harmonised system administered by WIPO that divides goods into Classes 1 to 34 and services into Classes 35 to 45. The classification of virtual goods first came up for discussion before the Committee of Experts of the Nice Union in 2022, following a proposal from the Swiss Intellectual Property Office. At its Thirty-Third Session in 2023, the Committee resolved that virtual goods should be classified under Class 9, which covers downloadable software and digital content, regardless of the class in which their physical equivalents fall. Virtual services, by contrast, are classified according to their underlying purpose rather than the environment in which they are rendered; where the purpose remains unchanged online, the corresponding real-world class continues to apply and where the purpose changes because of the virtual setting, an analogous class such as Class 35 (retail and marketing), Class 36 (financial services) or Class 41 (entertainment) becomes relevant.

C. Guidance from the EUIPO and the Benelux Office

The European Union Intellectual Property Office revised its Examination Guidelines in 2023 to require that terms such as “virtual goods” and “NFT” be specified further, for instance as “downloadable virtual clothing” or “downloadable digital art authenticated by non-fungible tokens”, since the generic terms alone are considered insufficiently clear for classification purposes. The Benelux Office for Intellectual Property has adopted a similar approach, confirming that virtual goods are always classified in Class 9 and that services connected with virtual goods are classified according to the effect the service produces, mirroring the Nice Committee’s purpose-based test.

Legal Analysis

A. How Brands Are Extending Trademarks into the Metaverse

Two broad strategies have emerged for brand owners entering virtual environments. The first is proactive registration: filing under Class 9 for virtual goods well before any actual virtual product launches, thereby establishing priority. Nike illustrates this approach through its patented “CryptoKicks” system, which links a physical sneaker purchase to a cryptographically authenticated digital twin, and through its acquisition of the virtual sneaker studio RTFKT to build out its “Nikeland” presence. In India, Tata Tea Premium’s virtual Holi experience and the NFT-related Class 9 filings by Infosys and Mahindra & Mahindra reflect the same instinct to secure the mark before third parties can exploit the gap. The second strategy is monitoring and opposition: rather than filing pre-emptively across every conceivable virtual product, a brand owner watches the register and opposes conflicting applications as they arise, trading upfront registration costs for the ongoing cost of vigilance and potential litigation.

B. Classification Complexities for Goods and Services

The current classification of virtual goods under Class 9 creates a structural anomaly where brands, such as fashion houses traditionally registered under Class 25, must now seek separate registrations for their digital counterparts because they are treated as legally distinct assets. To avoid provisional refusal and ensure clarity, registries now require applicants to move beyond generic terms like “virtual goods” or “metaverse” and instead provide precise specifications, such as “downloadable virtual clothing”. For services, classification hinges on a purpose-based test. While services with unaltered outcomes, such as online banking, remain in their original classes, those whose nature changes in a digital environment, such as a travel agency offering “virtual vacations” that cannot replicate physical travel, must move to analogous classes like Class 41 for entertainment. 

C. Global Filings and Disputes Shaping Indian Strategy

The rapid commercialisation of the metaverse has transformed trademark protection from a defensive legal mechanism into a strategic business necessity. Recognising the commercial potential of virtual commerce, multinational corporations have proactively expanded their trademark portfolios to include downloadable virtual goods, NFT-authenticated products, virtual retail stores and immersive entertainment services. One of the earliest corporate responses to the metaverse was the filing of extensive trademark applications covering virtual goods and services. Nike emerged as one of the most proactive brand owners in this regard.

It filed multiple trademark applications covering downloadable virtual footwear, clothing, sports equipment and online retail services before launching NIKELAND, an immersive virtual platform hosted on Roblox. The platform enables users to purchase digital apparel for their avatars while simultaneously strengthening consumer engagement with Nike's physical products. Similarly, Gucci has collaborated with Roblox to create immersive retail experiences featuring limited-edition virtual handbags, apparel and accessories. The retail sector has likewise embraced metaverse commerce. Walmart, McDonald's, L'Oréal, Samsung, Mastercard and American Express have filed trademark applications covering virtual retail stores, downloadable consumer goods, blockchain-enabled payment services and virtual entertainment platforms.

Relevant Case Laws

Hermès International v. Rothschild, No. 1:22-cv-03204 (S.D.N.Y. 2023): In this case, a federal jury delivered a landmark verdict finding that Mason Rothschild’s “MetaBirkins” NFTs which are digital images depicting fur-covered handbags, infringed Hermès’ trademark rights. The litigation was examined under the Rogers v. Grimaldi test, which affords First Amendment protection to artistic works unless the use of a trademark is artistically irrelevant or explicitly misleading as to source or sponsorship.

Although the district court permitted the claims to proceed under this framework, the jury ultimately concluded that Rothschild’s use of the “Birkin” mark was not protected because it was likely to mislead consumers into believing that Hermès had authorised or was associated with the project. The jury awarded Hermès $133,000 in damages, and the case is widely regarded as one of the first major U.S. decisions to apply traditional trademark principles to NFT-based products, reinforcing that trademark protection and the law of consumer confusion extend to commercially exploited virtual assets.

