Trademarking in the Metaverse: EU General Court contradicts current EU IPO practice on virtual goods

Guidance from the EU IPO issued in 2024 suggested that the metaverse and digital goods are too novel for assumptions to be made regarding the similarity between physical and virtual goods. However, a recent General Court decision contradicts these guidelines. According to the General Court decision in Case T-1163/23 Glashütter Uhrenbetrieb GmbH v EU IPO, where a reputation already exists for physical goods, the production of the same goods in the virtual world is a “logical extension” of that reputation and no evidence needed to be submitted in support of the extension of the reputation into the digital world.

Background

Glashütter Uhrenbetrieb GmbH (“Glashütter”), filed an application at the EU IPO in July 2022 for the following logo mark:

The application covered a range of goods and services in classes 9, 35 and 41, all of which related to digital goods representing clocks, watches and similar horological instruments designed to be used in online virtual worlds.

The EU IPO rejected the application on the basis that the mark lacked distinctive character in relation to the goods and services applied for. Glashütter appealed the decision to the Board of Appeal, but the appeal was rejected. Both the first instance Examiner and the Board of Appeal held that the mark applied for would evoke the city of Glashütte, Germany, which has a significant repute amongst the German public in the field of watchmaking. Even though the goods applied for were virtual representations of watches, clocks etc, the repute of the city in relation to the manufacture of physical watches was enough to mean the mark lacked distinctive character.

General Court Decision

Glashütter filed a further appeal to the General Court, criticising the Board of Appeal for reaching the wrong conclusion by making four errors relating to:

1. the reputation of Glashütte for watchmaking, whilst it was accepted that the city is known for watchmaking, Glashütter argued that this reputation was limited to the public in Germany and was not more generally known throughout the EU.
2. extending that reputation to virtual goods and services
3. overlooking the distinctive character of the mark applied for, in particular not paying sufficient attention to the visual impression produced by the log.
4. overlooking the registration of a similar mark which Glashütter had previously filed and which was accepted in class 14 without any objection.

It is the second of these grounds of appeal which we will focus on, however, for completeness we note that all four complaints made by Glashütter were rejected by the General Court.

Virtual v physical goods

By its second complaint, Glashütter raised an interesting criticism of the Board of Appeal alleging that it had transferred the reputation of Glashütte in the field of traditional watchmaking into the virtual sphere. Glashütter argued that the city of Glashütte had no reputation in relation to the production of virtual products, in particular it had no reputation for the production of representations of watches for use in the virtual world and there is no evidence linking the city with virtual goods or services.

Glashütter also argued that the Board of Appeal failed to recognise the substantial difference between physical and virtual products, which is enough to prevent the transfer of reputation from the physical world to the virtual world. According to Glashütter, the transfer of the reputation was based on an unfounded assumption, as opposed to actual knowledge, that the public interested in physical watches overlaps with the public interested in virtual watches.

The General Court assessed and summarised established case law relating to the assessment of distinctive character of a mark which is also an advertising slogan or indication of quality, ultimately finding that the Board of Appeal rightly considered that the name Glashütte would evoke a town famous for watch making in the mind of the German public.

Regarding the virtual nature of the goods applied for, the General Court held

“it must be considered that the relevant public will, in principle, perceive virtual goods and services in the same way as it perceives the corresponding real goods and services. The nature of the goods and services in question is therefore decisive. Thus, if virtual goods merely represent real goods or if virtual goods represent or emulate the functions of real goods, or if virtual services emulate the functions of real services in the virtual world, a transfer of the relevant public’s perception of the real goods and services to the corresponding virtual goods and services may, in principle, be established.”

Accordingly, the General Court dismissed this ground of appeal, finding that the Board of Appeal had rightly transferred the reputation of Glashütte from physical watches to virtual ones as the German public will directly perceive the mark applied for as a logical extension of the reputation of the city.

Comment

The approach of the General Court is an interesting one as it conflicts with the approach we have seen in other cases considering the similarity (or dissimilarity) between physical goods and virtual representations of those goods.

We have previously reported on the Vinicio EU IPO opposition decision, in that case the EU IPO had to assess whether physical cosmetics were similar to the retail of virtual representations of cosmetics. In that case, it was held that the technology associated with virtual goods is still very novel and for the time being it cannot be assumed that any particular market practices have been established. Without evidence, the EU IPO was unable to conclude that consumers would consider physical goods and the retail of virtual representations of those same goods as originating from the same entity. This approach aligns with guidance published by the EU IPO on the topic, which essentially laid out that the EU IPO would not make any assumptions, and the burden is on the parties to evidence the real world situation.

The General Court decision appears to be entirely contrary to the guidance laid to by the EU IPO and the approach the EU IPO has taken in recent decisions. It seems surprising that, in the context of assessing the distinctiveness of a mark, the General Court was happy to accept without any evidence being put forward, that the public will transfer the reputation of a physical goods maker into the virtual sphere as this represents a “logical extension” of the business.  This is even more surprising bearing in mind that the case did not involve the reputation of a physical entity, which might reasonably expand into the virtual world, but rather it involved the repute of a city in German for manufacturing physical goods and it seems like a significant leap that an entire city would suddenly become known for producing virtual versions of those goods.

I am struggling to see how these two approaches can be aligned, and the fact the questions were raised in different contexts does not go anyway to help explain the difference in approach. Either the emergence of virtual worlds is too novel and we cannot yet make any assumptions about how consumers will understand the interaction between the real and the virtual world, or the virtual world is a logical extension of a physical business and we can draw assumptions from that about consumer perception.

It is most interesting to note that the EU IPO was the counter-party in the General Court, and it is therefore the EU IPO who made assumptions about the extension of the reputation from the physical to the virtual world without providing any supporting evidence. It seems that the EU IPO is happy to rely on assertions and assumptions when it is the party bearing the burden of proof, but is imposing a significant burden on trade mark owners when the burden of proof on the same issue sits with them. This decision could open the door for trade mark owners in other matters to attempt to rely on assumptions without the need to file evidence in support and we await with interest the next decision in this area.