Trademark protection in the metaverse, new legal challenges

The use of trademarks in the metaverse raises questions on the commercial strategy to promote these distinctive elements, but also on the forms of trademark protection and defense. The explosion of online brands requires a clear understanding of how to protect the brand from counterfeits, and how to ensure for the customer the sale guaranteed by the brand. “Our lawyers dealing with international protection and trademark application – at Damiani & Damiani International Law Firm – are studying the legislation to find ways to effectively protect companies, since they are all wanting to enter the metaverse and conquer its space and visibility.

Metaverse is an opportunity for brands to find new protection and investment opportunities

Facebook, Microsoft, Epic Games are just some of the major brands that are investing in virtual reality. Digital spaces are on the rise and new opportunities for business and the sale of goods and services will soon open up. Maserati, Aston Martin, Tesla have already launched virtual car models in a Tencent game. Ralph Lauren released a 50-piece digital clothing collection in August 2021, available for purchase via the social network app Zepeto.

Even land and properties can be purchased in the metaverse. In March 2022, the first Metaverse Fashion Week in the history of fashion – but also of the metaverse itself – was held on Decentreland, where fashion brands such as Hogan of the Tod’s group have presented in NFT (Non-Fungible Token) a digital re-edition of the brand’s first luxury sneakers.

NFT and metaverse: the new revolution of digital corporate advertising campaigns

The revolution did not start yesterday. The information guiding customers’ purchases is now mainly digital, given how generation Z spends an average of 7 to 9 hours a day on digital devices. For brands, the metaverse is not the future – it’s the present.

How major international companies are protecting their brands. Registration of trademarks to be used online

This is the direction already taken by many major entrepreneurial realities such as Nike, which filed trademark applications in the USA for various brands (including “Nike”, “Just Do It”, “Jordan”, “Air Jordan”) of shoes, clothes and accessories that can be used in online virtual environments. Among other things, Nike has gone even further, creating Nikeland on the Roblox platform, which is essentially a digital city where one can buy Nike digital products, but also play and “practice” sports, such as parkour.

The importance of protecting brands in the metaverse

It’s easy to see how the use of trademarks in the metaverse raises not only challenges regarding the appropriate commercial strategy to promote the brands, but also questions about the forms of protection of the trademark itself: for example, is it necessary to file the trademark also for the entertainment and software classes? Or is the protection automatically effective even in the virtual world?

The filing of new brands in virtual cities 

The aforementioned digital logos, in addition to constituting real signs within the virtual windows of the metaverse, will also be imprinted on the clothes and accessories of the avatars / consumers. And some brands are already selling digital assets such as NFTs, so as to confer exclusivity to the virtual object purchased in its digital version. Just like in the real world, in fact, even metaverse users want their virtual alter egos to have a unique personality: hence the bet of the fashion brand of the likes of Louis Vuitton and Balenciaga, on collections and skins for games like Fortnite and League of Legends.

Adidas, like Nike, has filed trademark applications for the metaverse and so has Puma, filing trademark registration applications with the intention of offering downloadable virtual goods for use in virtual worlds. Victoria’s Secret also took its first step into the metaverse by filing trademarks for “downloadable virtual goods, computer programs for creating and trading digital collectibles using blockchain-based consensus protocols and smart contracts.”

Companies are applying for trademark registration for new types of products and services, especially non-traditional brands. In this sense, the classes of the Nice Classification to consider could be no. 9 but also no. 35, 41 and 42 as well as, of course, those referring to the goods and / or services offered.

Metaverse and Metarights: new legal challenges

On the other hand, the metaverse race in the opposite direction has already begun: the first fraudulent registrations of famous brands by third parties for virtual products and services (such as Gucci and Prada) have already been attempted.

Undoubtedly, attention will also have to be paid to license agreements relating to intangible goods and, in particular, to trademarks: it will be necessary to identify the rights of the licensor and licensee within the virtual world, pinpoint the new technological clauses and define the territorial-virtual perimeter. It will also be essential to identify the faculties granted to consumers’ avatars.

Problems related to consumers’ brand management 

There are platforms, such as the Animal Crossing game, in which players can use well-known logos to create clothing for their avatars. These questions arise:

  • How are these creations managed?
  • Are they exportable to other platforms?
  • How can trademarks be used freely within the metaverse? With what limitations?
  • What happens if the brand is used in an inappropriate way, perhaps in a violent context?
  • Does the principle of exhaustion, according to which the owner of an industrial property right who places his goods in the territory where the trademark is protected can no longer oppose further and subsequent circulation of those goods, apply to the metaverse?

The problem of licensing agreements and evidence gathering

For lack of adequate license agreements, metaverse platforms could then risk being accused of counterfeiting due to the activity of their avatar-users. Contractual agreements are inevitably destined to become even more detailed and fundamental. Not to mention the issue of gathering evidence of violations within the metaverse: identifying and locating offenders may be more challenging than it already is in the real world, requiring more advanced investigation methods, able to adapt to the identification of violations risks in the metaverse.

In addition to constant monitoring, investigators of the virtual, whether it be natural persons, automated systems and/or artificial intelligence, will have to implement their own techniques to keep up with the dynamism of the metaverse. In the same way, it will be necessary to identify new methods for quantifying the damage: how is the prejudice deriving from counterfeiting within the virtual world quantified?

The extent of the legal challenges that await us therefore appears evident and the more operators will be able to anticipate, imagine and evaluate the scenarios, the more controllable the consequences will be. The opportunities in this scenario really are the next big thing, both for technology companies aimed at monetizing their intellectual property existing in the metaverse, and for companies monitoring users’ avatars – consumers enjoying the goods and services offered.

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