E.S.S. Entertainment 2000, Inc. v. Rockstar Videos, Inc., 547 F.3d 1095 (9th Cir. 2008): The Ninth Circuit held that Rockstar’s fictional depiction of the “Play Pen” strip club as the “Pig Pen” in the Grand Theft Auto: San Andreas video game was protected under the First Amendment. Applying the Rogers test, the court found that the use of the mark possessed at least some artistic relevance to Rockstar’s objective of creating a fictional, satirical representation of East Los Angeles and was not explicitly misleading as to the source or content of the game. The court therefore concluded that expressive uses of trademarks within creative works warrant constitutional protection where they do not function as source identifiers or create consumer confusion, distinguishing such uses from commercial exploitation of marks in the marketplace.

Yuga Labs, Inc. v. Ryder Ripps, 157 F.4th (9th Cir. 2025): The creators of the Bored Ape Yacht Club (BAYC) NFT collection instituted trademark infringement and cybersquatting proceedings against Ryder Ripps and Jeremy Cahen for marketing the RR/BAYC NFT collection, which reproduced identical ape images, Ape IDs, and BAYC branding while claiming to constitute artistic criticism and parody. The Ninth Circuit held that NFTs constitute "goods" within the meaning of the Lanham Act and are therefore entitled to trademark protection. The Court further rejected the defendants' contention that the NFT collection qualified as a protected expressive work under the First Amendment, reaffirming that traditional trademark principles extend to commercially exploited digital assets and virtual goods.

Practical Implications: A Roadmap for Brand Owners

The rapid evolution of virtual commerce presents Indian businesses with both unprecedented opportunities and significant legal challenges. As consumer interactions increasingly extend into immersive digital environments, brand owners can no longer afford to treat the metaverse as a speculative technological trend. Instead, it must be viewed as an emerging marketplace requiring proactive intellectual property management. Although India's existing trademark framework is sufficiently flexible to accommodate many aspects of virtual commerce, businesses must adopt forward-looking legal strategies to minimise infringement risks and preserve the commercial value of their brands. For a brand owner assessing entry into the metaverse, the practical priorities can be organised into five steps.

1. Applications should specify the exact virtual product, for example “downloadable virtual clothing” or “downloadable digital image files authenticated by non-fungible tokens”, rather than relying on the bare terms “virtual goods” or “metaverse”, which registries increasingly reject as insufficiently precise.

2. Register in Class 9 in addition to the conventional class. A brand that has only ever registered under Class 25, Class 18 or a similar goods class should not assume that registration extends to virtual equivalents. A separate Class 9 application is required and Classes 35, 36 or 41 should be considered for associated services depending on their purpose.

3. Choose between pre-emptive filing and active monitoring. Brands with the resources to file broadly should do so before entering a market; others can adopt a monitoring and opposition strategy, provided they are prepared for the litigation costs that approach can generate.

4. Preserve evidence of use and of any infringement in a form that will withstand judicial scrutiny. As the application of Section 63 of the Bharatiya Sakshya Adhiniyam, 2023 to blockchain-based records remains judicially untested, brand owners should maintain parallel, verifiable records of virtual product launches, marketing directed at Indian consumers, and any third-party misuse encountered on metaverse platforms.

5. Plan for jurisdiction before a dispute arises. Given the absence of Indian precedent under Section 134 for purely virtual infringement, brand owners should identify the platforms and markets where their consumers are actually located, since overseas rulings suggest that the place where a mark is presented to the relevant public, rather than the location of the platform’s servers, is likely to determine jurisdiction and genuine use.

Conclusion

The metaverse has fundamentally redefined the relationship between trademarks, commerce and consumer engagement. Brands are no longer confined to physical marketplaces but increasingly exist as valuable commercial assets within immersive digital environments where consumers purchase, interact with and derive value from virtual goods and services. The core function of a trademark, distinguishing the origin of goods and services, does not change merely because the goods and services in question are virtual. What has changed and continues to change rapidly is the classification and enforcement architecture built around that function.

Author: Damita in case of any queries please contact/write back to us via email to content@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

Endnotes / References

1. The Trade Marks Act, No. 47 of 1999, Acts of Parliament, 1999 (India).

2. The Trade Marks Rules, 2017, G.S.R. 258(E), Gazette of India, Extraordinary, Mar. 6, 2017 (India).

3. The Bharatiya Sakshya Adhiniyam, No. 47 of 2023, Acts of Parliament, 2023 (India).

4. Nice Classification (NCL), 12th ed., World Intell. Prop. Org. (2023).

5. European Union Intellectual Property Office, Guidelines for Examination of European Union Trade Marks pt. B, § 6.25 (2023).

6. Benelux Office for Intellectual Property, Classification of Virtual Goods and Services (updated Aug. 22, 2023).

7. Hermès Int'l v. Rothschild, 590 F. Supp. 3d 647 (S.D.N.Y. 2023).

8. E.S.S. Entertainment 2000, Inc. v. Rockstar Videos, Inc., 547 F.3d 1095 (9th Cir. 2008).

9. Yuga Labs, Inc. v. Ripps, 157 F.4th (9th Cir. 2025).