Author: Paola Bonalume
A virtual world has recently resurfaced in which the features of digital technology such as video conferencing, games such as Minecraft or Roblox, use of cryptocurrencies, virtual reality, virtual reality, social media and live-streaming called 'the Metaverse' and described as 'the Internet of the future' merge.
It is a digital universe where people can experience a life parallel to that of the real world, a space where, through their avatars, they spend their free time, playing, working, developing relationships and whatever else usually happens in reality.
Of course, the Metaverse can also become a space for doing business, not only because one could open offices of a company and thus carry out commercial activities, but also because all the resources that exist in it can be bought, sold, rented (e.g. real estate).
The Metaverse allows one to virtually live a variety of experiences, explore environments, resources and virtual concepts that are no longer segmented or intermittent but 'fused' together. In fact, it is not
a single product, it is not a game and it has not been created by a single company but is instead similar to a 3D world wide web, in which companies, everyday office activities, channels and media are immersive and interoperable.
The growing interest in the Metaverse is mainly due to Mark Zuckerberg's new marketing strategy, which recently changed the name of Facebook to Meta, aiming to become a Metaverse-type platform.
Recent video games are also increasingly immersive as RPG (Role Playing) where universes with almost infinite possibilities can be created and users can create and sell their own artefacts, buy currencies, clothes and other items created by the developers, such as in the Animal Crossing or Fortnite games.
In fact, a real passion for the creation of personalised avatars, apps and communication tools (emoji, messaging avatars...) has exploded. Such reality is increasingly accessible to the 'general public', that nowadays access virtual worlds via smartphones, PCs and other accessories such as visors, VR sensors and virtual reality helmets.
NTFs (Non Fungible Tokens) have therefore recently been developed in order to allow companies to create dematerialised products and for users to buy and trade them.
NTFs are files with a JPEG extension (e.g. a drawing, a tweet, a gif, a video), encrypted and protected by blockchain. This makes the file unique and non-reproducible and because of this uniqueness, it also (and not only) has a market value from a collecting point of view.
This special type of cryptographic token is the certificate of ownership and authenticity of a unique asset (digital or physical), i.e. it is a non-duplicable token.
Several companies (e.g. Axie Infinity) now rely exclusively on NTFs to create virtual real estate projects where transactions take place in cryptocurrencies. Therefore, a virtual artwork can be purchased as a 'non-fungible token' from company A and could be displayed on the digital wall of a house in a game made by company B.
There are even specialised consultancies that help companies enter the Metaverse and cryptocurrency payment service providers to facilitate the virtual cross-border transactions that will multiply in the virtual universe.
The result is real-time collaboration between users and applications, that increases productivity and maximises the exchange of know-how by abandoning the need for the physical office or face-to-face contact, with the advantage of enabling companies to move from B-to-C marketing to B-to-Avatar marketing.
Because avatars in the Metaverse can interact, create and sell virtual products and services, just like real physical products/services, how can one guarantee that no one will create or sell products and services in a metaverse before the real owner does? and what industrial property rules will apply to protect intellectual property?
There are many possibilities of expression for trademarks in the Metaverse, for example:
- virtual product placement/marketing
- virtual events: conferences, trade fairs, virtual seminars, concerts (sold by companies specialising in creating universes)
- virtual influences
- virtual sponsorship of events
From a legal point of view, the Metaverse thus presents several problems concerning the notions of trademark law, copyright law and image law, such as:
- difficulty in limiting and monitoring the use of the trademark
- territoriality of the trademark
- licensing and consequent extension of the territory and authorised use of trademarks in the Metaverse.
- control of counterfeiting, of CMUs (User Generated Contents) and of contents created by the users of a trademark.
The issue has recently emerged following an issue involving US digital designer and artist Mason Rothschild and Hermès International.
Mason Rothschild introduced, in the form of NFT, a collection composed of "Meta Birkin" bags, also presented at the Miami Art Basel 2021 and sold for around $45,000 each.
These bags were clearly inspired by the famous and iconic Birkin model by Hermès and of course the French Maison immediately intervened to remove the collection from the online platform OpenSea.
