• Transform magazine
  • February 04, 2023

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Intellectual property: should brands get metaverse ready?

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Mark Caddle, partner and trade mark attorney at European intellectual property firm Withers & Rogers, discusses some of the legal issues brands are facing following the advent of the Metaverse.

Growing interest in Web3 gaming and widespread use of social media has led to an influx of interest in the emerging ‘Metaverse’, and contributed to the popularity of non-fungible tokens (NFTs). In response, brands across industries have been rushing to secure trade mark protection for virtual assets, even if they haven’t yet decided how to leverage them commercially. But is this the best course of action?

Platforms such as Mark Zuckerberg’s Metaverse, The Sandbox and Decentraland provide space where global users can socialise, view artwork and even buy the latest fashion products, typically through the use of cryptocurrency. However, it’s important that brands understand the commercial opportunities and challenges presented by the Metaverse. Expected to achieve an estimated net worth of $800 billion by 2024, the potential rewards for brand owners are considerable and many have already decided to stake their claim. ITV Studios recently applied to register The Voice within the Metaverse for entertainment purposes along with some NFT products that exist only in the virtual world.

However, there is an ever-growing grey area that can make it challenging to secure trade mark protection in the Metaverse. The question here is whether or not traditional trade mark registrations for physical goods can capture their virtual equivalent when infringement occurs in virtual worlds rather than in real life. This was proven to be the case in a recent ruling by Italian judges, where they ruled in favour of Juventus FC, granting an injunction against Blockeras after it was found that they had infringed trade mark law by creating NFTs depicting a Juventus football player. However, this was the first judgement in European courts to determine that the unauthorised reproduction of third-party trade marks in the form of NFTs is infringement. Regardless of this, some brands are attempting to minimise risk in this area now by investing in the protection of a portfolio of virtual assets.

A key challenge to protecting IP in the virtual world is making sure that trade mark registrations are applicable to local requirements for product categorisation. This means that sufficient advice should be given to ensure that new registrations for virtual assets conform to local trade mark law in the territories where they can be accessed. To assist with this, recent guidance was issued by the European Intellectual Property Office (EUIPO) on how best to protect products in the virtual space, which means brands are now able to seek specific advice in this area.

Due to the borderless nature of the Metaverse, as well as the anonymity afforded by such platforms, enforcing trade mark rights can be a challenge in itself. Being able to crack down on copycat products is fundamental, yet not all virtual spaces offer the correct tools to file complaints and subsequently remove any infringing content. Furthermore, finding where the owner of the counterfeiting brand resides, and proving that they were targeting consumers within territories where a specific trade mark registration would be upheld, can be extremely difficult to achieve. This further highlights the importance of forthcoming rulings in cases such as the ongoing dispute between Hermès International and Mason Rothschild over the sale of ‘MetaBirkin NFTs’, and Nike’s battle against StockX, both of which will help to establish a legal precedent.

Despite the technical challenges of the Metaverse, brand owners shouldn’t wait for legal clarity. Instead, they should act now to ensure their brand assets are registered as trade marks in order to prevent their online presence becoming diluted. Preparation is key to ensuring that key commercial opportunities are not missed and professional advice should be sought to make any necessary adjustments to their intellectual property (IP) strategy. It is also important for brands to stay in touch with key decisions being made in cases around the world if they are considering expanding their reach into the virtual marketplace.

In a fast-changing commercial world, brands must have the right tools to protect themselves and reduce the risk of infringement, which is why some are choosing to be proactive and get metaverse ready now. Securing trade mark or design registrations in the correct classifications will place them in a strong position, but it’s equally important for strategic branding decisions to be fully informed before entering the virtual world.