Author

LI Xiang

Associate Professor at the School of Law

Tianjin University of Technology

Main research direction: intellectual property law

Abstract

The 3D high-immersion virtual world created based on virtual reality technology is characterized by "high immersion" and "virtual-real integration," aiming to provide users with a highly realistic immersive experience. Blockchain technology ensures the confirmation and transfer of property rights within the virtual world, allowing the 3D high-immersion virtual world to transcend a purely entertainment-oriented positioning. A virtual visual trademark refers to a trademark generated using virtual reality technology that can be visually perceived. Depending on the space it resides in, it can be classified into 3D high-immersion virtual trademarks and NFT trademarks, with their respective objects manifesting as visualized trademark images and tokens generated through asymmetric encryption technology.

For assessing the similarity of trademarks within the same virtual world, existing rules remain applicable. However, when evaluating similarity across different spatial environments, attention should be given to visual differences caused by changes between virtual and real spaces, using the potential confusion among relevant consumers as the primary criterion. The classification of similar goods (services) within the same virtual world should still refer to the Classification Table, which should be supplemented with a "virtual environment goods (services)" group and include NFT-related virtual goods (services). However, for goods (services) across different spatial environments, similarity assessment is unnecessary. Under virtual reality technology, the "subjective confusion" standard should be adopted, with environmental factors serving as an important reference for determining the likelihood of confusion.

Keywords: Virtual Reality, Virtual Visual Trademarks, Likelihood of Confusion, NFT Trademarks, Subjective Confusion

Introduction

Compared to works of authorship and patents, trademarks may appear to have little correlation with scientific and technological advancements. However, since the development of internet technology, the trademark legal system has become increasingly intertwined with technological progress. Currently, as artificial intelligence, blockchain, virtual reality, and other technologies deeply integrate with the internet, the virtual world constructed by the traditional internet is transitioning from a two-dimensional (2D) network space to a 3D high-immersion virtual world. Through virtual reality technology, businesses are dynamically building virtual commercial worlds to create a highly immersive shopping experience for users, presenting a new dimension of virtual-real integrated shopping environments.

As the dimensions of the shopping environment evolve, the traditional flat, internet-based shopping environment is transforming into a three-dimensional space. To adapt to this change, virtual visual trademarks will be widely applied as a new type of non-traditional trademark. As a mark for transmitting product information, a trademark’s accuracy in conveying information is highly susceptible to the influence of the shopping environment. At present, China's trademark legal system has not yet addressed the protection of virtual visual trademarks, and it should promptly respond to this emerging issue.

* Lecturer at the School of Law, Tianjin Polytechnic University.

I. The Concept of Virtual Reality Technology and the Virtual World It Creates

(1) Virtual Reality Technology as the Foundation for the Development of the Metaverse Industry

Currently, the concept of the metaverse is experiencing an expansion trend, while the industry lacks a comprehensive understanding and systematic analysis of its technical principles and operational mechanisms. Some viewpoints argue that the metaverse is merely a speculative concept in the "crypto circle," lacking technical and industrial support, and serving only as a means for illegal fundraising, thus earning the label of an "electronic utopia." However, throughout human history, any emerging technology has faced skepticism and challenges from multiple perspectives.〔1〕

Furthermore, unlike singular technologies, the metaverse is a new organizational and aggregation model formed by the convergence of blockchain, virtual reality, broadband communication, artificial intelligence, and other technologies at a certain stage of development. Its growth and formation require the synchronized advancement of multiple technologies across various fields, along with effective mechanisms for integration. Therefore, doubts about the metaverse at its early development stage are entirely normal. However, given the broader context of digital economy development, research in this field should not be stalled due to the complexity and ambiguity of its concept.〔2〕

At this stage, "virtual-real integration" and "immersive experience" have become two key terms for defining the metaverse. The Metaverse White Paper (2023) highlights the need to establish the core technologies and products for the metaverse industry along two major technological lines: immersive and trusted distributed systems. This process should sequentially prepare for adaptive terminals, 3D immersive audiovisual technologies, and other necessary elements.〔3〕 Therefore, virtual reality is a critical frontier in next-generation information technology, a major forward-looking field of the digital economy, and one that will profoundly transform human production and lifestyles. The strategic window for industrial development has already emerged.〔4〕

(2) Definition and Technical Principles of Virtual Reality Technology

Virtual reality (VR) technology refers to the use of modern technological tools centered on computer technology and specialized input/output devices to simulate a highly realistic virtual world.〔5〕 The construction of a virtual world generally involves three steps:

1. Data Collection from the Real World – Utilizing computers and electronic sensing devices to collect real-world data. Currently, methods such as image capture of three-dimensional (3D) objects and physical environments, as well as radar scanning, are employed to gather geometric, texture, and lighting information of 3D environments.

