Trademarking in the Metaverse and Non-Fungible Tokens – virtually pointless?

Trademarking in the Metaverse and Non-Fungible Tokens – virtually pointless?

Should you be extending your trade mark protection to the Metaverse?  What role do Non-Fungible Tokens (NFTs) play within the Metaverse and your trade mark protection strategy?


What is the Metaverse?

It is probably easiest to understand as a massively scaled up version of existing virtual gaming environments like Second Life, where you can meet up, share experiences and buy and sell goods.  The addition of high quality 3D visuals will merge the real and virtual worlds enabling you to seamlessly mix the two environments for a single experience.  Accessing the Metaverse will be as easy as opening a search browser but it will offer more than just the limitless information, pictures and videos that we see on the internet and extend into experiences and relationships.  If you have seen the movie Ready Player One, “The Oasis” is a very advanced example of what the Metaverse could be.

Well, that is the idea, but we are not quite there yet and when we do get there you can be certain that it will be heavily monetised, with shopping for both goods and services at the heart of the experience.  We buy clothes online, but perhaps the experience would be better if your virtual self could try on the items before you buy, with a life-like avatar showing you the fit and look of the product in near perfect reality?  Brand owners might invest considerably in such an experience to drive sales, reduce the cost of bricks and mortar stores and the number of items which are returned.  Nike are already active in this area, including collaborations with the hugely popular gaming platform Fortnite and a number of trade mark applications directed at virtual goods.


Where do NFTs come in to this discussion?

An NFT is a code added to an electronic file, such as an image, to create a unique signature – this signature distinguishes the file from an otherwise unique file containing identical content and allows the original file to be sold and re-sold and to prove ownership.   It is based on the same blockchain technology that has enabled the growth of digital currencies like Bitcoin.  NFTs have created a market for digital artists and the sale of digital memorabilia, such as Jack Dorsey’s first tweet, which sold for $2.5 million.

Looking back to the Metaverse, if I want to invest in, say, a virtual designer handbag, then how do I guarantee authenticity, ownership and a re-sale value?  Probably from an NFT embedded in the file I buy.


So should you be protecting your trade marks for this new reality?

In one sense, the Metaverse is a bit of a red herring.   A current example of legal action which is causing lots of discussion about the Metaverse in the news is the action being brought by Hermes against MetaBirkin in relation to digital artwork imitating their products – but this action is likely to be based on conventional Intellectual Property Rights (IPR) and the digital nature of the infringement is unlikely to impact on the claim.

Also, in relation to the fashion brands at least, virtual copies are likely to copy not just the trade mark but also the product design which will bring other rights into play – like design rights and copyright– these other rights are not limited to specific lists of goods and will be as applicable in the virtual world as they are in the real world.

On the other hand, it seems that in the fashion arena in particular, the use of the Metaverse is growing rapidly with brands appearing virtually in gaming platforms and with brand owners using the Metaverse to allow customers to virtually try on goods as mentioned above.  Your existing IPR is likely to provide solid basis for action against someone selling virtual copies of your brand in the Metaverse but it may be possible to simplify the action by registering your marks for, say, downloadable virtual goods or the like as it is easier to take action if your registration covers the exact goods of interest.  That said, if I sell a virtual handbag, and I have a registration that covers handbags (rather than downloadable virtual handbags) then the virtual product and the actual product could be argued to be identical negating the need for a further registration.

If you are actively targeting the Metaverse then it may be worth considering extending your protection to cover virtual goods, but until we have a body of decisions on this issue it will be hard to assess what value those registrations have.  For other brands who are not yet intending to engage with the Metaverse, their existing rights should give enough protection to prevent digital copies of their goods in the current environment but if new filings are needed in light of a conventional portfolio expansion consideration could be given to including virtual goods and services within the new applications.

There are still many unknowns about the Metaverse and how it will be formed and developed.  What if a separate Trade Mark Office and judicial system are opened in the Metaverse? Will you need to obtain protection there in the same way as you need to obtain protection in different countries?  If you are relying on conventional rights, where does the infringement take place and do you have a conventional trade mark registration in that country?  Looking at our experience with financial institutions whose names have been used without permission for cryptocurrencies, where the legal case is unanswerable, can you find the real world infringer to take action against them?  What is the sanction against a virtual person for infringement of IPR – can you fine them based on the value of their NFTs or other virtual assets? Or put them in a virtual prison?

We don’t have the answers to all these questions, but it will be interesting to see how things develop.


If you would like to discuss this topic you can contact the writers, or a member of our expert trade mark team.

Category: Latest Insights | Author: Ian Gill, Sarah Neil | Published: | Read more