You are likely familiar with a relatively recent buzzword that has been making the rounds, “the metaverse.” The metaverse generally refers to an immersive collection of digital platforms where users can interact with different spaces, users, and things through digital avatars. While there is debate and skepticism surrounding the metaverse, one thing is certain: the legal field, particularly intellectual property laws and practices, are reacting to this still new technological phenomenon. Many companies and brands, from American Express® to Zyrtec®, have already moved to protect their intellectual property in the metaverse. As such, it is important to be aware of legal developments in this space and plan accordingly.
Brand owners need to think about how to protect their brands not just in the real world, but also in the digital landscape of the metaverse.
One may buy, sell, and trade digital goods and services in the metaverse using a digital avatar. Non-fungible tokens, or NFTs (another buzzword you have likely heard of), enable transactions of these digital goods and services by enabling authentication of ownership, goods and services, and identity. NFTs are published on a blockchain to record identification and authenticity of virtual assets. These virtual assets are often digital representations of goods and services that are offered in the world we live in (e.g., real estate, apparel, vehicles, shows, restaurants, consumer goods, etc.). For example, one can purchase a virtual plot of land in close proximity to one held by Snoop Dogg, hold a virtual business meeting in a Toyota® virtual office space, and virtually travel to the meeting driving an Audi® backed Holoride® vehicle. In addition, a variety of businesses and other entities have created, or are in the process of creating, their own sub-platforms within the metaverse. Hence, the metaverse is ripe for commercialization and intellectual property protection plays a crucial role in its monetization.
While one might think that one’s existing trademark registration for goods and services in the world we live in may protect digital or virtual representations of the goods and services, the law is not yet settled on this issue. It is unsettled whether existing trademark registrations identifying conventional goods and services cover virtual assets, including digital versions of the registered goods and services. Hence, filing trademark applications covering these digital goods and services is an important step in attempting to protect virtual assets. Digital goods and services that are featured in the metaverse typically fall under International Class 9 if downloadable or 41 and/or 42 if non-downloadable. Thus, it is no surprise that there is an ongoing surge in U.S. trademark filings directed to digital goods and services in these classes. For example, Lululemon® has filed trademark applications directed to virtual retail stores, virtual exercise classes, and virtual apparel, among other things, in the metaverse. Businesses should consider filing appropriate trademark applications for their goods and services in the appropriate classes to extend protection to the metaverse.
Depending on the nature of the virtual assets, protection may also be available under copyright law. For example, virtual assets including images, motion pictures, and other dynamic visuals, may be suitable for copyright protection. Experienced intellectual property counsel can assist in navigating challenges in implementing takedowns for copyright violations, licensing agreements, and royalty collections, including those that may arise due to the emergent status of this industry.
There are already high-profile cases involving the metaverse, such as a suit filed by Hermès® against digital artist Mason Rothschild for making, selling, and using a virtual handbag named MetaBirkin that allegedly infringes on Hermès’ trademark rights to its famously pricey Birkin® handbag. Hermès’ complaint further alleges trademark and trade dress dilution based upon the sale of MetaBirkin NFTs, which could sell for as much as $40,000 – well within the retail price range of actual Birkin® bags. Notably, the court in the Hermès® case noted that a traditional trademark analysis would be more appropriate if the MetaBirkin was usable or wearable in the metaverse rendering it more akin to a commodity as opposed an artistic work, signaling the importance of trademark protection for those who wish to protect their brand against NFT creators.
A viable defense in such infringement cases may include asserting the First Amendment. The First Amendment may protect otherwise infringing uses of another’s trademarks where the uses involve free expression (e.g., art). For example, in a case filed by AM General® against Activision Blizzard, vehicle manufacturer AM General® alleged that video game developer Activision Blizzard using Humvee® trucks in a Call of Duty® game constituted trademark infringement. The court held in favor of Activision Blizzard, finding that use of the Humvees® has artistic relevance in evoking a sense of realism and lifelikeness in the game since Humvees® are actually used in real world military operations and do not explicitly mislead consumers as to the source of the games. If a parallelism can be drawn between video games and the metaverse, perhaps courts may rule that trademarks may be used in the metaverse without a license to evoke a sense of realism and lifelikeness as long as consumers are not explicitly misled. This, however, is yet to be seen.
Accordingly, it is advisable to seek intellectual property protection in the metaverse and having a conversation with your legal counsel to strategize and familiarize yourself with this emerging industry.
JMBM’s Intellectual Property Group represents entrepreneurs, family-owned businesses, middle-market companies, startups, universities and the FORTUNE 500, handling patents, trademarks, copyrights, domain names, trade dress, trade secrets, and related licensing and litigation. Our approach is aggressive and efficient, and we keep a keen focus on helping clients achieve their goals.
This update is provided to our clients, business associates and friends for informational purposes only. Legal advice should be based on your specific situation and provided by a qualified attorney.