Trade marks: brand guardians of the metaverse

‘Metaverse’ has become a buzzword across numerous industries over recent years, with Facebook’s announcement last October that it is rebranding to Meta demonstrating where the company sees its future. Although the idea of a ‘metaverse’ has been presented to us before with platforms such as Second Life, this time around widespread adoption appears more likely with companies such as Alphabet, Meta and Microsoft collectively investing billions of dollars on developing technology for the metaverse. The growth of the metaverse has raised important questions within the intellectual property sphere, particularly in relation to trade marks.

When filing for a trade mark, it is necessary to set out the goods or services the mark will be used in relation to. Once an application has been filed, it is not possible to make this list of goods and services broader. Therefore, a quick and expansive uptake of new types of products and services in a market can often be problematic for those with existing trade marks; marks which were potentially registered at a point in time when those goods and services didn’t exist and were not even contemplated.

The recent expansion of interest in the metaverse has led to companies such as Nike, Crocs and Puma, together with numerous others, filing new trade mark applications to ensure that their brands are protected in the metaverse. The below list sets out just some examples of the goods covered by these new applications:

  •  Downloadable virtual goods, namely, computer programs featuring footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories for use online and in online virtual worlds – Nike
  • Downloadable digital media, namely, digital assets, digital collectibles, digital tokens and non-fungible tokens (NFTs) – Crocs
  • Downloadable virtual goods, namely, computer programs featuring footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys, and accessories for use online and in online virtual worlds – Puma
  • Downloadable virtual goods, namely, computer programs featuring programs featuring apparel, footwear, headwear, sporting goods and accessories for use in online virtual worlds – Under Armour

Trade mark litigation has already ensued as a result of this technological and cultural shift towards the metaverse, most prevalently demonstrated by the ongoing case of Hermès v Mason Rothschild. Although this case relates to NFTs, rather than the metaverse per se, these two technologies are closely linked: a NFT is a token which represents ownership of a digital good. These digital goods can then be used in a variety of metaverse platforms such as AltSpace VR, Decentraland and Horizon.

In the Hermès case, the artist Mason Rothschild created and sold digital recreations of Hermès Birkin handbags, calling them ‘Meta-Birkins’ and selling them on NFT marketplaces. The sales of these NFTs accumulated around $450,000 in Ethereum at the time (Ethereum (ETH) is a popular cryptocurrency which is often used to buy and sell NFTs). The value of these sales illustrates the reason for third party interest and the potential financial opportunities available to companies who are not yet operating in the digital space.

Although the BIRKIN mark is renowned in the luxury fashion world, Hermès trade mark registration for the mark in the US only covers physical goods such as ‘handbags’. Notably, the specification does not include virtual goods or NFTs, which has opened up a debate as to whether Rothschild is actually infringing Hermès BIRKIN registration.

An interesting point which has already arisen in the Hermès case is that, in a judgment on a motion to dismiss the case, the judge implied a distinction between items which are wearable (in a virtual environment) and non-wearable items. In the case of Mason Rothschild’s Meta-Birkins, they were merely images, not virtual bags. Although these images could have been used within metaverses as decorative pieces, for example for virtual homes, it was implied that there may be a difference in how decorative pieces and wearable items are viewed in the metaverse by the courts. It is likely that the jurisprudence in this area will develop significantly as more cases relating to trade mark issues in the metaverse go through the courts.

To further emphasise the importance of having protection over for these new types of goods and services, it is important to take enforceability into consideration. Contrary to the common misconception, there is not a singular, all encompassing ‘metaverse’. As is the case with social media platforms, the difficulty of enforcing trade marks in the metaverse will be the volume of content that is available across multiple platforms. Below is a list of some popular metaverses:

  • Horizon (Owned by Meta)
  • Alt Space VR (Owned by Microsoft)
  • Decentraland
  • VR Chat
  • Roblox

These are only a small selection of the metaverse platforms currently out there, a number which is bound to grow. If, when making metaverse related IP decisions, you feel overwhelmed by all of the tech jargon, it is useful to equate the term ‘metaverse’ to ‘social media’. Firstly, whilst there are multiple platforms, not one singular platform, they all occupy a similar space; secondly, enforcing trade marks on metaverse platforms will be done in a similar way to how rights are enforced on social media platforms, in that takedowns will have to be filed on each individual metaverse platform.

Enforcing your IP on social media platforms can be difficult even with registered trade mark rights and most platforms ask for proof of trade mark registrations when a takedown request is being filed. Going forward it is therefore important for businesses to consider whether they are protecting their brands appropriately and it is becoming apparent that a necessary consideration for new trade mark applications should be whether a business’ products may be used in the metaverse. The fact that companies such as Nike are re-filing applications for this very purpose suggests that there is a commercial shift underway which will soon become relevant to many more businesses, not just in the technology industry but also to those operating in other areas such as fashion and consumer goods. Inconceivable a few years ago, for such businesses it seems that protecting their IP for digital goods and services may soon be as important as protecting them for real goods and services.

Given the recent increase in the number of applications covering virtual goods and NFTs, the EUIPO has recently issued guidance on the approach it will be taking to the classification of such goods. The guidance is in line with the approach mooted in the Hermès case and reinforces the need for rights owners to bolster their portfolios. The EUIPO has confirmed that virtual goods are to be treated as digital content or images, so will be proper to one core class relating to digital goods (class 9) irrespective of the class which the real-world version of the goods would be classified in. It will be necessary to state the content or images the virtual goods relate to: for example, “downloadable virtual goods, namely, digital clothing”. Similarly, for NFTs, applicants will have to state the type of digital item being authenticated by the NFT; the term “non-fungible tokens” on its own will not be acceptable. There will not be any changes to services relating to virtual goods and NFTs; these will be classified based on the current principles of classification.

With case law afoot and this type of IPO guidance now issuing, it will be interesting to see how the comparison of virtual goods and corresponding real goods develops in other areas such as trade mark oppositions.

If you would like to discuss further how best to protect your brand in the metaverse, please contact the author or your usual Barker Brettell attorney.

This article was researched by Jacob Larking, legal research assistant, and co-written with Tracy Arch, trade mark attorney and partner, Barker Brettell.