The Future of Trademarks in the Metaverse

Jared Zim – The future of the internet lies between the integration of a virtual world and reality, what is known as the metaverse. The metaverse is a virtual world where people can socialize, work, and play. Facebook, for example, recently changed its name to Meta to refocus on the metaverse, going beyond today’s social network. Although the metaverse is still in its early stages, it can also provide opportunities and challenges for brands to extend their engagement with consumers to the virtual world.

A trademark can be any word, phrase, symbol, design, or a combination of these things that identifies your goods or services. Trademark law protects against the unauthorized use of a trademark or service mark on or in connection with goods and/or services in a manner that is likely to cause confusion, deception, or mistake about the source of the goods or services. What if the metaverse allows users to purchase a virtual Ferrari to drive or to wear a Gucci T-shirt? As in video games, a brand may license the use of a real-world item in the metaverse.

Similarly, what if an individual user imports a trademarked item into the metaverse, and then sells that item? Although the Digital Millennium Copyright Act (“DMCA”) protects against infringement of copyrighted material, the United States Patent and Trademark Office (“USPTO”) has said a DMCA claim is not a proper method to report trademark infringement claims. On the other hand, a trademark owner may claim trademark infringement or unfair competition by proving they have priority in a valid trademark and that the defendant’s mark is likely to cause confusion in the minds of consumers about the source or sponsorship of the goods or services. Further, the Federal Trademark Anti-Dilution Act allows nationally known brands to sue if the use of their mark by others in advertising or branding a product “tarnishes” or “blurs” the mark.

Some brand owners are currently engaging with consumers in the metaverse through decentralized game applications and by selling exclusive virtual clothing lines using non-fungible tokens (NFTs). For instance, Gucci collaborated with the developers of Roblox, a popular online game, to provide players the chance to win a limited digital version of a Gucci bag, which later sold for more than the physical bag itself. Recently, several companies, including Nike, Abercrombie & Fitch, Vineyard Vines, and Urban Outfitters, have filed intent-to-use trademark applications in various virtual goods and services.

While the metaverse promises companies new opportunities to expand their digital footprint, trademark trolling has also followed these brands into the metaverse. Trademark trolls are those who attempt to register in demand marks with no intent to lawfully use the mark. There have already been several examples of trademark trolls targeting the metaverse. Several trademark applications for well-known brands, e.g., Prada and Gucci, have been filed by unaffiliated individuals before the bona fide brand has filed. These trademark trolls will likely not pose any issues to these brands in the United States, as U.S. trademark law requires actual use or an intention to use the respective mark in commerce on or in connection with the goods or services listed on the application. Ho­­­wever, such rogue applications may cause issues in other jurisdictions, such as China, where trademark rights are granted on a first-to-file basis.

As more digital goods and services are offered, it is clear trademark infringement and counterfeits will follow. The metaverse is the future of the internet, and now is the time to begin protecting trademark rights in this alternate reality. Securing an enforceable trademark in virtual goods and services will allow brand owners to combat infringement and more effectively enforce their rights in the metaverse.

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