2. 3D Modeling and Rendering – Within the virtual reality system, 3D modeling and rendering are performed based on spatial structures and physical attributes, creating digital 3D models. Artificial intelligence tools are used to reconstruct the three-dimensional structure and surface details of a scene, enabling spatial expression, which is further refined through visualization rendering techniques.

3. Human-Machine Interaction via Adaptive Devices – Various head-mounted display devices are used to facilitate interaction between the virtual and real worlds. As VR technology advances, real-time interactions between the physical and virtual worlds are becoming possible. Sensory experiences such as vision, hearing, touch, and even taste, which may be difficult to experience in certain real-world contexts, can be simulated through computer-generated virtual information, thereby enhancing human sensory experiences.

For example, in a pioneering virtual reality shopping project, when consumers select displayed clothing and view it through a VR headset, a virtual sales avatar wearing the clothing will appear, dancing while providing information on the brand, material, and price of the apparel.〔6〕

(3) Classification of Virtual Worlds

Trademark law essentially serves as a commercial regulatory framework for business activities. The development of VR technology has significantly altered business models within virtual worlds. Different virtual business models influence the scope and focus of trademark protection. Based on technology reliance, user interaction level, and commercial models, virtual worlds can be classified into the following categories:

1. Pure Game-Based Virtual Worlds Without User Intervention – These virtual worlds are entirely based on pre-designed computer game software. Users can only participate in pre-set activities and have no autonomy, thus making trademark infringement unlikely.

2. User-Interactive Gamified and Commercialized Virtual Worlds – These primarily include online gaming platforms and virtual shopping platforms, allowing users to engage in social interactions and commercial activities within a structured digital space.

3. 3D High-Immersion Virtual Worlds – Unlike traditional gaming or e-commerce virtual worlds, these worlds offer high immersion and virtual-real integration, significantly enhancing user sensory experiences and increasing the complexity of trademark-related legal issues.

Buying and Selling Assets in the Virtual World

Users in 3D high-immersion virtual worlds can buy and sell assets such as character avatars, props, equipment, and land. The "currency" used for these transactions can also be exchanged for real cash. For example, on a certain immersive experience platform, the platform publicly lists land for sale, and users can purchase it through an auction using virtual currency stored in their digital wallets. Once acquired, users can build their own homes on the virtual land.

Video games are merely a representative application scenario of virtual reality technology. Currently, many well-known trademark owners have already extended their trademarks into 3D high-immersion virtual worlds, leveraging their brand reputation accumulated in the real world to expand their influence in virtual spaces. For instance, a renowned brand has launched its first metaverse-exclusive physical shoe, allowing users to change its colors and customize its appearance within the virtual world, thereby setting new fashion trends in virtual environments.

The emergence of 3D high-immersion virtual worlds has expanded the boundaries of human activities, enabling the establishment of multidimensional, cross-space commercial environments.

IV. Virtual Worlds Formed Based on Blockchain Technology

Virtual worlds based on blockchain technology are not independent entities but rather derivatives of 3D high-immersion virtual worlds, forming a hierarchical relationship between the two. User activities such as creation and transactions within the 3D high-immersion virtual world inevitably lead to the emergence and transfer of property rights. However, the intangible nature of virtual assets poses challenges for property rights confirmation.

The decentralized transaction model enabled by blockchain technology provides a fundamental security guarantee for virtual world transactions, linking real-world and virtual assets while dismantling the centralized trust mechanisms traditionally managed by governments or centralized organizations. The decentralized trust mechanism established by blockchain technology supports property rights confirmation and transactions in the virtual world, ensuring its operational stability. Furthermore, this trust mechanism allows for the monetization of virtual world assets.

Apart from differences in underlying technology, blockchain-based virtual worlds share similar user experiences and business models with user-interactive gamified and commercialized virtual worlds. Since 2018, the NFT market has experienced rapid growth overseas, with NFT trading platforms continuously evolving. In China, the NFT market has also developed under the leadership of major domestic enterprises, with the strongest integration occurring between NFTs and the digital cultural and creative industries. These developments illustrate that blockchain technology provides the foundational trust mechanism for the growth of virtual worlds and is a crucial component of the evolving digital economy.

