Brand

IP in the metaverse

In the real world, making a counterfeit product takes some skill and effort. But all that is needed to make a virtual knock-off in the metaverse is a computer, an internet connection and a bit of patience. And unlike their real-world equivalents, copycat NFTs may be effectively indistinguishable from those produced by the genuine brand.

Other NFTs may not seek to duplicate existing legitimate ones but may hold themselves out as being issued by or associated with a brand or person, or may use a business’s IP without permission.

From a trade mark perspective, enforcement in the metaverse can raise some difficult questions.

Grounds for complaint

One problem may be the grounds for complaint. It may be hard to show that the unauthorised use of a mark in the metaverse constitutes use in the course of trade. A trade mark registration for a real-world good may not protect against unauthorised use of a virtual equivalent. (In many cases, a real world good will have a different trade mark classification from its digital equivalent.) And a court may not accept that digital artifacts and real-world products are sufficiently similar to give rise to a risk of confusion for trade mark infringement.

Trade mark registration

Unsurprisingly, therefore, many major brands have opted to register their trade marks for virtual goods and services. But registering every mark in every significant jurisdiction is an expensive option, and some businesses will inevitably wish to prioritise – assessing, for example, where infringement is most likely to happen and most likely to be damaging. It is also important to remember that pre-emptive registration is not an indefinite fix: a mark can be removed from the register if it goes unused for five years.

Decisions about registration are further complicated by the fact that trade marks sit uncomfortably with a borderless world. Trade mark disputes over the internet have so far been addressed via the principle of targeting (essentially, whether the goods or services in question are targeted at buyers in a particular country). But the targeting principle may offer little help if a decentralised currency is in use and the activity is international.

Enforcing IP rights in the metaverse

You may have a claim for infringement, but how do you make it? And against whom do you make it?

IP infringements in the metaverse are often the actions of individuals rather than corporates. Tracking them down and dealing with them can be tricky and expensive – especially if they are spread across different jurisdictions, or if none of them have full control of the project in question. Establishing jurisdiction and enforcing a judgment can be difficult for the same reason.

Ultimately, it will be for individual brand owners to determine how best to leverage their position in the metaverse. Many will opt to create experiences – focusing on entertainment, or on the digital equivalent of window-shopping.

Those that make or sell physical goods may choose to be more involved. They can see the utility of having a digital storefront and selling these things. And in the longer term, the best way of combating counterfeits in the metaverse may be to have an offering yourself, at a price which encourages people to buy your genuine items rather than creating or buying counterfeits. 

It may be more immediately effective to issue a takedown notice to the relevant platform, arguing that your IP is being infringed and, typically, asking them to delist the relevant NFTs.

If NFTs are being traded on a platform such as OpenSea, a takedown process would follow a similar track to that used by established social media giants The complainant asks the platform to remove infringing items and there is no set response or appeal process. As such, while the de-platforming process sometimes raises issues of fairness, it can be a quick and effective tool for brand owners faced with infringements in the metaverse.

But this type of swift takedown is not available in all situations. OpenSea is one of the larger players in the NFT market and has significant investment from venture capitalists. As such, it has some incentive to follow best practice. The same cannot be said for other NFT marketplaces, particularly those that are community-owned and decentralised.

Furthermore, while a takedown would stop the NFTs being traded on Opensea, it does not remove them from the metaverse more generally or stop their owners using them. They could be relisted in another marketplace.

Web3 domains

A growing concern for some businesses is the arrival of Web3 (aka Web 3.0) domain names. As Web3 becomes more established, businesses are finding that they have missed an opportunity to direct people to their online presence – something which will become more of a concern as Web3 becomes more integrated with the pre-existing internet and web browsers.

Perhaps more worryingly, it also creates obvious opportunities for fraud. Customers could be deceived into making a payment to what they believe is a household name company or individual but is actually the digital wallet of some hard-to-identify-subsequently con artist.

Faced with this situation on the ‘traditional’ internet, a UK business would probably resort to centralised UDRP proceedings, which are used to resolve disputes regarding the registration of internet domain names. If the business can show that it has relevant trade marks and goodwill, and that its customers are being misled, it is likely to get a resolution very quickly (and cheaply). But Web3 is designed to be decentralised, so there is no registry to handle such complaints.

Aggrieved businesses do have a few weapons in their armoury.

Business will probably be better advised to snap up the obvious and most intuitive ones, and then maintain a policy of enforcement as and when third parties acquire any others.