To file or not to file? Trade mark protection in the metaverse

Whether you’re familiar with the term or hearing it for the first time, many global brands have begun to consider the implications that the metaverse might have on their IP. There are, seemingly, boundless opportunities for brands to enter this new sphere. From 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 trade marks currently protected against infringement in the metaverse?

Double identity

In these new, unchartered waters there exists a possibility that protection afforded to existing registrations may extend to virtual goods and services. However, whilst untested in the UK courts, the level of similarity between real-world and virtual goods and services will no doubt be a fact-specific assessment. For example, legal services offered in the metaverse are arguably no different from legal services provided in-person or elsewhere on the Internet (e.g. on a video call). A business bringing an action against third-party use of a trade mark for legal services in the metaverse may, therefore, be able to rely on so-called “double identity” infringement under s.10(1) Trade Marks Act 1994.

Similarity and likelihood of confusion

Conversely, the similarity of real-world goods compared to their virtual equivalents is likely to be more complex. On the face of it, they are completely different. Virtual clothing is, in essence, data presented on a screen by computer software. It does not serve the normal purpose of clothing, such as to provide warmth or protection, meaning that such goods likely would not be considered to be interchangeable. However, arguments could be made that a stronger purpose of clothing is as an indicator of your identity: if clothing was solely purchased for functional reasons many clothing brands would go out of business. Perhaps where a consumer has the opportunity to purchase both a real-world item and the virtual equivalent, the goods could be understood as complementary.

Even if virtual goods and real-world goods are similar, confusion is still required for a successful claim under s.10(2) Trade Marks Act 1994. This could be a difficult hurdle in situations where the real-world goods are sold in-store and the virtual goods are sold on an NFT marketplace. It would appear 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 hard-copy book.

Reputation-based claims

Protection will more likely exist for well-known brands whose reputation can be leveraged to enforce their existing rights under s.10(3) Trade Marks Act 1994. Similarity and confusion do not need to be shown here, meaning bringing a trade mark infringement claim is more straightforward.

Should I register my trade marks in this new digital sphere?

There are many upsides to brands participating in the metaverse: for one, it is always “on”. Existing in the metaverse allows your brand to persistently reach audiences, currently without (much) limitation. Of course, it inevitably brings challenges too.

Benefits of filing:

• Filing for trade mark registration is relatively inexpensive. For example, filing a trade mark with the UKIPO will attract official fees of GBP 170 for the first class, plus an incremental fee of GBP 50 for each additional class and, if approved without opposition, the registration will last for 10 years.
• Reputation. Filing may signal to shareholders and the wider community that your brand is a forward-thinking business, enhancing the brand’s reputation.
• It is beneficial to file early. For the reasons outlined above, a registration for virtual goods and services would assist in enforcement proceedings and may lower the risk of infringement from third parties.

Considerations before filing:

• The likelihood of having to amend trade mark specifications. Due to the nascent status of the metaverse, we are seeing much divergence among the trade mark specifications from those brands who have already filed for virtual goods and services. Some brands are choosing a catch-all approach to begin with, filing to cover a wide range of classes until they decide how they will operate in this space; a prudent approach, perhaps, but one that leaves your registration open to challenges of non-use down the line. What’s more, as the metaverse and associated technology evolves, earlier specifications may quickly become outdated.
• Determining liability for infringement may not be straightforward. The metaverse potentially allows for a high level of anonymity for its users. This would make it difficult for brands to trace infringers and issue proceedings. As well, some metaverse platform providers, such as Decentraland, have taken steps to avoid potential liability for contributory infringement; these include non-infringement clauses within their terms of use, and opening channels through which users can report alleged trade mark abuses.
• Strategically selecting which jurisdiction(s) to file for registration. Unlike websites that can be shown to be “targeted” at one or more jurisdiction, the metaverse will likely be an all-encompassing territory that does not discriminate based on geographical location. Therefore, when selecting which intellectual property office(s) to file your trade mark with, consideration must be had as to the challenges around jurisdiction and enforcement.

Co-authored by Rosie Lapper, Trainee Solicitor at CMS.