Coca-Cola’s virtual goods and opposing trade mark applications for use in the metaverse

By David Stewart

5 September 2023

In the World Intellectual Property Organisation’s magazine published in March 2022, an article entitled “trademarks in the metaverse (written by Kathryn Park of Strategic Trademark Initiatives) describes the metaverse as,

“a virtual space in which users are and will be able to interact and connect with each other in myriad ways – gaming, collaborating, shopping, and exploring – without leaving the comfort of their couch. Some of this functionality already exists in gaming platforms. What is envisioned is nothing short of a sophisticated make-believe world in which consumers can experience life virtually. For example, shoppers can buy virtual products, online simulacrums of a real item with which to adorn their avatar or can attend concerts and sporting events as virtual VIPs, buy expensive and unique works of art, drive virtual autos or yachts, travel and dine in special and exotic locations and more. The metaverse is expanding day by day.”

Some companies have been quicker than others to capitalise upon this new forum for commerce:

This Australian trade mark application was filed by The Coca-Cola Company in September 2022. A Google search of “Coca Cola Creations” is an introduction to an entirely new level of digital consumer interaction, some of which has at best marginal reference to beverages.

This includes:

a. “Unlock a new version of yourself: launch this experience and watch how your unique personality transforms into your own shareable, digital Metaversion”;

b. collaborations between Coca-Cola and Grammy-award winning singer Rosalía, which includes a new limited-edition flavour, Coca-Cola Move. (An article about this from CNN wryly notes that “Move doesn’t have a traditional flavour, such as cherry. Instead, the beverage is supposed to represent a mood or idea — in this case, transformation.”)

c. offering Coca Cola Dreamworld wearables “to wear in your DRESSX metacloset: our Icy, Bubbly and Cloudy apparel. Share some fit pics that’ll break the feed.”

d. “Discover the Coca Cola Dreamworld and Tomorrowland AR Experience”;

e. “Launch this experience and watch your emotions become a shareable work of digital art”;

f. a collaboration with the popular shooter game Fortnite: “Transport yourself to the Coca Cola Zero Sugar Byte Island created in Fortnite”;

g. a collaboration with singer Ava Max: “Bring the music of the cosmos to Earth, Ava Max swings ‘Sweet but Psycho” from your Starlight can or bottle”;

and so on.

Coca Cola have clearly doubled down on augmented reality and the Metaverse in its efforts to attract young consumers to its products. But this application is, as ever with trade marks, designed to mitigate risk. As Ms Park says in her article,

“Not surprisingly, bad actors are trying to usurp valuable trademark rights in the metaverse with pre-emptive filings. Bad faith applications for metaverse trademarks abound. In the United States, for example, bad faith applications for metaverse marks have been spotted recently for fashion brands like Prada and Gucci. These bad filings are a major challenge for trademark owners because combatting such bad faith applicants has a price; potentially huge legal fees and a drain on corporate resources.”

In Australia, we have yet to see a metaverse-related trade mark dispute. But bad actors are just as prevalent in Australia as anywhere else – take for example, this clearly bad faith trade mark application filed last year:

We expect to see bad actors filing applications for trade marks relating to online digital environments in Australia as consumer involvement in the metaverse picks up steam. These applications will invite oppositions. What if a trade mark applicant has not filed an application for its core brand in class 42, which covers non-downloadable software and is the usual anchor point for virtual goods?

An argument that the opposed mark is substantially identical with, or deceptively similar to, a trade mark registered by another person in respect of similar goods or closely related services (section 44 of the Trade Marks Act 1995) will fail because the goods or services are unlikely to be similar to virtual goods.

Section 60 of the Trade Marks Act 1995 is a better option. That section provides for a ground of opposition on the basis that another trade mark had, before the priority date for the registration of the first-mentioned trade mark in respect of those goods or services, acquired a reputation in Australia and because of the reputation of that other trade mark, the use of the first-mentioned trade mark would be likely to deceive or cause confusion. As stated in Hills Industries v Bitek [2011] FCA 94:

“An inquiry under s 60 must be a staged inquiry. First, there must be a finding that the mark is substantially identical with or deceptively similar to an existing registered mark. Secondly, the opponent must establish that its trade mark had before the priority date for the registration of the other party’s trade mark acquired a reputation. Thirdly, it must establish, because of that reputation, the use of the trade mark which is sought to be registered would be likely to deceive or cause confusion.”

But an opponent relying upon this ground needs “convincing corroboratory evidence” (Advance Buying Corporation Pty Ltd v Avia Group International Inc [1995] ATMO 37 (28 July 1995)) and is likely to “easily inspire belief that there is one ultimate controlling entity” in respect of spillover reputation (Cowparade Holdings Corporation v Kelvin Bentley [2001] ATMO 126 (24 December 2001)). One example of the difficulty can be found in respect of the trade marks of famous fashion designer Alexander McQueen, when section 60 was a successful ground for an opposition to “Alexander McQueen”, but not “McQueen” nor the “McQ” logo (Autumnpaper Ltd v Metropolitan Investment Group [2015] ATMO 82 (8 September 2015) at [60]). Applications filed in respect of less than famous sub-brands for use in the metaverse run this risk.

Another option is section 62A of the TMA provides that registration may be opposed on the ground that the application was made in bad faith. Decisions of the Registrar of Trade Marks to date indicate that for an assessment of “bad faith” there must be an element of intentional dishonesty or a deliberate attempt to mislead the Registrar in some way in a trade mark application. That can be difficult to prove. In the decision of Hard Coffee Pty Limited v Hard Coffee Main Beach Pty Limited [2009] ATMO 26 (1 April 2009) at [12], the hearing officer noted:

“The onus of demonstrating ‘bad faith’ falls squarely on the party making such an allegation with the need for evidence able to fulfil the degree of proof required to satisfy the civil standard of ‘balance of probabilities’. That said, the allegation of ‘bad faith’ is a very serious one and a finding of bad faith should not be taken lightly.”

The most straightforward path is likely to be pursuant to section 42 of the Trade Marks Act 1995: the application is contrary to law, and the law in this case is section 18(1) of the Australian Consumer Law. This section famously states:

A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

But again, this comes with difficulties. Burchett J in the Full Court in Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd [2000] FCA 876; (2000) 100 FCR 90 at [45]) to the effect that “[t]he public is thoroughly accustomed to competing brands of almost identical products, which may or may not have some link”. While Coca Cola would be fine, other less ubiquitous brands might not.

All of this suggests to us that as the metaverse expands, we will see more and more brand owners out of caution applying for trade mark registrations to cover virtual goods.

 

Disclaimer: The information published in this article is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.