Metaverse Series #4: IP in the Metaverse - Expanding the reach of intangible rights

As new products and services are introduced into the rapidly expanding metaverse, we look at how IP protection and enforcement strategies will need to be international, pro-active and inventive to keep pace with developments.

IP rights work…

It may seem odd to obsess over whether and how IP rights apply to the metaverse.  The clue is in the name: “intellectual” or “intangible” rights are designed to work in the “unreal” world of creativity, brands and data, so it sounds like they should be ideally suited for the metaverse.  And in one sense they are.  Instinctively IP owners know that:

• their trade mark rights should prevent third parties setting up competing businesses with the same name in meta high streets;
• their copyrights should prevent third parties from communicating pirate content at meta cinemas; and
• their rights in data should prevent third parties from running meta-sweepstakes on real world sports events.

So the problem isn’t with the sorts of activities that IP rights apply to – these map relatively well onto the concept of the metaverse. 

The problem is that the enforcement of IP rights requires that a specific IP right – almost always territorially limited by design – be deemed to cover the metaverse based activity and that there be a court willing to take jurisdiction and enforce its orders against infringers. The key questions about IP in the metaverse therefore concern the practical or technical enforcement of IP rights, not the substance of those rights. 

…but enforcement of IP rights is tricky.

Key practical concerns include:

How quickly can you find out about infringements in the numerous metaverse platforms that will develop over the coming years?  While building a bricks and mortar copycat store takes months or years, a retailer on a virtual high street can pop up, fully formed, for a brief flash sale and then disappear again quicker than the aggrieved party can say “interim injunction”.

Can you find out who the infringer is?  Initiating a “notice and take down” process (if one exists) against the platform should be an option, but how to identify the person responsible for introducing the infringing content into the Metaverse?

The key legal concerns centre on territorial questions: 

An infringing store might pop up virtually in the centre of London, but would that activity fall within the scope of a UK trade mark registration if the server on which that metaverse platform is hosted is based in another jurisdiction? 

Which courts will take jurisdiction over infringements in the metaverse? 

Are parties limited to the “traditional” options of the defendant’s jurisdiction or the jurisdiction where the server is hosted or are there other options?

So IP owners need pro-active and international IP strategies…

These concerns mean that any IP protection and enforcement strategy for the metaverse will need to be pro-active (so that infringement identification and enforcement routes are planned in advance of threats arising) and international in outlook: IP owners will want to take swift action in legal and court systems where an effective remedy can most quickly be achieved.

…which stay on top of national developments

It won’t be enough for lawyers to keep on top of legal developments that are conveniently badged as “metaverse” jurisprudence.  Every month, courts in key jurisdictions hand down judgments that, with a little lateral thinking, have striking relevance for the metaverse.  By way of example from just the recent past:

In the EU:

• The European Intellectual Property Office has issued preliminary guidance on how to classify virtual goods so as to obtain robust trade mark protection. Virtual goods are known to fall with Class 9 of the trade mark classification system.  However it is now recommended that goods be specified more narrowly within that class so as to obtain the best possible protection; for example “downloadable virtual goods, namely, virtual clothing” or ““digital certificates registered in a blockchain, to authenticate digital items”.

In the UK:

• Copyright can exist in literary characters (Shazam v Only Fools The Dining Experience and Others [2022] EWHC 1379 (IPEC)). This will make it easier for authors to prevent third parties from using characters they created as avatars or actors in metaverse. This is a blow from those wishing to recreate the brand-heavy Oasis from Ernest Cline’s Ready Player One.
  
  
• An online marketplace allowing sales of branded products to the UK is “using” the brand for the purposes of UK trade mark law (Lifestyle Equities CV and another v Amazon UK Services [2022] EWCA Civ 552). This will broaden the jurisdictional-enforcement options for brand owners wishing to stop the sales of their products in the Metaverse

In France:

• Use of a trademark in the URL address of a website, amounts to trade mark infringement (Paris First Instance Court, 10 June 2022, CARRE BLANC EXPANSION and others). This reinforces the barriers to the use of digital addresses that bring to mind third party businesses (including on the metaverse) to sell branded products.
  
  
• The reproduction of a car in a video game can constitute an infringement of copyright and design rights (although the infringement claim was dismissed in this case) (French Supreme Court, 8 April 2014, No. 13-10.689). This cuts down the freedom to recreate “real world” vehicles and other everyday objects without the consent of their real world producers.

In Germany:

• Owners of trademarks of luxury products may object to the trademarks’ use on online selling platforms if this threatens the good reputation of the brand (Sensai & Kanebo [2019] – 3 U 151/17 This ruling allows companies to prohibit the usage of their trademarks in ways that damage their reputation – and so the repute of the relevant metaverse world will be an important factor in determining whether sales there are infringing.
  
  
• Media Platforms can be responsible for copyright infringements if they become aware of infringement committed by their users (GEMA [2015] – 5 U 87/12). These and other liability rules provided by the case law relating to platform operators by the CJEU (e.g. Peterson v Google LLC [2021] C‑682/18 & C‑683/18) will be crucial for the enforcement of copyrights in the Metaverse if the single user’s identity cannot be determined.

In Belgium:

• An advertisement for the sale of branded products protected by a Benelux trademark is not attributable to the operator of the online marketplace on which the advertisement was placed. (Christian Louboutin v Amazon.com, Inc. and Amazon Services LLC [2022] C-148/21 and C-184/21). This decision, confirmed by AG Szpunar but still pending before the CJEU, shows that an online marketplace operator is not (directly) liable for trademark infringement by third-party sellers when it does not use the (infringed) trademark in its own commercial communication. If confirmed by the CJEU as well, this may be good news for intermediary platforms in the Metaverse. This appears to run counter to the general trend for increased liability for intermediaries demonstrating the shifting sands on this topic and possible contradictions between jurisdictions.
  
  
• The Federal Judicial Police seized for the first time NFTs in the context of an investigation into financial fraud. This shows that seizure is no longer limited to traditional assets, but may also cover digital certificates like non-fungible tokens.

…and keep pace with the developing technology too

In tandem with multiple developing virtual environments the rapid adoption of augmented reality technology (layering virtual images and content onto the user’s real world view) arguably raises more complex legal issues that impact on real and intellectual property rights.  The future for IP and technology has never looked more interesting.

Read the full Metaverse blog series here Contemplating the metaverse: Opportunities and risks (linklaters.com)