At present, trademark infringement issues related to NFTs in blockchain-based virtual worlds have become particularly prominent.

NFT Trademarks and the Tokenization Process of NFT Goods (Services)

The tokenization process of NFT trademarks and NFT goods (services) involves several steps:

1. Creation and Upload – After a trademark, good, or service is created, it is uploaded to a designated workspace where users can edit its various attributes.

2. Minting – The minting process consists of four steps:

o Step 1: Ensure the object to be minted contains sufficient "catalysts."〔9〕

o Step 2: Click the "Mint" button to allow the computer to autonomously complete the process. Once the object is minted, the user can list it for sale.〔10〕

o Step 3: Set the sales information for the NFT to be sold.

o Step 4: Sign a sales agreement with the platform and proceed with the sale.

An NFT consists of a set of metadata with a timestamp stored on a blockchain, maintaining a unique and immutable link to a specific digital file stored in a designated location on the network.〔11〕 NFTs function as tokenized rights certificates built upon the trust mechanism of blockchain (such as Ethereum). Smart contracts and decentralized applications facilitate the issuance and circulation of NFTs.

Essentially, an NFT is a string of data symbols without inherent meaning, with its attributes and transaction mechanisms defined by code. A token can represent or correspond to any type of content, including digital content in cyberspace (such as digital goods and digital currencies) as well as tangible real-world assets (such as movable or immovable property).

The key difference between NFTs and fungible tokens (such as Bitcoin) lies in their uniqueness—each NFT possesses a distinct identifier and can reference a specific object or its associated rights within a system. In contrast, fungible tokens are typically used as value transfer instruments with divisible and interchangeable properties. This distinctiveness gives NFTs inherent content attributes, making them highly compatible with intellectual property rights, including copyright and trademark rights, which in turn creates risks of trademark infringement.

II. Infringement Patterns and Legal Risks of Virtual Visual Trademarks Under Virtual Reality Technology

(1) Infringement Patterns of Virtual Visual Trademarks in Virtual Reality

Based on the classification of virtual worlds discussed earlier, trademark infringement in virtual spaces generally falls into the following categories:

1. Unauthorized Use of Real-World Trademarks in the Virtual World – This occurs when an infringer engages in commercial activities within a virtual world and, without permission from the real-world trademark owner, uses the real-world trademark on products sold in the virtual environment to boost sales.

2. Hijacking of Virtual Visual Trademarks for Real-World Use – A business operator establishes a virtual brand in the virtual world, accumulating reputation over time but failing to register it as a trademark. An infringer then registers this virtual visual trademark without authorization and uses it for real-world products.

3. Unauthorized Use of Virtual Visual Trademarks Within the Virtual World – A business operator develops a virtual visual trademark through long-term operation in the virtual world, but an infringer, without permission, uses the trademark for commercial activities within the virtual environment.

4. NFT-Related Trademark Infringement – Involves the minting or transfer of NFTs representing real-world or virtual-world goods without the trademark owner's consent. Examples include the trademark infringement cases Hermès Int’l v. Rothschild and Nike, Inc. v. StockX LLC, where unauthorized NFT-related uses of trademarks led to legal disputes.〔12〕〔13〕

(2) Legal Challenges in Protecting Virtual Visual Trademarks Under Virtual Reality Technology

1. Similarity Assessment of Virtual Visual Trademarks

A virtual visual trademark is a visually perceptible mark generated using virtual reality technology. Unlike physical trademarks that exist solely in the real world or purely digital trademarks created via computer technology (such as those depicted in the movie Branded), virtual visual trademarks originate in 3D high-immersion virtual worlds and can be perceived either directly or through external devices.

Virtual visual trademarks are an inevitable product of the digital economy. Furthermore, since blockchain-based virtual worlds and 3D high-immersion virtual worlds are interrelated, NFTs representing trademarks have emerged as a unique form of virtual visual trademarks.

As digital commerce evolves, consumers are exposed to an overwhelming amount of product information, increasing search costs. Consequently, the trademark’s role in reducing search costs and serving as an advertising medium has become more crucial. Businesses are recognizing that sensory experiences derived from products and services significantly influence consumer purchasing decisions. Enhancing sensory stimuli to elevate consumer perception thresholds has become a key marketing strategy.

