Whether you’re familiar with the term or hearing it for the first time, many global brands have started thinking about the implications the metaverse might have on their intellectual property. There are seemingly limitless opportunities for brands to enter this new sphere. Whether it’s advertising in-game, developing skins (read: digital clothing) for avatars or, as Wendy’s did, bringing your brand to life in-game… if you can’t beat them, join them. So what does this mean for my IP?
Are my marks currently protected against counterfeiting in the metaverse?
In these new unchartered waters, there is a possibility that the protection given to existing records could extend to virtual goods and services. However, although it has not been tested by UK courts, the level of similarity between real world and virtual goods and services will undoubtedly be a factual assessment. For example, legal services offered in the metaverse are arguably no different from legal services provided in person or elsewhere on the Internet (such as during a video call). A company bringing an action against a third party’s use of a trademark for legal services in the metaverse may therefore be able to claim so-called “dual identity” infringement under Article 10(1 ) of the Trade Marks Act 1994.
Similarity and risk of confusion
Conversely, the similarity of real-world goods to their virtual counterparts is likely to be more complex. At first glance, they are completely different. Virtual clothes are basically data presented on a screen by computer software. It does not serve the normal purpose of clothing, such as providing warmth or protection, which means these goods would likely not be considered interchangeable. However, arguments could be made that clothes serve a greater purpose as an indicator of your identity: if clothes were purchased solely for functional reasons, many clothing brands would go bankrupt. Perhaps when a consumer has the option of purchasing both a real-world item and the virtual equivalent, the goods could be considered complementary.
Even though virtual goods and real world goods are similar, confusion is still necessary for a successful claim under Section 10(2) of the Trade Marks Act 1994. This could be a difficult hurdle in situations where real-world goods are sold in-store and virtual goods are sold in an NFT marketplace. It would seem unlikely that consumers would be confused between the products. However, technological developments may mean that consumers can purchase real-world and virtual goods from the same platform. The possibility of confusion would be akin to a consumer mistakenly purchasing an e-book from an online retailer rather than a paper book.
Protection will more likely exist for well-known marks whose reputation can be exploited to enforce their existing rights under section 10(3) of the Trade Marks Act 1994. Similarity and confusion need not be demonstrated here, which means filing a trademark infringement lawsuit. is more direct.
Should I register my trademarks in this new digital sphere?
Brands that participate in the metaverse have many advantages: on the one hand, it is always “on”. Existing in the metaverse allows your brand to reach audiences persistently, currently without (much) limitation. Of course, this inevitably brings challenges too.
Advantages of deposit:
Filing a trademark application is relatively inexpensive. For example, filing a trademark with UKIPO will incur an official fee of GBP 170 for the first class, plus an additional fee of GBP 50 for each additional class and, if approved unopposed, registration will last 10 years.
Reputation. Filing can signal to shareholders and the wider community that your brand is a forward-thinking company, enhancing brand reputation.
It pays to file early. For the reasons set out above, registration for virtual goods and services would facilitate enforcement procedures and may reduce the risk of infringement by third parties.
Considerations before filing:
The likelihood of having to modify the brand specifications. Due to the nascent status of the metaverse, we are seeing a wide discrepancy between the specifications of registered trademarks compared to brands that have already filed applications for virtual goods and services. Some brands choose a catch-all approach first, classifying to cover a wide range of classes until they decide how they will operate in that space; a cautious approach, perhaps, but one that leaves your recording open to non-use challenges down the line. Additionally, as the Metaverse and associated technology evolves, earlier specifications can quickly become obsolete.
Determining responsibility for an offense may not be straightforward. The metaverse potentially allows a high level of anonymity for its users. It would then be difficult for brands to track down offenders and take legal action. Additionally, some metaverse platform providers, such as Decentraland, have taken steps to avoid potential liability for contributory infringement; these include non-infringement clauses in their terms of service and open channels through which users can report suspected trademark abuse.
Strategic selection of jurisdiction(s) to file for registration. Unlike websites that can be shown to be “targeted” to one or more jurisdictions, the metaverse will likely be an all-encompassing territory that does not discriminate based on geographic location. Therefore, when selecting the IP office(s) with which to file your trademark, you need to consider jurisdictional and enforcement challenges.
Co-authored by Rosie Lapper, Trainee Lawyer at CMS.