What is the metaverse?
The metaverse is an immersive next-generation version of the Internet. It is a fictional, virtual reality universe where users can experience the content of the metaverse through the use of a headset or glasses. The metaverse already exists in a number of video games where many aspects of social media are implemented in a virtual world. The metaverse allows a user to be able to take part in a multitude of experiences such as attending school, shopping for virtual goods, fostering a dog and attending concerts. The metaverse heavily depends on virtual reality technology which, at present, can be costly and lack high quality graphics. However, with increasing interest in and demand for access to the virtual world as a result of the global pandemic, the metaverse is perhaps the next big thing for brand owners to think about.
Following the trend in non-fungible token technology (blockchain-based units of value which have a unique ID leading to an underlying asset such as a digital piece of art), the next step for a brand owner to consider is whether their digital goods or services will be offered via the metaverse. Nike has recently sought protection for “virtual goods” where a pair of virtual trainers can cost up to £30,000 for a user to wear in the metaverse. The wearing of such virtual goods may simply be within a gaming platform or could be used in what many are describing as “real life” circumstances if people around you were wearing augmented glasses which essentially allow the Internet into the real world. In order to understand where protection needs to be sought for virtual goods and services, brand owners should first identify where their brand is being discussed (forums, social media etc) and whether there is an appetite for their particular goods and services in the metaverse, although brands can also look to establish their own presence in the metaverse proactively. While it may be arguable that trade mark protection held for physical goods will be sufficient to take action against a user in the metaverse (should it prove necessary), fresh protection should nevertheless be considered to cover the virtual goods and services which may be offered to clearly establish rights.
User-generated content will be essential to the development of the metaverse. What needs to be considered by brand owners is whether the misuse of your trade mark within the metaverse is damaging to your brand and whether there is a potential for negative PR which may cause further harm to your brand. Infringement action may therefore need to be contemplated. However, brand owners, rather than taking action against infringing use, may prefer instead to offer authenticity status to the virtual goods and services (by way of analogy, in a similar manner to how Twitter verifies certain celebrity accounts). It is also worth bearing in mind that user-generated content could be allowed by way of limited permissions granted to certain users. At present, if infringing content is found within a gaming platform, for example, there are tools to be able to flag up the infringing content and have this removed. It is not yet clear how a brand owner would be able to deal with infringement within the metaverse itself and case law is still developing. It needs to be considered carefully on a case by case basis as to whether the infringing activity is actionable and how the use affects the brand overall as there have been instances in the US where infringing use has been considered as artistic expression.
Licences and brand collaboration
Successful leverage in the metaverse will allow brand owners the possibility of cross-promotional branding and collaboration to reach a wider audience than their usual demographic. Limited edition brand collaborations as NFTs are immensely popular: one collaboration between a sneaker brand and an artist sold virtual shoes for over $3 million. Licences will need to be carefully drafted and there will undoubtedly be a tension between licensor and licensee in respect of control of the brand as a whole especially where there is further development of the brand. An overarching principle for any licence granted for use of a brand within the metaverse needs to also consider the end user of the virtual goods or services for the exploitation of the brand to be successful and to ensure that future uses are incorporated into the licence itself. Any licence should also cover off what steps the licensee will take to remove infringing content should this prove necessary.
The metaverse as a whole will provide exciting opportunities for brand owners to become ultra creative with how they offer virtual goods and services. Although there will be significant developments in the creation and utilisation of the metaverse in the next few years, now is the time for brands to consider what additional protection they need and the processes to put in place in order to harness as many commercial exploits as they can.
If you have any questions on this topic, contact our BDC team, we’d be happy to help.