With virtual reality technology enabling immersive shopping experiences, traditional flat, internet-based shopping environments are being replaced by three-dimensional spaces. As trademarks continue to function as symbols conveying product information, their use in virtual reality necessitates adjustments in similarity assessment rules when applied to real-world trademark comparisons.

2. Determining Similarity of Virtual Goods and Services

Assessing the similarity of goods and services is a critical factor in trademark infringement cases. A study analyzing 192 preliminary injunction cases found that in 134 cases (69.8%), courts deemed the goods and services similar, supporting the likelihood of confusion. Plaintiffs won 71% of cases where goods and services were considered similar, while the plaintiff success rate dropped to 30.2% in cases where goods and services were found dissimilar.〔15〕

Traditional legal theories debate subjective vs. objective approaches to similarity assessment. However, in virtual reality environments, evolving transactional contexts complicate this determination. The Classification Table, which serves as a reference for assessing similar goods and services, should be expanded to include virtual goods and services. Moreover, there is currently no established standard for comparing virtual and real-world goods and services—raising questions such as whether virtual apparel should be considered similar to physical clothing. As virtual and real-world product categories align more closely, similarity assessments will become increasingly complex.

The Relationship Between "Similarity" and "Likelihood of Confusion" in Trademark Law

Both of the aforementioned theories emphasize the relationship between "similarity" and "likelihood of confusion"—specifically, that similarity serves as the prerequisite for assessing the likelihood of confusion, and likelihood of confusion is the ultimate criterion for determining trademark infringement.

The divergence between these two theories stems from different interpretations of Article 11 of the Preamble to Directive 2008/95/EC on the Harmonization of Trademark Legislation among Member States.〔21〕

· The Subjective Theory argues that this article should be interpreted as "the concept of similarity must be understood in conjunction with the likelihood of confusion," meaning that similarity inherently includes a likelihood of confusion. This view aligns with the "confusion-based similarity" approach.

· The Objective Theory contends that Article 11 should be understood as "it is necessary to interpret the concept of similarity in relation to the likelihood of confusion," implying that similarity and likelihood of confusion should be analyzed independently.

In judicial practice, different jurisdictions apply these theories differently. For example, in one case, Advocate General Jacobs noted that when assessing the similarity between trademarks and the goods or services they apply to, the distinctiveness and reputation of the earlier trademark should be considered to determine whether the similarity is sufficient to cause public confusion.〔22〕

France, Italy, and the European Commission share the view that similarity is an abstract concept that cannot be assessed solely based on objective factors but must be interpreted in relation to the likelihood of confusion. In contrast, the United Kingdom maintains that similarity should be evaluated independently of the likelihood of confusion.

Beyond these two main theories, the "confusion-based similarity" approach has had a profound influence in China. Under this approach, trademark similarity is a legal concept, and only when the similarity is sufficient to cause confusion can it constitute trademark infringement.〔23〕

For assessing similarity of goods (services), the focus is not on their physical attributes but on preventing confusion about their origin, which is a fundamental principle of similarity assessment. According to this theory, likelihood of confusion is not a separate condition for infringement but is instead internalized within the similarity assessment itself.

The "confusion-based similarity" theory has been influenced by Japanese judicial practice and has long been upheld in Chinese legislation and judicial decisions. Before the 2013 Trademark Law revision, China's trademark law, judicial interpretations, and judicial practice consistently followed this theory.

For example, in 2008, the Supreme People's Court ruled that trademark similarity in the context of infringement should not only compare the visual, phonetic, and semantic similarities of the marks but also consider whether the similarity is sufficient to cause market confusion.〔24〕

Since the 2013 Trademark Law revision, the "subjective confusion theory" has gradually replaced the "confusion-based similarity" approach. This shift in doctrine has led to a distinction between "the degree of trademark similarity" and "confusion-based similarity". Judicial interpretations, examination guidelines, and other regulatory documents have increasingly incorporated subjective standards into similarity assessments.

For instance, in the 2020 amendment to the Supreme People's Court's Interpretation on Several Issues Concerning the Application of Law in the Trial of Civil Disputes over Trademarks, Article 10(3)〔25〕 and Article 11〔26〕 continue to emphasize that similarity assessment should consider the likelihood of confusion.

