While most of us are trying to grasp what the Metaverse is and what it will entail, a few big entities have already begun their journey into it. A question that anyone who is aware of the Metaverse raises - “Why is there a hype for a world which is only virtual?” Both Facebook and Microsoft are now making claims for having developed assets for the digital world. Metaverse can be simply defined ‘as a digital realm populated by virtual representations of people, places, and objects’. It is resultant a hybrid of many technological aspects, such as virtual and augmented reality.
Even though the Metaverse is at a nascent stage, legal issues related to the Metaverse have started to appear in conversations and practice.
This opinion piece which has been written by Ms. Vasundhara Shankar and Mr. Mudit Kaushik, discusses the impact of trademark laws and rights granted therein on this development. Vasundhara Shankar, the Founder and Managing Partner of Verum Legal, has assisted a number of businesses and technology-focused startups with legal structuring and other regulatory and compliance matters. Mudit Kaushik, Counsel at ZeusIP Advocates, specializes in Intellectual Property and Data Privacy laws.
Metaverse introduces issues that aren’t restricted to the virtual realm and will most certainly have real-world implications to a company’s capacity to secure and manage its intellectual property. Even when an organization has protected its mark in the real world, does it need to protect its mark separately in the digital world? Monitoring trademark usage, such as infringement and passing off, are just a few of these issues presented by the Metaverse’s unknown, unpredictable, and uncontrolled environment. Even if a corporation chooses not to develop its assets, its intellectual property may find its way into the virtual marketplace, and its rights in such property might also be impacted. How? Let’s see what our experts think!
The challenges faced by the entities to protect and enforce their rights vested with them in their trademarks, several giant right holders have already submitted trademark applications intended to be used in the digital world, in United States with the USPTO, says Ms. Vasundhara Shankar. Even prominent brands that have substantial existence in the real world are choosing to register their marks as represented in the virtual world. For instance, the shoe giant Nike has recently filed trademark applications for the marks Nije, Just Do IT and the Air Jordan logo.
Ms. Shankar also adds that “As the concept of Metaverse is at an emerging stage and the existing legislation is yet to be revised, the same is causing confusion leading to duplicating of applications that the right holders are filing”.
As many businesses consider their transition to the Metaverse, it’s vital to design a trademark strategy that ensures optimum protection for their brands. In the Metaverse, brand owners who fail to protect their trademark rights may find it challenging to prevent infringement and successful enforcement of rights. Some brand owners have already tried to register their trademarks for Metaverse-related goods and services, such as downloaded virtual goods and digital collectable services, adds Mr. Mudit Kaushik.
It is inferred that there is uncertainty about what the future will look like in this space. The use of real-world, third-party trademarks has been a repetitive concern at the junction of the virtual and real worlds. Trademark infringement is an ever-increasing risk.
In the United States, trademark owners have had difficulty enforcing trademarks used in digital spaces. The case of ESS Entertainment 2000 Inc v Rock Star Videos Inc, in which the issue was whether a virtual depiction of a real-world strip club in the popular game Grand Theft Auto infringed the strip club’s logo and exterior design trademark rights, was an early example of the potential pitfalls of using trademarks in the virtual world. The court said that the video game was an artistic expression protected by the First Amendment of the US Constitution. The court also mentioned that it was not likely that consumers would be misled into believing that the club produced the sophisticated video game.
Ms. Shankar also adds that since the concept of the metaverse is to bring everything real into the digital world, would each organisation and entity need to ensure that their trademark, and in fact other intellectual property rights are protected in the metaverse as well? Or would their right be applicable in the digital world as well, by extension?
One of the most recent cases which have come to the highlight is the suit lodged by the luxury giant Hermes against an individual named Rothschild, who has published a collection of NFTs (Non-Fungible Tokens) under the ‘MetaBirkins’ trademark. Hermes, who offers luxury bags under the trademark BIRKIN, has claimed Rothschild’s unauthorized use of the said mark. Interestingly, Hermes has argued that it has existing registrations for the mark BIRKIN and Metaverse specific trademarks registrations are not necessary to enforce their rights.
The overarching pattern emerging from the case laws is that the risks of liability for users of third-party trademarks are higher when the user is engaged in commercial activity. Another interesting point made by Mudit is that these cases till now have been decided against the respective trademark owners.
Metaverse is going to expand extensively in the coming times; hence, many right holders are at the doors of the respective trademarks offices to seek protection by filing multiple applications covering several classes. It is of primary importance and urgency that International Standards of Nice Classification be updated to clarify where the virtual products are categorized, to avoid unnecessary application and better protection of trademark rights. The least extensive, but impactful way to go about this would be to update the Nice Classification and add the option of choosing virtual or real-world to the goods or services categories provided, instead of filing new applications.
For now, to be on the conservative side, it is important that businesses register their trademark(s) for Metaverse to protect their trademark rights in both worlds. Also, as of now, since many intermediaries have their own Metaverse, these intermediaries must be regulated by the formation of regulations at both the international and national levels to avoid any anonymous infringement and protect the brand owner’s rights.