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In October 2021, Facebook was renamed Meta and announced that the company would focus on the metaverse, an alternate reality that aims to connect people and grow businesses. While ecommerce sales skyrocketed during the pandemic, the metaverse is expected to set another milestone for future ecommerce growth. However, there is a lot of uncertainty about what the metaverse actually is and how business owners can protect their intellectual properties in this new virtual world.
In this article, we break down what is known so far about the metaverse and help you grasp its implications for intellectual property rights.
Up to this point, the metaverse can be seen as an early-stage concept that has the potential to evolve into a virtual world that parallels social life in our physical world. However, the idea itself is not new. The term metaverse was coined by Neal Stephenson in his 1992 novel, “Snow Crash”, which depicts a virtual reality world where people work, play, and shop.
You can think of the Metaverse as a 3D version of the internet that you might access through a VR interface, a space parallel to the physical world where people can live a digital life. In this space, you can create an avatar for yourself, through which you can interact with others in various kinds of settings or activities. This parallel space coexists with the physical world and is a live reality, meaning that it continues to develop even if you’re not actively using it.
While these elements of continuation whenever you are not logged in might already be present in video games like Second Life, Fortnite, Roblox, and others, visions of the metaverse suggest that it will be far more expansive than these standalone video games. “3D spaces in the metaverse will let you socialize, learn, collaborate, and play in ways that go beyond what we can imagine”, according to Meta.
One factor, which makes the metaverse a prominent topic in the tech industry, is the blockchain technology that has made NFTs possible. The metaverse has the potential to become an important marketplace for NFTs that enables the ownership of virtual items like digital art and real estate. Total NFT sales grew to $40 billion in 2021 and will very likely surpass that in 2022, as sales hit $37 billion as of the first week of May.
So far, it remains unclear if there will be one metaverse or many. Besides Meta, a number of companies are investing in the idea of a metaverse, including Microsoft, Alphabet, Amazon, Nvidia, and others. Time will tell if different metaverses will be collaborative and allow you to move with your avatar between them, or if one metaverse asserts itself and becomes the principle augmented digital world.
Numerous news articles point out that large corporations are filing trademark applications with the US Trademark and Patent Office that are relevant to the sales of goods and services within the metaverse. Brands are clearly seeking new business opportunities, as well as, ways to extend their brand reach in the metaverse. As users can buy and sell goods, services, and even property in the metaverse, questions arise on how IP rights owners can protect their marks against IP infringers in the virtual world.
Copyrights protect the original works of a creator published in any tangible medium. As such, texts, music, images, videos, and other works can be copyrighted in the metaverse.
Challenges will arise for rights holders when dealing with copyright infringements. It might take years until a clear takedown framework for copyright violations in the metaverse is implemented. Additionally, inconsistent regulations or rules between the different platforms that have a metaverse could require you to continuously adjust licensing agreements of your brand’s products, likely resulting in a big headache as you adapt to each platform.
This also applies to calculating fees for the use of copyrighted works based on the number of subscribers or views. Different platforms within the metaverse might have different usage rules and further complicate usage tracking.
A trademark is an identifying sign or collection of marks that help customers distinguish the source of a product or service. Trademarks can be words, letters, symbols, designs, and other identifying elements of a company. Virtual goods and services can be trademarked with the USPTO.
Brands that have trademarked their goods and services in the real world should also consider registering their marks for the metaverse. Think about retail stores that offer virtual goods or online entertainment services that are designed for use in virtual environments. As almost all real-world products can be made into virtual goods, brand owners can protect their marks from third-party use by registering their trademarks.
Similar to the hurdles rights holders face when enforcing their copyrights in the metaverse, trademark theft may be more difficult to take down than it would be in the real world. Trademarks aren’t globally valid and need to be registered in each country. If the metaverse blends between different platforms, it is unclear to what degree filed trademarks will shield rights holders from possible infringements in the digital world.
Business owners and IP rights holders who want to promote their brands in the metaverse are well-advised to work with a brand protection service, such as Red Points that has the ability to scan the web for possible trademark infringements and can automatically shut them down before it damages your brand reputation or revenue.
Patents protect new inventions, such as designs, processes, or utility types, from being recreated and profited on by others. Unlike copyrights that grant automatic protection to each original created work, patents require a formal registration to protect a specific invention.
Improving hardware for the metaverse will be crucial for blending virtual reality with the real world. This includes AR and VR technology such as VR headsets, haptic gloves, cameras, and scanning sensors. The demand for improved hardware is likely to increase patent applications that are correlated to the metaverse.
While the metaverse might evolve into an interoperable decentralized digital world in which users can freely move, at its current stage, the concept of a metaverse is being developed on several different platforms with centralized ownership. Therefore, brands that want to operate in the metaverse need to negotiate IP licensing with the platform provider. If a brand creates a digital fashion item for a metaverse platform, it should make sure to have full IP rights for future use if, for instance, the brand decides to transfer that item to another platform.
Guaranteeing authenticity and protecting IP from digital infringements will be another issue that brands should focus on. While NFTs can function as digital certificates that prove ownership, many creators have been struggling with NFT infringements across digital platforms. If you want to learn more about this topic, we recommend watching our webinar on NFT infringements and how to combat them.
While brands and IP rights holders can rely on a well-developed legal framework when it comes to protecting their marks in traditional ecommerce, the legal conditions for IP in the metaverse are still developing. Nevertheless, brand owners should focus on proven ways of protecting and enforcing their IP because a weak IP approach in the real world is likely to be just as weak in the metaverse. A good start is registering your trademarks, copyrights, and patents in all jurisdictions of operation.
Brands should consider filing IP registrations for virtual world applications that help protect a business to sell goods and services in the metaverse. A solid monitoring and enforcement plan for your IP rights in both the real and the virtual world will help to detect and prevent infringements.
Get in touch with us today and learn more about how we can help you protect your intellectual property!