Some scholars argue that focusing more on natural attributes and objective similarities between trademarks and goods aligns with judicial practice, where similarity and likelihood of confusion are not strictly separated. Consequently, the practical application of this approach does not fundamentally differ from the requirements of judicial interpretations.〔27〕

However, other scholars contend that the "subjective confusion theory" could lead to circular reasoning between trademark similarity and likelihood of confusion and might unjustifiably expand the scope of exclusive trademark rights. Under this approach, using a non-identical and non-similar mark on similar goods could still be deemed an infringement if it creates confusion about the origin of the goods.〔28〕

2. Feasibility Analysis of Applying Consumer Behavior Theory

Trademark law contains many ambiguous legal concepts, making them difficult to define precisely. The likelihood of confusion doctrine, as a fundamental principle of trademark law, is one such ambiguous concept.

Many scholars have adopted an interdisciplinary research approach to study the likelihood of confusion, reflecting the multifaceted nature of trademarks.〔29〕 Trademarks are intellectual property based on consumer perception, and core trademark concepts such as distinctiveness, confusion, and dilution are abstract representations of specific consumer cognitive states, manifesting as psychological associations.〔30〕

While cognitive psychology has been widely used in trademark law research, it overemphasizes how individuals process external information while neglecting the influence of social, situational, and cultural factors. Elementalism, which focuses on analyzing individual components of cognition, fails to account for the holistic nature of human experience.

However, the process of purchasing goods inherently involves recognizing trademarks, during which consumers are influenced by motivation, emotions, social context, cultural background, and group dynamics. Because cognitive psychology focuses primarily on individual cognitive processes, it has certain limitations in addressing the complexities of consumer behavior.

Consumer behavior research examines the processes by which individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy their needs and desires.〔31〕 It provides several advantages for resolving theoretical issues in trademark law:

1. Consumer behavior is central to trademark law – Both legislation and judicial practice rely on the relevant public as the benchmark for assessing trademark issues. Because trademarks exist only in the minds of consumers, consumer behavior theory provides theoretical support for defining the scope of the relevant public.

2. Consumer behavior theory directly addresses the core issue of trademark infringement – Determining whether consumers are likely to be confused by a disputed trademark is the essence of infringement cases. Consumer behavior studies analyze individual and group behaviors by considering social background, cultural context, and social class, making it well-suited to trademark law's emphasis on the relevant public.

3. Consumer behavior theory can help define the standard for likelihood of confusion – Some scholars have suggested that the only way to resolve trademark infringement disputes is to introduce psychology into the courtroom. Psychology provides objective tools for evaluating consumer perception and accurately assessing likelihood of confusion.〔32〕

Overall, compared to cognitive psychology, consumer behavior theory offers a more comprehensive approach by focusing on the entire consumer decision-making process rather than just cognitive processing. This makes it better suited for refining the theoretical basis of likelihood of confusion, defining its scope, and establishing concrete evaluation criteria.

3. Analysis of "Subjective Confusion Theory" from a Consumer Behavior Perspective in Virtual Reality

Adopting the "subjective confusion theory" is particularly appropriate for assessing likelihood of confusion in virtual reality.

Virtual reality technology lowers the threshold for consumer perception and further enhances the recognition function of trademarks.

In today's world, consumers are exposed to overwhelming sensory stimuli, from giant billboards on skyscrapers to background music in shopping malls and live performances at theme parks—all of which are part of sophisticated marketing strategies. Some advertisers even convert dark subway tunnels into motion-advertising displays, using illuminated static images that appear as dynamic ads when trains pass by. Studies show that 92% of people remember subway advertisements, compared to only 13% for TV commercials.〔33〕

Due to the influence of commercial advertising, people today process three times more information per day than they did in the 1960s. As a result, consumers must constantly engage in multitasking to process external information, but the human brain has limited capacity and can only selectively focus on future information.

In response, businesses strive to position their brands within consumers' direct lines of sight, maximizing brand exposure. Marketers employ various strategies to enhance external stimuli and reach the perception threshold.

The 3D high-immersion virtual world introduces a new dimension for sensory marketing:

· Virtual reality creates more immersive environments, characters, and products (services) than ever before.

· Consumers engage multiple senses simultaneously—vision, smell, hearing, taste, and touch—enhancing trademark recognition.

Thus, virtual reality amplifies the impact of trademarks on consumer perception, making "subjective confusion theory" the most appropriate standard for assessing likelihood of confusion in this context.

