Trademarks in the Metaverse

The USPTO has shared new insights concerning Metaverse-based trademark applications. As brand owners attempt to expand their digital footprint, they are facing feedback from examining attorneys due to the likelihood of confusion and whether specimens function as a trademark. Meanwhile, brand owners with protected marks are raising legal concerns about possible infringement and inappropriate use in the Metaverse.

What is the Metaverse?

The Metaverse is a virtual space where users can interact through their avatars (personalized graphical illustrations that represent a computer user). Utilizing virtual reality and augmented reality, users interface with the 3D digital environment to work, socialize, play games, shop, experience virtual tourism, and other activities. Most people access the Metaverse with mobile devices, specialty headsets, and desktop computers. Examples of Metaverse platforms include Decentraland, HyperVerse, Metahero, and The Sandbox.

Future Functions of the Metaverse

The Metaverse first became popular as a gaming platform; however, in recent years, retailers and advertisers have been investing in the Metaverse as a commercial space. The platform provides opportunities for businesses to reach a global customer base in near-real time. Already, companies are opening virtual commercial enterprises for avatar clothing, virtual real estate, and virtual restaurants offering digital “food.”

Companies are looking to innovate the Metaverse and transform business, technology, and art. This new market presents opportunities to increase scalability and promote products and services. Over the next 10 years, the Metaverse is expected to grow 38-39%, reaching $800 billion.

Brands Taking Part in the Metaverse

With these forecasted numbers, brands are beginning to join the Metaverse and strategize new marketing campaigns. Companies are working to expand their digital footprint and increase revenue. Popular brands such as Nike, Adidas, Wendy’s, Coca-Cola, Samsung, Hyundai, Ferrari, Louis Vuitton, Forever 21, Atari, and The Walking Dead have already joined the Metaverse.

As companies venture into the virtual landscape, brand owners are looking to protect their existing intellectual property assets (trademarks, copyrighted content, design patents) while leveraging business models and innovation.

USPTO Insight on Metaverse Trademark Moves

As with the early days of the Internet, IP protection, enforcement, and licensing in the Metaverse are unsettled and complex. The US Trademark and Patent Office (USPTO) has recently experienced a significant rise in trademark applications as companies rush to protect their goods and services in the virtual sphere. According to the USPTO, the trademark office has been issuing Notice of Allowances in response to intent-to-use applications for downloadable virtual goods, retail store services featuring virtual goods, and entertainment services providing online non-downloadable goods.

The USPTO also reports that it has refused Metaverse-focused trademark applications due to the likelihood of confusion between previously-registered marks and Metaverse-related marks. Other examining attorneys have pushed back on whether an applied-for mark functions as a trademark. Ralph Lauren, for example, faced an application refusal earlier this year after the examining attorney found that the trademark submitted did not match the mark on the Metaverse-based specimen and that the company’s Polo specimen only appears as an ornamental feature of the virtual goods.

Recent Trademark Cases Involving the Metaverse

As brand owners expand their presence in the Metaverse, issues related to trademark law will become prominent in the promotion and protection of those brands. Disputes related to fair use and anti-dilution have already started to surface. In Hermes Int’l v. Rothchild, luxury retailer Hermès International sued digital artist Mason Rothschild, alleging Rothschild infringed on the famous Birkin handbag trademark by creating and selling MetaBirkins NFTs (nonfungible tokens). In Nike, Inc. v. StockX LLC, the sportswear giant Nike sued the online marketplace StockX, alleging that StockX inappropriately used the Nike trademark on its NFTs. In Roblox Corporation et. al., v. WowWee Grp. Ltd. et. al., the creation platform Roblox alleges that WowWee toymakers infringed their trademark by reproducing Roblox’s popular avatars as a line of toys and misleading consumers into believing that Roblox sanctioned those items.

These are just a few of the Metaverse-related trademark cases playing out in US courts right now. As this digital environment continues to evolve, market developments will continue to challenge legal precedents and prompt changes in intellectual property law. Issues to consider include:

• Will the Metaverse platform owners be responsible for policing IP disputes?
• Will an existing or newly-formed government agency be responsible for enforcing IP laws and protections in the Metaverse?
• How will national jurisdictional issues be resolved in the “international” Metaverse?
• Can a trademark be categorized as famous in the Metaverse but not in the real world?
• How will trademarks be protected when virtual-world holograms combine with real-world visuals?
• What will trademark licensing deals in the Metaverse look like?
• How will trademark franchising models be executed in the Metaverse?

A Time to Be Proactive

Enforcement of legal rights in the Metaverse is highly uncertain right now. While the commercial potential of the Metaverse continues to evolve, a proactive approach to establishing and protecting a Metaverse presence will be essential to success. To discuss these and other intellectual property issues, please contact Natalie A. Remien, at nremien@clarkhill.com.