Trade Marks In The Metaverse: What Brand Owners Need To Consider

Registering trade marks has been a business imperative for brands that want to protect their exclusivity in virtual settings for some time, but the emergence of the metaverse – a technological platform in which users experience digital 3D lives that parallel their real ones – brings the question of intellectual property rights in the virtual world into even sharper focus.

But before we delve into the issue of trade marks in the metaverse and offer up some practical suggestions for brand owners, let’s first take a closer look at what this next generation world looks like.

What is the metaverse?

The metaverse has been called the ‘sum of all virtual spaces’, ‘beyond the universe’ and the ‘next generation of the internet’, and it is billed as a 3D-enabled space that could ultimately connect users on all different online environments (such as social networks, gaming platforms etc) to play, connect, socialise, share information, conduct business, transact and be entertained. 

In other words, the metaverse is an all-encompassing confluence of virtual reality (VR), augmented reality (AR) and mixed reality (MR) which involves a mix of experiences both in real life (IRL) and through avatars. 

However, the metaverse is still very much in its infancy and no-one really knows what it may become or how it may actually develop.  Despite the unknowns, a number of brands including Nike, Coca Cola, Gucci and Louis Vuitton have already embraced the metaverse in pursuit of innovative and meaningful ways to engage with their customers. 

We’ve already seen significant changes in how brands market themselves as digital experiences grow and there’s no doubt that businesses face very real challenges in terms of their IP ownership, rights and enforcement in the virtual world.

In fact, several interesting legal issues around brand ownership in the VR and AR spaces and the registration of trade marks for virtual products have already emerged. In a recent case in the US, luxury brand Hermes International successfully claimed that the sale of ‘Metabirkins’ non-fungible tokens by artist Mason Rothschild was an infringement of its registered trade mark for its physical Birkin bag. 

Here in Australia, a number of companies have already started securing protection for their brands in virtual environments including Penfolds, Charlotte Tilbury and Zimmermann.  In 2021, Penfolds became the first wine partner to partner with Blockbar, a leading non-fungible token (NFT) marketplace for luxury wine and spirits products when they launched a limited edition NFT tied to one of their rare vintages.

There’s no doubt that as our digital experiences escalate, brand owners are having to carefully consider how they protect their IP in the virtual world.

Does a trade mark exist in the metaverse?

Metaverse users will be able to buy and sell digital assets such as non-fungible tokens (NFTs) and other blockchain and crypto assets. Customers will also be able to share products as well as participate in virtual events like product demonstrations, music events, fashion shows, tours, training courses – all of which could involve branded goods being used, experienced, promoted or placed in some way.

Trade marks distinguish the goods and services from those of other traders in the real world – and the legal protections that come with trade mark registration apply if these products are marketed and sold through digital platforms.  So if the metaverse is a new form of a virtual world, it follows that those same rights would apply. 

In short, the answer to the question of whether a trade mark exists in the metaverse is ‘yes’.  But trade mark law is a complex and dynamic field – and the evolution of new frontiers like the metaverse complicates matters.  That’s why every business whose success depends on maintaining exclusivity of its brand/s should get advice from a trade marks expert on how to protect their IP in the virtual world through trade mark registration.

Challenges with regards to branding in the metaverse

In the metaverse, the real world blurs with the virtual and imaginative worlds. 

Is it possible to quantify or validate an imaginary experience with an avatar or hologram?  If the interaction is not real or tangible in the traditional sense, how do brand owners maintain control over how their IP is used and portrayed in the metaverse?    If the metaverse doesn’t have any geographical boundaries, how do we get around the traditional method of trade mark registration according to country or jurisdiction?

There are certainly more questions than answers with regards to the metaverse, but IP law makers around the world have already made changes to protect branded goods in the metaverse and manage trade mark infringements.

In January 2023, an updated version of the Nice Classification (an international classification system for registering trade marks) was announced which included a number of categories for classifying virtual assets. 

IP Australia followed this lead and in August 2023, released their own guidelines on virtual goods, metaverse, NFTs, blockchain etc.  These guidelines clarify IP Australia’s practice relating to the classification of these emerging technologies, and any trade mark application must specify the exact nature of the virtual goods such as software, image files, music or clothing. 

Branding in the metaverse will bring undoubtedly bring new challenges as there are still so many ‘what ifs’.  However, with specific provisions now in place for trade marking in virtual environments, brand owners can take advantage of the known protections that these provide in a somewhat unknown world.

What should brand owners do about trade marking virtual products?

The most effective way for a brand owner to protect their IP in the virtual world is to secure exclusive rights to their brand in the real world through trade mark registration. 

Retail will be one of the biggest sectors in the metaverse, which means brand owners have to focus their attention on their branding and marketing.  The reality is that the value of a brand is entrenched in its IP and if virtual environments are a possibility for any particular product, brand owners should prioritise filing trade mark applications that specifically cover virtual classifications.

Recommendation:  The smart move for a brand owner would be to think long and hard about their brand and whether there is currently – or could be in the future – a need to file a separate trade mark application to ensure that its integrity and value is protected in virtual settings.   Now that it is possible to claim registration in relation to various downloadable and virtual goods, brand owners may need to consider whether their existing registrations extend to virtual versions thereof. For example, if a trade mark is registered for clothing, the trade mark owner may need to consider registration for downloadable virtual clothing too.

However, brand owners can’t assume that their legal protections are as watertight in the virtual world as they are in the real world.  Brand owners should also aim to understand what trade mark infringements could look like in the metaverse – and identify procedures for monitoring and responding to potential transgressions.

Key takeaways

Businesses need to be on the front foot when it comes to protecting their IP in virtual settings. 

While regulators in Australia and around the world continue to investigate and implement the best practices for securing and managing IP protection in the rapidly evolving virtual world, brand owners can’t simply rely on their existing trade marks for protection in the metaverse.  It is incumbent on businesses themselves to proactively minimise any risk of infringement – both by a third party against their own trade mark as well as the business infringing on another party’s registered trade mark.

Our team of highly experienced trade marks attorneys at MMW Trademark Services strives to stay abreast of developments in the world of trade mark law, and as new virtual frontiers open up, there has never been a more important time for business owners to ensure that their valuable IP assets are protected as comprehensively as possible.

You’re welcome to contact us for affordable trade mark services and an obligation-free chat about any aspect of trade mark registration in the real world as well as in the virtual world.  Get in touch by calling our friendly team on 03 8288 1432 or reach out through our website.  We’re here to help.