The Metaverse Is Not a Lawless Land! Unauthorized Use of Another’s Trademark in Virtual/Digital Scenarios May Constitute Infringement

The Hangzhou Intermediate People’s Court of Zhejiang Province has recently concluded the first-instance trial of the first virtual goods trademark infringement case. This case has clarified that the unauthorized use of another’s trademark in virtual and digital scenarios may constitute infringement, thereby effectively safeguarding and promoting the healthy development of the metaverse economy.

An automobile technology company is the sole legitimate brand owner of the automobile brand “乔治巴顿” (“G.PATTON”) in China. It has successively registered in China and acquired from its affiliated companies multiple trademarks related to “乔治巴顿”, “G.PATTON” and its brand logo, all of which are registered under Class 12 (automobiles and other goods).

Several defendants, including an industrial company, without authorization, extensively used marks that are identical or similar to the registered trademarks of the automobile technology company, such as “乔治巴顿” and “G-PATTON”, and manufactured, sold, and advertised automobiles by themselves or through authorized others, while engaging in commercial activities such as virtual game brand collaborations and fundraising under the guise of the automobile brand. The automobile technology company claimed that the above actions constituted trademark infringement. At the same time, the defendants also engaged in unfair competition acts such as fabricating distribution relationships, inventing brand histories, and falsely promoting company backgrounds. The automobile technology company filed a lawsuit with the first-instance court, requesting that the defendants cease infringement, eliminate the adverse effects, and jointly compensate RMB 1 million.

The first-instance court held that the industrial company’s authorization of a third party to use virtual vehicle models bearing the accused infringing marks in its game did not belong to the same category of goods as the automobile goods under Class 12, and had exceeded the scope of protection of the automobile technology company’s registered trademarks. Therefore, the collaborative licensing conduct in the game did not constitute trademark infringement of the trademarks involved in the case. Given that other uses of the accused infringing marks by the industrial company and other defendants constituted trademark infringement and unfair competition through false advertising, the first-instance court ordered the industrial company and other defendants to cease infringement and pay RMB 1 million in compensation. The automobile technology company disagreed with the finding that “the collaborative licensing in the game did not constitute trademark infringement” and filed an appeal.

After trial, the Hangzhou Intermediate People’s Court held that the virtual vehicle goods in the game and the automobile goods under Class 12 of the involved registered trademarks were indeed not identical categories, but the two were not completely unrelated and could, under certain circumstances, constitute similar goods.

Similar goods refer to goods that are identical in terms of function, purpose, production department, sales channels, target consumers, etc., or that the relevant public generally believes have a specific connection and are likely to cause confusion. In this case, the virtual vehicles in the game had a passenger transport function similar to real automobiles and could simulate the appearance of automobiles; players gained a driving experience through the game and might subsequently pay attention to or purchase real automobiles, so the two consumer groups overlapped. Players could easily mistakenly believe that the automobile brand had a specific connection with the game, thereby causing confusion.

The automobile technology company’s involved registered trademarks had a certain degree of distinctiveness and reputation. The industrial company, in its actual publicity, highlighted “乔治·巴顿” as an off-road vehicle brand, emphasized its collaborative relationship and brand value, and the official website of the involved game claimed it was “officially authorized.” When the relevant public encountered the above publicity content and experienced the game, they would inevitably identify “乔治巴顿” as an automobile brand and mistakenly believe that the brand had authorized the relevant goods or activities, thereby severing the indicative relationship between the involved trademarks and the plaintiff.

In summary, the Hangzhou Intermediate People’s Court reversed the first-instance judgment and found that the accused conduct constituted trademark infringement and unfair competition, ordered the defendants to cease infringement and eliminate the adverse effects, and fully upheld the plaintiff’s claim for RMB 1 million in compensation.

Unlike the strict classification of goods or service categories in traditional trademark protection, in the context of the metaverse, determining whether relevant goods or services are similar places “relevance review” at the core, comprehensively considering whether there is overlap or a high degree of correlation in terms of function, purpose, production entity, etc., and focuses on determining whether the relevant public would, based on ordinary perception, mistakenly believe that the two types of goods or services come from the same entity or that there is a specific relationship between their providers, such as authorization or cooperation.