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

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


In 28 October 2021 Facebook rebranded as Meta, with the aspiration "to be seen as a metaverse company".  Since then, there's been a significant buzz about the metaverse – the "next chapter of the internet", according to Mark Zuckerberg. Whilst some commentators suggest that the metaverse is over-hyped, the pandemic (and the switch to remote working and virtual social events) has undoubtedly accelerated our reliance on, and appetite for, digital experiences. Eager to tap into that demand (and fearing being left behind), there has been a movement by platforms and brands to embrace the metaverse and NFT technologies.  The advent of the metaverse raises a host of legal issues and will likely test boundaries and force the law to adapt to keep up with this new technology. This briefing sets out our top 10 issues for brand owners who are venturing into the metaverse to consider:

What is the metaverse?

There is no universally accepted definition of the metaverse. To put it most simply, it is a 3D version of the internet, accessed through the use of a virtual reality headset or glasses. But it ranges from a fully immersive, virtual reality world, to a layering of digital content over the real world, where people will socialise, shop, do business, buy real estate and learn. In that digital environment, businesses can replicate their products and services that exist in the real world to create more exciting and interactive virtual products and services. The metaverse may also be a misnomer; as yet there's no single metaverse contemplated, but multiple, overlapping metaverses. 

For many businesses, a strong brand portfolio in the real world is likely to be valuable in the virtual one

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).

Registered trade marks will be easier to enforce in the metaverse than unregistered rights

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. 

Get in there first…

In most jurisdictions, the first to file owns the rights in the trade mark. Bad faith applications are on the rise for digital goods (e.g. Prada and Gucci have challenged applications by third parties for metaverse-related goods and services in respect of their logos).

The extent to which real world goods and services offer protection against those same goods and services in the virtual world is as yet untested

A UK perspective

Under the Trade Marks Act 1994 in the UK, it is more straightforward to demonstrate that your mark has been infringed where you can point to identical goods/services than for similar good/services. For similar goods/services, there must be confusion (as to the source of the goods/services) in order to prove infringement. The degree of similarity between goods and services in the real world and their digital counterparts will be a question of fact. Advisory services, whether provided in a virtual meeting room or in a physical office are arguably the same, regardless of the delivery mechanism. In contrast, the pair of branded football boots you wear to play sport is arguably an entirely different product (footwear) from the digital representation of those branded boots that you purchase for your avatar (data and software). In the case of dissimilar products or services, only brands with reputation will be protected.  

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. 

Trade marks are territorial in nature and yet the metaverse is a borderless world, accessible globally

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…?      

Use it or lose it…

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).    

Identifying infringers will be challenging…

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.

but some are taking on the challenge in the US, alleging unauthorised use of NFTs

In the US, Nike is suing online marketplace, StockX, for trade mark infringement in relation to StockX's launch of an NFT collection linked to Nike (physical) trainers. The key question is whether StockX's NFTs are mere digital receipts to facilitate trading of those trainers (in which Nike's trade marks rights have been exhausted) or whether the NFTs are digital products in and of themselves. Nike argues that the NFTs are more than digital receipts because they're bundled with additional StockX benefits and are sold for more than the price of the trainers in store.

Hermès is suing Mason Rothschild, who has minted (and sold for large sums) a "MetaBirkin" NFT depicting images of Hermès' Birkin handbags covered in colourful fur, for infringing Hermès registered trade marks for BIRKIN and the configuration of its iconic BIRKIN handbag. Rothschild claims that "MetaBirkin" is the title of his artworks, which he suggests are "a commentary on fashion's history of cruelty to animals…", rather than identifying the source of the NFT. He applied (unsuccessfully) for Hermès' claim to be dismissed, pleading First Amendment free speech rights. Under US law, free speech rights would normally defeat a trade mark infringement claim in relation to titles of artistic works, unless the use of the mark bears no relevance to the work or is explicitly misleading as to the source of the work.

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. 

Is there use "in the course of trade"?

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.

Licensing terms should address use in the metaverse

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.

Watch out for Metaverse platform ts and cs

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.

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