Creation Process of NFT Trademarks

The creation of an NFT trademark consists of two main steps:

1. Preparation of Raw Data – The trademark symbol is first digitized, and its data format, description, and links to images representing trademark elements are stored as metadata in JSON format. During the preparation of NFT trademark metadata, the minter (creator) can categorize the trademark elements into primary and secondary tags according to their needs to complete the metadata structuring.

2. Minting on the Blockchain – Once the metadata is prepared, a smart contract capable of recording ownership confirmation and transfer interactions must be deployed on a blockchain system. After the smart contract is established, the minter can proceed with minting in batches.

The minting process of an NFT trademark involves executing a minting function embedded within the smart contract, which links the NFT trademark to a specific Token ID while assigning the minter's address to it. Once the NFT trademark is minted, subsequent transfers can be carried out through smart contracts, and every transaction will be permanently recorded on the blockchain.

I believe that the NFTization process merely encrypts the virtual symbol, allowing it to be confirmed and traded on the blockchain network. The hash code generated by asymmetric encryption is by no means equivalent to a virtual visual trademark symbol. Instead, the object of trademark infringement in NFT trademarks is a recognizable mark originating from either the real or virtual world, which takes a form similar to traditional trademarks on the internet.

II. Similarity Assessment of Virtual Visual Trademarks in Virtual Reality

Through extensive legislative and judicial practice, China has developed a relatively comprehensive standard for assessing trademark similarity. The existing principles and methods for trademark similarity assessment remain applicable to virtual visual trademarks, but they require appropriate adjustments to accommodate the unique characteristics of virtual trademarks.

For 3D high-immersion virtual trademarks, their essence lies in visual representations of trademarks displayed through VR terminals, designed to enhance the realism of virtual environments and improve sensory experiences.

A virtual visual trademark created in a virtual world can be used within that virtual world or projected into the real world through VR technology. For example, an infringer may digitally alter a real-world trademark using VR technology to create a similar 3D high-immersion virtual trademark and use it within a virtual world or project it into reality without the permission of the real-world trademark owner.

I believe that existing trademark similarity assessment methods remain applicable for 3D high-immersion virtual trademarks within the same virtual world. However, when comparing the similarity of a 3D high-immersion virtual trademark to a real-world trademark, particular attention should be paid to visual differences caused by spatial transitions.

Because a trademark's form may change in dimension when processed through VR technology and projected across spaces, consumers will experience different visual perceptions. Unlike artistic works, which may be considered new creations due to dimensional transformation, trademarks serve as symbols conveying product (or service) information. When a trademark undergoes dimensional changes and cross-space projections, its ability to accurately convey information may be disrupted.

Thus, I believe that visual differences caused by spatial shifts should be a key factor in assessing the similarity of 3D high-immersion virtual trademarks.

· If a 3D high-immersion virtual trademark and a real-world trademark share similar overall visual effects, leading to consumer confusion, they should be considered similar trademarks.

· If they do not appear visually similar, but the visual differences still cause consumer confusion, they should still be considered similar trademarks.

Similarity Assessment of NFT Trademarks

I believe that existing trademark similarity assessment standards fully apply to NFT trademarks for the following reasons:

1. NFT trademarks exhibit a "dual-layered nature"—they consist of a "public representation layer" and an "expressive layer":

o The public representation layer refers to the certification of trademark or product (service) appearance through blockchain technology. This is displayed as randomized digital code, serving as the technical foundation for asset transfer on the blockchain network.

o The expressive layer refers to the actual NFT trademark symbol, which contains the trademark’s constitutive elements. Trademark recognition solely depends on the expressive layer.

Since NFT and trademark symbols are separate entities, NFTization does not alter the essence of the trademark symbol. Instead, the identification function of an NFT trademark remains unchanged, operating just like a traditional trademark.

2. NFTs are based on blockchain technology, which provides a foundation for asset transactions in virtual worlds but does not involve VR technology. This means that NFT-based shopping environments resemble those of interactive gamified commercial virtual worlds.

3. Recent NFT trademark infringement cases (such as HERMÈS Int’l v. Rothschild) confirm that similarity assessment remains a key legal issue:

o The court found that the defendant used "MetaBirkins" prominently on multiple platforms and employed the "METABIRKINS" trademark in sales and advertising materials without permission from HERMÈS.

o The court ruled that "METABIRKINS" and "Birkin" were similar trademarks, leading to trademark infringement based on other likelihood of confusion factors.

o The NFT format did not affect the similarity assessment.

