The Metaverse and IP Brand Protection

Too many acronyms in the title?  Trademark lawyers are waiting for decisions to be made related to use of brands in the metaverse and whether the rights in the real world transcend to the digital space.

Even though signs point to yes – it is likely that trademark rights can extend into the digital space – it looks like gamers are still playing fast and loose with the trademark rights of famous brands within the wild-wild-west that is the metaverse, and it’s giving brand owners sweaty palms and lighter bank accounts.

First Off, What Is the Metaverse?

The meta-verse is an online virtual world where people can interact with three-dimensional avatars, customize their world, and explore. It is an ever-expanding world of user-generated content, allowing users to explore, create, and interact with virtual environments, real-world objects and other users. In the meta-verse, users can also purchase and trade digital goods, such as weapons, land, or services.

What’s the Big Deal as It Relates to IP?

Imagine trading virtual goods with your avatar on a digital platform.  Maybe you purchase your virtual fiancé a Tiffany® diamond ring or buy your virtual best friend a Coca-Cola®?  Or how about a game where you take a digital Ford® truck and drive it into a crowd of people eating in a virtual Pizza Hut® restaurant?  How would Ford Motors or Yum Brands feel if a metaverse game took that spin - probably not great.  What if digital images of miniature luxury handbags were sold as NFTs that were exact replicas of a famous luxury brand and ended up selling for $42,000 an image?  Would the luxury brand owner be okay with that?  French luxury brand, Hermes®, was definitely not and practically speaking, you can see the brand owners growing concerns about losing control of their images and brand reputations in this space.

Metaverse and Looming IP Issues

Case law has yet to be produced that would give direction over IP use rules in the metaverse.  We do know it is complex and brands have little recourse but to head to court for relief.  The two lawsuits to watch are StockX and MetaBirkins, as the outcomes may lay the foundation of IP law in the metaverse. The StockX lawsuit may set a legal precedent regarding what kinds of NFTs can be created, while MetaBirkins may clarify how trademark law will be applied to NFTs.

Lack of Regulation on Metaverse Platforms Contributing to Rise in Issues

While Metaverse platforms acknowledge that these issues are present on their platforms, and will sometimes remove the bad content, the onus is on the brand owner to police the activity and that poses real challenges. Many metaverse platforms have no IP enforcement protocols or implement effective preventative measures.

What Can Brands Do Today for Protection of Their Marks in the Metaverse?

So, what can brand owners do now to protect themselves in the wild?  Extend your current brand monitoring to the metaverse platforms if you have not already.  Regularly check for activity with respect to your brand.  Also, consider whether to apply for trademark protection in classes that have a digital focus.  Having these registered classes may bolster your enforcement abilities with respect to activity in the metaverse and allow you access to more efficient enforcement remedies (e.g. classes 9, 35, and 41).  Check back for updates on these pending cases to know the latest updates on trademark law as it relates to the metaverse.

Key Takeaways for Brand Protection in the Metaverse

Brand owners should consider expanding enforcement & monitoring efforts to help protect against infringement and unauthorized activity in the metaverse by:

• Setting up monitoring services for activity in the metaverse;

• Monitor for new decentralized domains that are confusingly similar to your marks; and

• Consider strategic trademark filings to cover metaverse-type activities, whenever possible.

For more information about trademark protection and enforcement monitoring services, see our Trademarks and Industry Focused Legal Solutions pages.