Intellectual property rights in a virtual world

European General Court’s Take On The Application Of TM In The Virtual World

The Impact of the EU's General Court's Ruling on Virtual Goods and Trademark Infringement: A Comprehensive Analysis of the “Glashütte Original” Case

There is a myth that in the virtual world, intellectual property (IP) is generally treated the same as in the real world, meaning existing copyright, trademark, and patent laws apply. However, that myth is not entirely accurate as, in our view, the nuances of the virtual world can sometimes pull the wool over the eyes of decision-makers who are unfamiliar with its esoteric nature.

On 7 January 2025, the European Union Intellectual Property Office (EUIPO) published a landmark case ruling from the General Court (GC) concerning the status of virtual goods and their relation to trademark law within the European Economic Area (EEA). This decision regarding the “Glashütte Original ” trademark for downloadable virtual goods significantly enhances the conventional understanding of the public perception of virtual versus real goods. It clarifies the legal framework for trademarks in the digital age. It is a vital reference for trademark professionals and legal entities, including intellectual property specialists like PAIL Solicitors, particularly on the intersections of AI, digital media, and intellectual property rights.

Background of the Case

The case examines the "Glashütte” trademark application for downloadable virtual goods, especially watches, clocks, and accessories. The trademark is registered in Class 9 and covers retail services in Classes 35 and 41. Glashütte, a town in Germany known for quality watchmaking, shapes public views of prestigious watch brands based on location.

Trademark distinctiveness is usually assessed under Article 7(1)(c) of the EUTMR, which states that descriptive signs lack distinctiveness. The GC ruling links physical and virtual goods.

Key Findings of the General Court

In its deliberations, the GC affirmed that the public recognises and perceives virtual goods in a manner parallel to their real-world counterparts. Notably, the court stated that a "non-negligible portion of the German public interested in virtual watches knows Glashütte," situating the town's repute within the broader context of its historical significance in watchmaking. This acknowledgement is pivotal, highlighting the generalised understanding of how consumers engage with virtual products—essentially viewing them as extensions of traditional goods.

The court elaborated that the public’s perception is the key to determining a trademark's distinctiveness. It emphasised that if virtual goods exhibit qualities or functionalities akin to those of their physical equivalents, consumers will likely interpret the trademark—which includes a reference to Glashütte—as promotional information regarding authenticity and quality. The GC’s assessment underscored a case-by-case approach that considers the specific nature of the virtual products or services to establish whether such a transfer in perception occurs.

Legal Implications of the Ruling

The ruling carries implications for trademark law as it affects the virtual world within the EEA, for legal practitioners and businesses alike as follows:

1. Recognition of Virtual Goods: It addresses trademark law in the virtual world in a way that recognises their standing parallel to physical goods.

2. Promotional Messaging vs. Distinctiveness: The GC's finding illustrates the need to differentiate between promotional messaging and distinctive trademarks. Businesses must navigate the complexities of how their names or logos may be interpreted virtually.

3. Market Positioning in the Digital Realm: With AI and other technological advancements shaping commerce, the ruling emphasises the importance of strategically positioning trademarks in the virtual world. What steps, if any, need to be taken to address how the public perceives the online brand as opposed to the physical brand?

4. Case-by-Case Assessment: The court's insistence on a nuanced, case-by-case analysis suggests future trends in IP litigation. This suggests more cases to follow without a clear precedent to follow.

Implications for PAIL Solicitors and Intellectual Property Practitioners

For PAIL Solicitors, this ruling underscores the urgency of adapting to the changing paradigms of consumer perception in the face of digital innovation and AI.

Here are our takeaways from the ruling:

- Expertise in Virtual Goods: To position ourselves as leaders in the field, we must enable our clients to understand how the legal framework applies to virtual goods and how to protect their trademarks in the evolving landscape.

- Awareness of AI’s Role: As artificial intelligence becomes increasingly integrated into marketing strategies and product representations, PAIL Solicitors needs to be able to guide businesses on the implications of AI-generated content and its potential effects on intellectual property rights.

- Holistic Digital Media Strategies: Our know-how must also extend to developing digital media strategies that integrate trademark protection with online branding, ensuring our clients are well-equipped to thrive in physical and digital markets.

Conclusion

The General Court’s ruling regarding the “Glashütte Original” trademark is a watershed moment in European trademark law, but it does not establish a clear precedent for public perception of virtual goods. In European Intellectual Property matters, the General Court serves as a judicial body within the Court of Justice of the European Union that primarily hears cases brought by individuals or companies against actions taken by EU institutions concerning intellectual property rights, such as disputes over trademarks, patents, or designs; essentially acting as the first instance court for such cases within the EU legal system. It handles situations where individuals or companies claim their intellectual property rights have been infringed upon by actions of the EU institutions. Decisions from the General Court can be appealed to the higher court, the Court of Justice of the European Union, on points of law. Therefore, this decision may be appealed, and the nuanced ruling means another interpretation may be applied to a different set of facts.

It is clear to us at PAIL Solicitors that trademarks need to be treated in the virtual world with the same respect as in the terrestrial world. As trademark exploitation in the virtual world becomes more ingenious, we need to lead the way in maximising the potential of intellectual property in the rapidly evolving digital marketplace, guaranteeing that the essential value tied to all IP, including trademarks, is respected and upheld across all mediums.

To obtain a quotation, please contact us at (020) 7305-7491 or at peter@pailsolicitors.co.uk. We would be delighted to assist you. Mr Peter Adediran is the owner and principal solicitor at PAIL® Solicitors. Subscribe to our newsletter to get blog post updates and other information about the firm straight to your inbox.