Virtual Commerce: Brands in the Metave®se

Virtual Commerce: Brands in the Metave®se

Virtual Commerce: Brands in the Metave®se

1024 664 David Hoppe

The value of the global metaverse is expected to reach $800 billion by 2024. This represents more than 16-fold growth over the $48 billion generated in 2020. The metaverse brings with it a host of legal challenges and opportunities including trademark enforcement, branding and marketing deals, content partnerships and collaborations, market development, and customer diversification. Companies – both established players and start-ups – that are intent on operating in the metaverse writ large or building their own metaverse platform should be aware of several brand-use and trademark issues that can arise.

The Metaverse Is Built on Brands and Trademarks

Companies seeking to establish a foothold in the metaverse must familiarize themselves with trademark rights, as many brand owners are leveraging their IP in this new digital environment. Many optimistically view the metaverse as a limitless market for promoting their products and services. Visionary brand owners are taking steps to register their logos and trademarks for goods and services that are accessible exclusively in the metaverse, including downloadable virtual goods for virtual online worlds, retail stores that carry virtual goods, digital collections services, and others. For example, Nike has filed more than a half dozen trademarks with the US Patent and Trademark Office (USPTO), indicating the brand’s intention to sell virtual shoes and apparel in the metaverse. Trademark applications include those for Nike’s swoosh logo, “Just Do It” slogan, and Air Jordan designs. Further, luxury brands such as Balenciaga and Gucci are actively testing how they can use the metaverse to connect with real-world consumers to generate additional revenue.

The diverse commercial implications of the metaverse may prove difficult to regulate, and potential metaverse participants may have difficulty following which rights belong to which stakeholders. The potential issues and ambiguities that arise from the proliferation of digital brands and their intersection with the metaverse emphasizes the need for companies operating in the video game, digital media, AR/VR, crypto, and other emerging tech spaces to develop comprehensive plans for protecting their assets and IP while avoiding infringing upon those of others. This will require them to accumulate or partner with others who possess an understanding of the applicable laws and regulations and how they affect business strategies, partnerships, rights conveyances, audience protections, publicity, products, services, and more.

Legal Considerations

Gaming, digital media, crypto/blockchain, and other tech organizations should pay particular attention to a few pertinent legal areas:

  • Trademark Search and Registration – Technology and digital media companies, whose primary focus until now likely has centered on Web 2.0, now may want to consider taking a page from Mark Zuckerberg’s Facebook and rebranding themselves as metaverse-first organizations. To do this, they will need to file at least one new trademark registration for the metaverse. Rebranding a company to reflect this new focus may stir up a host of issues. For instance, a company seeking to capitalize on the popularity of words such as ‘meta’ and ‘metaverse’ by promoting sports brands in their gaming metaverse, could face stiff competition and/or infringe on already-filed trademarks and copyrights. More than 800 already use “meta” as a word or prefix, and more than 100 more such applications were filed in 2021. Furthermore, the USPTO might consider trademark applications such as ‘BRANDS IN THE METAVERSE’ or ‘SPORTS IN THE METAVERSE’ too generic or descriptive to be valid. It is advisable to consult a trademark attorney for guidance on such matters.

  • Branding – Use and the misuse of brand names are likely to become even more rampant in the metaverse than in the physical world. This is a primary reason why world-famous brands have registered trademarks for virtual goods in addition to their physical consumer product lines. Technology companies aiming to build their own metaverse should be aware that effective mechanisms exist for brand owners to enforce their rights. As a result, metaverse providers may find it necessary to engage dedicated staff to monitor user-generated content, investigate suspected violations, respond to cease and desist notices filed by legitimate trademark holders, and remove offers for counterfeit goods. Responsible platforms might take a proactive approach and provide a dedicated mechanism for brands to file notices and lodge complaints if they find cases of their trademarks being violated.

    Obtaining the advice of an experienced intellectual property attorney can help these companies understand their responsibilities for policing infringements and ways they can protect themselves from becoming a party to them. A comprehensive, nuanced IP policy is also extremely important for mitigating secondary liability. Specifically, a metaverse service provider that fails to incorporate a sound IP policy might be held liable for trademark infringement or brand misuse which takes place in their corner of the metaverse.

  • Licensing – Many brands and trademark owners are experimenting with ways to profit from the metaverse. Some hope to promote their goods and services while others look to leverage the drawing power of other brands and trademarks. Whatever the business model, commercial metaverse participants and providers must be able to negotiate and document appropriate trademark licensing arrangements. For example, metaverse users can create avatars by using a variety of digital products. This functionality can empower users to assume identities as “real-life” fictional characters in the virtual world. Absent appropriate trademark licenses, metaverse providers may find themselves at risk of being accused of trademark infringement due to user activity. It is critical that providers: (i) understand the scope of rights, duration, territory, exclusivity, sub-licensing, royalty rates, and other provisions of any licensing agreement they enter; and (ii) implement calendars and related procedures to ensure that applicable provisions are complied with and deadlines are met.

The metaverse provides both opportunities and challenges for providers, marketers, and brand owners seeking to engage with new audiences and increase brand loyalty via virtual goods and services. As more brands move forward with metaverse marketing strategies, developing a sound trademark strategy will ensure maximum protection and flexibility for all stakeholders. A strong trademark strategy can also help emerging technology companies monetize their existing IP (brands) in the metaverse. For example, a video game company might capitalize on the goodwill of its existing in-game assets and license them out in the metaverse.

The information provided herein does not, and is not intended to, constitute legal advice. It is for general informational purposes only.

A trademark attorney specializing in emerging technologies can advise you regarding how to profit from your existing trademarks in the metaverse and related legal issues.

Gamma Law is a San Francisco-based firm supporting select clients in cutting-edge business sectors. We provide our clients with the support required to succeed in complex and dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.

Author

David Hoppe

All stories by: David Hoppe

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