This aligns with China’s legal practice, where trademark examination guidelines state that if a trademark only undergoes minor textual modifications (e.g., pluralization, grammatical shifts, or abbreviation changes) but retains its original meaning, it can still be considered similar.

For example:

· "NOUVELE" and "LA NOUVELE"

· "FRANK" and "FROM FRANK"

Similarly, "MetaBirkins" and "Birkin" should be deemed similar trademarks.

III. Similarity Assessment of Virtual Goods and Services in Virtual Reality

1. Defining Virtual Goods and Services in Virtual Reality

In 3D high-immersion virtual worlds, goods and services generated using VR technology share the same nature as 3D high-immersion virtual trademarks.

· They are visualized products (services) displayed via VR terminals.

· They may represent real-world products (services) or exist exclusively in the virtual world.

In blockchain networks, any digitalized product (service) can be "minted" as an NFT and sold.

Several notable NFT-related trademark infringement cases illustrate this issue:

· Rothschild minted 100 NFT versions of HERMÈS Birkin bags under the "MetaBirkin" collection and sold them online. Consumers viewing the NFT images on the website associated them with the original Birkin brand.〔35〕

· StockX minted NFT sneaker representations using Nike trademarks without authorization and sold them to customers.〔36〕

· Ryder Ripps (RR/BAYC) created an NFT series identical to the Bored Ape Yacht Club (BAYC) NFTs.〔37〕

· Quentin Tarantino NFTized pages from the Pulp Fiction script and props owned by Miramax and sold them as NFTs.〔38〕

According to NFT’s technical principles, NFT products (services) are not the content they represent but rather tokenized assets generated through asymmetric encryption.

For example, an NFT sneaker featuring a Nike trademark on OpenSea is not the sneaker itself but a token representing ownership.

2. Assessing Similarity of Virtual Goods and Services

For virtual goods (services) within the same virtual space, existing classification tables should be expanded to include virtual product/service categories.

· A "Virtual Environment Goods (Services)" group should be added to correspond with real-world categories.

· Virtual goods should only be considered similar if they fall within the same virtual classification group.

· Cross-space (virtual-to-real) similarity assessment is unnecessary, as virtual and real-world goods have fundamental differences in use, legal nature, and ownership structure.

Currently, the U.S., South Korea, and the EU have incorporated NFT-related product and service classifications into their trademark classification tables.

(IV) Expanding the Factors in the Likelihood of Confusion Analysis

"Rules must be flexible in order to encompass constantly evolving matters."〔39〕

In recent years, trademark protection in China has generally shown an expanding trend. In judicial practice, the application of the likelihood of confusion standard has facilitated the expansion of trademark rights. The fundamental principle of "strengthening rights protection, defining market boundaries, providing space for innovation, and fostering a favorable development environment"〔40〕 remains a key objective in developing the digital economy.

The likelihood of confusion standard plays an increasingly important role in adjusting the scope of trademark protection in virtual reality technology. Both domestic and international judicial practices have established multiple factors for assessing the likelihood of confusion, including:

· The degree of similarity between trademarks,

· The degree of similarity between goods (or services),

· The distinctiveness and fame of the prior trademark,

· The intentional bad faith of the infringer,

· The level of consumer attention,

· Actual confusion occurring in the marketplace,

· Consumer sophistication and experience,

· Similarity of advertising strategies,

· Similarity of trade channels,

· The potential overlap between the product markets,

· Competitive relationships between the goods/services,

· Duration of trademark usage,

· Similarity in target consumer groups,

· The established market position of the trademarks.

It is important to note that not every factor must be considered in every case, and the list of confusion factors is not exhaustive. The weight of each factor varies depending on the circumstances of each case.

For instance:

· The "Polaroid" case considered eight factors in determining confusion.

· The "DuPont" case examined thirteen factors.

· The Restatement (Third) of Torts established nine confusion factors.〔41〕

These cases illustrate that courts vary in their selection of confusion factors depending on the context.

Although the factors for assessing confusion are not rigidly fixed, certain fundamental elements must always be considered, as they play a critical role in determining whether confusion exists.

A study found that in 102 cases where confusion was established:

· 94% of cases found that similarity between goods/services contributed to a likelihood of confusion.

· 90% of cases found that distinctiveness was an important factor in establishing confusion.

· All cases considered similarity between trademarks as a key factor in proving confusion.

