The metaverse is a virtual world where people can socialize, work, play, and transact. Although the concept of the metaverse continues to evolve, it is generally understood to include any immersive, 3D, virtual experience. Rather than a connected, interoperable universe, the metaverse is comprised of virtual worlds created by various organizations all with particularized access, membership, monetization rights, and formats of creative expression. The metaverse allows users to showcase digital forms of art and property, and non-fungible tokens (NFTs) – records of digital ownership stored in the blockchain – allow users to put a price on that content with proof of ownership.
Brand owners have already started embracing the metaverse and collaborating with digital platforms to launch virtual products and experiences. For example, Gucci recently collaborated with the online game Roblox to provide players with the chance to win a limited digital version of their Gucci Dionysus bag. The digital version of the bag was re-sold on the Roblox marketplace for over $4,100, exceeding the price of a physical Gucci Dionysus bag.
It is estimated that revenue from virtual worlds could grow from approximately $180 billion in 2020 to $400 billion in 2025. Now is the time for companies to begin thinking about possibilities for their entrance into the digital world and the host of new branding and marketing opportunities – and risks – to come.
As brands prepare to find their place in this new frontier, protecting and enforcing trademark and other intellectual property rights is a marquee issue. Trademark law protects against the unauthorized use of a trademark by another when such use would be likely to cause consumer confusion as to the source or origin of goods or services. Trademarks primarily refer to the words, look and feel, and other perceptible and distinct features that define a product or service. Trademarks can be used to protect company names, product names, service names, logos and symbols, tagline and slogans, colors and design, sounds, and hashtags.
Some forward-looking brand owners have already applied to register their trademarks (or versions of their trademarks modified for virtual spaces) for use in virtual reality to ensure their rights are recognized in a virtual marketplace like the metaverse. For example:
- Kobe, Inc. filed trademark applications for KOBE BRYANT and MAMBA FOREVER for virtual goods such as clothing, jewelry, toys and trading cards, as well as virtual experiences, including basketball courts; and MAMBACITA to commemorate Kobe’s daughter, Gianna Bryant;
- McDonald’s filed several trademark applications for MCDONALDS covering, among other goods and services, the operation of a virtual restaurant featuring actual and virtual goods; and MCCAFE in connection with entertainment services such as online actual and virtual concerts;
- The Brooklyn Nets filed trademark applications for NETAVERSE, covering broadcast entertainment services and clothing goods related to the NBA team;
- Nike filed trademark applications for NIKE, JUST DO IT, JORDAN, AIR JORDAN, the Nike swoosh logo design mark, the Jordan silhouette logo, and combinations thereof, covering various virtual goods and services;
- Jay-Z filed a trademark application for JAY-Z, covering music, clothing, and jewelry goods for use in online virtual worlds;
- The Coachella Music Festival filed a trademark application for COACHELLA, covering downloadable audio and video recordings featuring live musical performances authenticated by NFTs; and
- Ralph Lauren filed a trademark application for a virtual store as well as for virtual clothing and other digital goods (and has since opened an official Roblox experience with virtual fashion items).
Brand owners who wait to secure their trademark rights for virtual goods and services may find it difficult to combat infringement and effectively enforce their rights in the metaverse. The recourses available if, for example, a user imports a trademarked item into the metaverse and sells it for virtual or actual cash, are still unclear. As a recent example, Hermes is suing a digital artist who created fuzzy images of the Hermes Birkin handbag and minted them as MetaBirkin NFTs, claiming trademark infringement, trademark dilution, and cybersquatting. Hermes’ trademarks are for leather goods, specifically handbags. Generally, trademarks only apply to the goods or services listed on the registrations and those that are reasonably related to the listed goods or services. Without a registration for virtual goods, Hermes will need to prove that its trademark for leather goods extends to expressive images based on the leather goods, which is what the MetaBirkin trademark is selling to consumers.
Earlier this month, Nike sued StockX, an online resale marketplace selling shoes, streetwear and other goods, for trademark infringement, trademark dilution and other charges, claiming StockX sold Nike-branded non-fungible tokens that did not originate from Nike.
While the USPTO has not provided guidance or instruction as to metaverse protection and trademark law and practice are lagging behind what is happening in the virtual world, these lawsuits may begin to lay the groundwork for the future of brand enforcement in the metaverse.
For brands contemplating entry into the metaverse (and beyond), developing a trademark protection strategy calculated to secure maximum protection is critical. Despite this largely unchartered territory, at the very least, brand owners intent to have a presence in the metaverse are well advised to: (1) register their trademarks with the USPTO (and potentially foreign equivalents) with the applicable virtual goods and services; and (2) consider subscribing to a trademark watch service to monitor newly filed and pending third-party trademark applications for potentially infringing marks.