Protecting your brand in the metaverse: top 10 issues for brand owners to consider

Consider carrying out an audit to assess what rights you can enforce and whether there are any obvious gaps and vulnerabilities. Check that your protection matches your expansion plans and that, as well as word marks, you have protected figurative marks (that may appeal to digital artists).

Unregistered rights are less readily understood by potential infringers than registered rights, less certain (requiring proof of the elements of a passing off action under English law), and the protection they confer differs widely between jurisdictions (more on which law will govern in point 4 below).  In some countries, such as China, rights are based entirely on registration and not on the fact or nature of use in that country. 

Trade mark offices have seen a wave of trade mark applications covering virtual classes of goods and services – for example for downloadable virtual goods (class 9), retail store services featuring virtual goods (class 35), entertainment services (class 35), online non-downloadable virtual goods and NFTs (class 42) and financial services, including digital tokens (class 36). As the metaverse is yet to evolve and early adopters won't have fully decided how they'll operate within it, specifications are likely to become outdated and require amendment (or risk revocation - see point 5). Some brand owners have already implemented broad filing programmes: Nike has applied to register some of its brands in the US for various digital goods, including shoes, headgear and sports equipment. 

This begs the question, where to file?  In this regard, similar considerations will likely apply in respect of the metaverse and digital products as already apply in respect of the internet and real-word products, i.e. where does the brand owner actively want to do business and what is the risk of infringement in certain countries? 

It is less clear if and how the principles regarding "targeting" (currently used to determine jurisdiction where there's a dispute over online use of a trade mark) apply to use of a trade mark in the metaverse. Factors that the courts take into account when assessing whether a website targets UK consumers (offering goods or services for delivery to the UK, accepting pounds sterling, the use of country code top level domain names, the language of the website etc) may be more complex in the metaverse. There's no shipping of virtual assets and metaverse platforms may have their own cryptocurrencies and be hosted in a decentralised way, with real-time translation of content. We will have to see how this area develops. Perhaps in the future we'll see a shift from the territorial approach to a separate intellectual property registry and a cross-jurisdictional mechanism for mediating IP disputes that arise in relation to the metaverse…?      

The use of your brands will need to match your registrations: they're likely to be vulnerable to challenge if there's a prolonged period of non-use for the goods/services in relation to which you've registered your trade mark. This is a risk where you've submitted catch-all virtual world applications before you've decided how you're going to operate in the metaverse (see point 3).    

With user generated content and potential anonymity of users, identifying infringers will be a challenge. Brand owners will rely heavily on metaverse platforms as intermediaries to prevent and identify infringements via notification and take down procedures. The operators of those platforms may require a trade mark registration for the specific goods or services before they will intervene to implement your enforcement request (see point 2 above) as they are unlikely to explore grey areas and evaluate whether there is a likelihood of confusion etc.

Be clear about which issues you want to tackle (and which not): there's a balance to be struck (as there is in relation to enforcement of IP on social media platforms), between preventing dilution of your trade mark and the risk of negative PR arising from enforcement action, which can also be harmful to your brand. 

Trade mark infringement requires use in the course of trade (e.g. a trade mark applied to an NFT and offered for sale). It's unclear whether a private individual, minting an NFT of Nike trainers to be worn by her avatar in the metaverse, amounts to trade mark infringement, although it is likely to qualify as a type of passing off (similar to fraudulent registration of domain names for famous brands). 

Whilst this briefing focuses on trade marks, there are of course other intellectual property rights that may be relevant, which may not present the same hurdles to proving infringement. Digital copies, particularly in the fashion world, are likely to copy the design of the products which will bring design rights and copyright into play.

Given the number of platforms within the metaverse and the difficulty in identifying infringers, you'll likely need to implement a trade mark monitoring and watch service to identify potential infringements and bad faith applications in the virtual world. Customer engagement is another way through which brand owners can learn of misuse of their trade marks.

Many trade mark licences permit use on the internet but it is untested as to whether this would include use in the metaverse. It would be advisable to address the metaverse and use in digital assets such as NFTs explicitly in robust, clear licences. Where access to the metaverse is permitted, consider whether it is limited to specific platforms, what controls are needed to guard against rogue use or use alongside content that may be reputationally damaging to your brand and ensure – as far as possible – that you future-proof the scope of the licence to allow for developments in technologies.

It'll be important to review the terms and conditions of the metaverse platform prior to use to guard against any unexpected terms e.g. in relation to ownership of IP and breadth of licences granted to the platform owner. It's also important to assess what steps the platform owner will take to prevent infringement and control content that may be damaging to your brand.

In conclusion…

The metaverse is an evolving concept, reliant on nascent technology.  No one yet knows for certain what form(s) it will take and no one can predict all the risks and opportunities that will emerge for those who embrace it.  Whether you plan to dive in, virtual feet first, dip in a tentative virtual toe to see if it "takes off", or shun the metaverse but prevent others from exploiting your brands within it, there is ground work that brand owners can do to ready themselves, by working out the extent of their trade mark registrations, a robust policing and enforcement strategy, and appropriate licences and terms of use.