The study also noted that bad faith intent is not a necessary factor in proving confusion.〔42〕

China’s Trademark Examination Guidelines provide a sequence for applying confusion factors:

1. First, consider the degree of similarity between the trademarks and the similarity of the goods/services.

2. Second, evaluate the distinctiveness and reputation of the prior trademark.

3. Third, assess bad faith intent if applicable, but emphasize that bad faith is not a necessary condition for confusion.

4. Lastly, consider the level of consumer attention and actual confusion evidence.

This confirms that in Chinese legal practice, the key elements for establishing confusion are:

· Trademark similarity,

· Similarity of goods/services,

· Distinctiveness and fame of the prior trademark.

Other factors are considered on a case-by-case basis.

I believe that when trademark infringement occurs in a 3D high-immersion virtual world, the factors used to assess likelihood of confusion should be expanded, and the shopping environment should be treated as a fundamental factor in evaluating virtual visual trademark confusion.

Virtual Shopping Environments and Consumer Behavior in Virtual Reality

First, consumer behavior is increasingly influenced by virtual shopping environments, leading to a rise in trademark infringement within virtual stores.

According to China’s National Bureau of Statistics, in 2023, the total retail sales of consumer goods reached 47.15 trillion yuan, with online retail sales accounting for 15.42 trillion yuan. The influence of e-commerce on domestic consumption continues to grow.

As Amazon, Walmart, Alibaba, and other companies complete their virtual reality shopping ecosystems, online transactions will further increase due to their ability to enhance the perceived value of purchased goods.

Consumers who prefer in-person shopping typically do so to:

· Experience the physical quality of products firsthand.

· Engage with tangible goods before making a purchase decision.

· Enjoy the social interaction and atmosphere of a physical shopping environment.

On the other hand, online shoppers prioritize:

· Convenience.

· The anonymity and security of e-commerce transactions.

Although both shopping methods provide access to goods, the consumer experience differs significantly.

Virtual reality technology bridges this gap by allowing consumers to:

· Try on outfits in a virtual environment.

· Interact with virtual sales associates and other shoppers.

· Access product information beyond what is possible in physical stores.

Second, shopping environments significantly influence consumer purchasing behavior, often leading to unplanned purchases.

For example, researchers found that:

· Store displays are the primary source of decision-making for female shoppers selecting clothing.

· About two-thirds of supermarket purchases occur as consumers walk through aisles, rather than being planned in advance.

· Shelf placement can prompt consumers to exceed their shopping budget.〔43〕

By wearing VR headsets, consumers enter a completely different shopping experience:

· They can shop in a 360-degree immersive space.

· Selecting a beauty product may trigger a pop-up display with product details and a virtual beauty influencer demonstrating how to use it.

· A virtual fitting room allows users to instantly change outfits and see different clothing styles in real-time.

· Multisensory experiences could let users feel the ocean spray while buying a surfboard or smell the aroma of food while shopping for groceries.

As a result, more businesses recognize the impact of virtual reality on consumer decision-making. Studies show that consumers using in-store mobile shopping technologies tend to purchase more unplanned items.

Assessing Confusion in Virtual Shopping Environments

To incorporate environmental factors into the likelihood of confusion analysis, the following three-step approach can be applied:

1. If the infringer only uses another party’s virtual visual trademark within a virtual world, the degree of similarity between the virtual environments should be considered. The more similar the virtual shopping environments, the greater the likelihood of confusion.

2. If the infringer uses a trademark across both virtual and real-world spaces, the degree of similarity between virtual and real shopping environments should be assessed. The more similar these environments, the higher the risk of confusion.

3. The level of immersive experience in different shopping environments should be evaluated. The greater the similarity in immersion levels, the greater the likelihood of confusion.

Conclusion

Humanity stands on the brink of a technological explosion, with virtual reality technology now deeply integrated into daily life, expanding new living spaces and redefining the relationships between people, objects, and machines.

Although partial adjustments to trademark law can currently address challenges posed by virtual reality, as the boundaries between virtual and real worlds continue to blur, a complete restructuring of the trademark legal framework will become necessary.

Looking ahead, several key issues require further exploration, including:

· The assessment of similarity for non-visual trademarks in 3D high-immersion virtual worlds.

· The definition of trademark use in virtual worlds.

· The scope of "relevant public" in trademark legal relationships within virtual spaces.

As virtual reality and digital commerce evolve, so must the legal frameworks governing trademark protection.