The Metaverse: Implications for Brand Protection

The word ‘Metaverse’ has its origins in the science fiction novel ‘Snow Crash’, and in substance refers to a virtual universe distinct from day-to-day reality. The potential pitfalls of a perpetual online existence for the whole of humanity aside (a topic explored quite thoroughly in the film ‘The Matrix’), the Metaverse has clear implications for brand owners irrespective of whether they intend to exploit their brand in the online world.

What is the Metaverse

In some senses the ‘Metaverse’ is nothing new, after all many online games, including the massively popular (no pun intended), massively multiplayer online role-playing games (mmorpgs), have allowed users the opportunity to create an online alter ego or ‘avatar’, and have frequently encouraged the exchange of fiat or cryptocurrencies, or other tokens, for digital or in-game assets. The ‘Metaverse’ seems only to differ as to the scope of the online world envisaged – instead of players being confined within the limits of a particular game, the Metaverse offers an online universe without clear boundaries.

As in the real world, in the Metaverse goods are bought and sold and, accordingly, digital assets have real world value. These digital assets are commonly known as non-fungible tokens or NFTs, examples of which include in-game digital assets such as plots of land, and fashion items, as well as digital works of art. The trade in these assets can be extremely lucrative, for example, the digital work of art ‘Everydays: the First 5000 Days’ was sold at auction for 69.3 million USD in 2021.

Brands and the Metaverse

Given the lucrative nature of the trade in NFTs in the Metaverse and the likely future expansion of trade in virtual assets in due course, brand owners should consider the effects that the expansion of the Metaverse may have on their business and brand. For example, the owner of a fashion brand may wish to control the exploitation of its brand on digital assets held in the Metaverse, because it wishes to create its own line of NFT’s in due course, or because it wishes or needs to control the trade in digital assets so that this does not end up diluting a brand for primary use on physical products in the real world.

The law surrounding the Metaverse and its impact upon intellectual property rights is developing and at this stage it is unclear whether a trade mark registered for a physical product or service could be used to prevent use of the same trade mark on an NFT or digital asset. Accordingly, brand owners should consider expanding their current trade mark protection to cover digital versions of physical products where appropriate. This will serve to ensure that their registered trade mark rights can be enforced against use of their trade mark in the Metaverse, and enable them to control and exploit the possibilities of this new market going forward. Further, in circumstances where there has been unauthorised use of a brand or work in relation to a digital asset, brand owners should consider whether copyright or design right can be enforced against the alleged infringer.

Similarly, before committing to using a brand or logo in the Metaverse, businesses intending to trade or deal in NFT’s would be well advised to conduct thorough searching of earlier registered and unregistered marks which cover comparable ‘real-world’ goods or services to ensure that use of the brand or logo as an NFT does not constitute an infringement of earlier rights which is preventable by an action for trade mark infringement or for passing off.  

Dealers in NFT’s should also be aware of the potential for digital assets to infringe copyright or design right in an existing physical work. For example, to the extent that a digital work of art is a substantial copy of an original real life drawing or painting in which copyright exists, it is likely that the copyright owner can prevent copying as an NFT in the Metaverse by means of an action for copyright infringement in relation to the use of the digital work of art.

The Metaverse is a rapidly expanding arena which presents businesses, brand owners, and content creators with a unique set of challenges and opportunities. The creation of this parallel virtual business world means business owners must consider its implications for the future of their businesses and, as part of this process, must ensure that existing portfolios of intellectual property assets are sufficient and appropriate to protect and enhance their business as it engages with the Metaverse.

If you require advice or assistance to protect or exploit your business or intellectual property assets in the Metaverse, one of our qualified Trade Mark Attorneys would be happy to assist you.