However, the designer, while acknowledging that the MetaBirkins NFT were protected by the trademark rights of Hermès, maintained his own right and freedom in the artistic creation. Moreover, the artist, who sold his non-fungible tokens for approximately 800,000 dollars, also claimed that some “cheaters” had made 35,000 dollars from copies of his "works".
In January, Hermès also filed a writ of summons in a New York court against Mason Rothschild for his "MetaBirkin", precisely because these virtual works of art are clearly recall the design of the Birkin bag, although the colours and textures are different.
Basically, this is the first "virtual counterfeit" and whatever the conclusion of the legal action will be,
this case addresses for the first time the issue of 'authenticity' in the digital world and 'luxury' in the Metaverse, a reality with which the entire sector will have to deal in a future that is already here.
The Metaverse makes products more accessible to millions of people who can wear and own items virtually, that they could not afford in real life, and allows fashion houses to extend their presence into new virtual territories.
Many fashion companies are therefore investing in the Metaverse and have already started filing trademark applications for virtual products: e.g. Balenciaga, Nike, Adidas, Gucci or OTB Gruppo.
Moreover, not satisfied of the virtual world alone, many brands have created a bridge between the physical and the metaphysical. For example, Balenciaga decided not only to dress a Fortnite avatar virtually, but also allowed access to the brand's online shop to buy real-life products.
Dolce & Gabbana presented a collection of nine NFT pieces (Genesis Collection) intended to be used both in the real world and in the Metaverse with their NTF. This initiative was also promoted by Gucci on Roblox.
Adidas also recently announced its forthcoming 'Into the Metaverse' collection which will consist of a mix of digital and physical objects, sold as NFTs, which shoppers will be able to use both in online platforms and as real-world wearable clothing. The same initiative has also been announced by Nike.
This new phenomenon is likely to have an important impact on trademark law as companies will be able to sell their products both in reality and in the Metaverse.
Therefore, trade mark protection will have to be adapted to this virtual world and companies will have to think about protecting their signs for particular goods and services in classes 9 (software, downloadable virtual goods), 35 (distribution or sale of virtual goods) and 41 (entertainment services, in particular providing on-line non-downloadable goods such as footwear, clothing, headgear, spectacles, bags, sports bags, backpacks, sports equipment, art, toys for use in virtual environments)
The Metaverse, like any new opportunity, can either lead to a radical change in our way of communicating and living or not. However, according to a Chainalysis report, in 2021 the NTF market generated $26.9 billion in cryptocurrency transactions worldwide.
It is therefore reasonable to assume that the Metaverse has all the potential to become an important part of future professional and social life and many companies are ready, or preparing, to enter the Metaverse.
As is often the case, legislation cannot keep up with the rapid development of technology; therefore, it will be crucial for a company that wants to effectively enter the Metaverse to implement solid and well studied contractual strategies, including the possible implications of the digitisation of its products and services in its licence agreements, partnerships, commercial collaborations and franchising.
Thus, companies interested in or whose brands may be exposed to the risks generated by this new reality, should immediately consider registering their trademarks and extending protection of their brands to the meta-use of the sign.
Design is another great opportunity. Seeing how a piece of furniture looks in a virtual version of their living room will help buyers decide whether they want to buy it or not. Therefore, like trademarks, designs also must be protected.
In conclusion, although there are still many questions, it is undeniable that the Metaverse is now more than just a suggestion and that, as a result, the winners of this new challenge will certainly be those companies, content creators and software and application developers who decide to invest and protect themselves in a digital ecosystem that represents an almost inexhaustible source of advertising, publicity and visibility.
In light of the above, we invite you to consider filing your trade mark(s) in classes 9, 35 and 41 and, if you have an iconic product, we suggest you assess the feasibility of being the first to create a digital work certified by NFT in order to take this possibility away from third parties and possibly offer it in the Metaverse.
This last service is not one of the services we provide, but we believe it was our duty to evidence the matter to you.
Of course, we do not know whether or not this new "trend" in the Metaverse will be very successful, however, since for the first five years it is possible to protect a sign even without actual use, such circumstance allows you to make a careful assessment of the possibility and opportunity to enter the world of virtual reality and gives you the time needed to adapt to this market.