Metaverse and intellectual property

By Yves Schyns Trademarks | Designs attorney | Ipsilon Group

The metaverse, this constantly evolving virtual and interactive universe, today represents a new field full of opportunities and is attracting the attention of many market players. Moreover, it heralds new challenges for the world of intellectual property. The convergence of the physical and virtual worlds is changing the way brands interact with consumers. As a result, companies need to review their trademark protection strategies, because a strategy adapted to protecting a brand in the physical world may no longer be sufficient for its digital equivalent.

The overturning of the principles of speciality and territoriality

First of all, we need to look again at the two main principles on which trademark law is based:

– The principle of speciality (to which well-known and reputed trademarks are however exceptions), according to which a trademark is protected for specific goods and services.

– The principle of territoriality, which limits this protection to the geographical boundaries of a given territory, i.e. a country or a union of countries (e.g. the Benelux countries or the European Union).

When we enter the metaverse, these two principles are rudely overturned. They need to be redefined, or at least adapted.

Principle of Territoriality

The metaverse is essentially global, which makes the principle of territoriality more difficult to apply in this case. Can the protection of a trade mark registered in one country be extended to the metaverse, where consumers in the four corners of the world navigate?

One possible solution lies in the theory of ‘focus’, used for trademark infringements on the Internet, where the target of an infringing act (such as language or delivery in a specific country) may justify legal action.

Principle of speciality

The metaverse allows users all over the world to interact with NFTLs, i.e. virtual goods such as clothes for their avatars, works of art to decorate their digital flats, or luxury cars to get around in. But does this mean that these products are similar to their physical equivalents?

Let’s take the example of a handbag. Although a virtual bag in the metaverse does not have the same function as a physical bag, it nevertheless often carries the same symbols of style and prestige as its real equivalent. Consumers can therefore be influenced by a brand on a virtual product, just as they would be by a brand on a real product.

In these circumstances, is there a risk of confusion?

The Metabirkin case is a perfect illustration of this question. In 2021, artist Mason Rothschild created NFTs depicting Birkin bags, an iconic Hermès brand, under the name ‘MetaBirkins’. Hermès sued Rothschild claiming trademark infringement and that the availability of these virtual bags created confusion with its physical products, thereby threatening its brand image.

The Court considered that the use of the MetaBirkin trademark in this manner indeed infringed upon Hermès’ prior rights, and the consumers were misled as to the origin of the products. Furthermore, the NFTs were not considered as being “protected art” and therefore were found to violate Hermès’ trademark rights.

This case highlights the importance for companies of protecting themselves against the unauthorised use of their brands in the metaverse, where the boundaries between the real and the virtual become blurred.

It is important to note that this decision comes from a New York Court, not a European one. While it offers a first glimpse of what might be decided by the European authorities, there is still a degree of legal uncertainty on this subject for the time being.

Moreover, beyond the geographical aspect, this decision should be approached with caution, as it concerns a renowned brand belonging to an international luxury house. Would the decision have been the same if the trademark in question were not a well-known trademark? Nothing is less certain.

What steps should be taken to anticipate the risks?

Given that case law in this area is still in its infancy, caution is advised. It is therefore in the interests of future trademark owners to anticipate possible infringements of their rights, which could be highly prejudicial. To protect your rights effectively, we recommend that you to:

– Make note of the extent to which your trademarks are protected.

– Register trademarks for products and services related to virtual environments. In practical terms, virtual products are classified in class 9 of the Nice Classification.

– Actively monitor third-party activities in the metaverse to detect possible counterfeiting.

By doing so, right holders will avoid the uncertainties associated with a body of case law that is far from firmly established in this area.

Lastly, collaboration between national and international regulators and metaverse platforms will be crucial to establishing clear rules and enforcing intellectual property rights in these digital spaces.

The author’s opinion

Ultimately, metaverse offers unprecedented opportunities for commercial development, but it also requires greater vigilance when it comes to intellectual property. In particular, the protection of trademarks, which represent enormous value for businesses in the real world, must now be adapted to this new digital reality, which is advancing at breakneck speed. Ultimately, whether or not you are a company with an active or developing presence in the metaverse, it is time to adapt your trademark registration strategies to include virtual products and services. By anticipating the risks and taking the necessary steps without delay, you can be sure that your brand will remain protected – whether in the real or digital world.

Sources:

Park, K. (03/2022), Les marques dans le métavers, OMPI MAGAZINE, https://www.wipo.int/wipo_magazine/fr/2022/01/article_0006.html

Dahan, V. (04/2022), Les métavers et la propriété intellectuelle : quelle protection pour les titulaires de marques ?, Article Editions Multimedia n° 276, https://www.joffeassocies.com/wp-content/uploads/2022/04/Newsletter-IP-metavers-avril2022.pdf

Ancré Team (01/2021), Hermès attaque un artiste pour contrefaçon dans le Metavers, https://ancre-magazine.com/hermes-sac-birkin-metabirkin-contrefacon

Hermes Int’l v. Rothschild, 22-CV-384 (JSR) (S.D.N.Y. May. 18, 2022