Brand owners should submit trade mark applications for the digital equivalent of physical goods in light of legal uncertainty over whether existing registrations can be enforced in the metaverse.
The move is recommended at a time when many organisations are exploring how the virtual world and non-fungible tokens (NFTs) can improve their customer engagement – as demonstrated recently when Roland-Garros launched its first ever collection of NFTs and offered virtual seats to tennis fans at the French Open this year.
Regular brand audits, the development of a robust filing strategy, and appropriate monitoring and enforcement of rights are advised for brands seeking to futureproof themselves.
The benefits of a brand audit
Regular reviews of trade mark and design portfolios can help brand owners ensure that the protections they have in place are fit for purpose. With the metaverse presenting new opportunities and risks, now is the time for brand owners to undertake such an audit.
An audit is helpful to identify any gaps in protection within an IP portfolio, whether they relate to the metaverse or otherwise. A brand audit focuses on whether: a brand owner has registered all branding elements; the scope of protection is wide enough – in particular in respect of the goods and services covered by any trade mark registrations; and protection has been extended to all the countries in which the brand owner is active or intending to be active in the foreseeable future.
Plugging any gaps in protection can assist in building more robust brands and growing revenue. Equally, an audit can also identify rights that are no longer in use and which could potentially be allowed to lapse in a strategically controlled manner, sold, licensed or recycled. This can free up budget for other projects – such as new filings intended to futureproof brands in the metaverse, an area which represents an enormous potential for licensing opportunities.
Désirée Fields
Legal Director
An existing registration for a tennis ball could provide some protection to stop a third party selling a virtual version in the metaverse – but there is no solid law to confirm this. Filing distinct rights for the virtual tennis ball would increase protection and the scope for enforcement
In conducting the audit, brand owners must keep in mind the difference between physical assets, digital assets and NFTs and how each element is protected. This will help them determine whether their existing brand protection needs to be expanded.
A robust trade mark filing strategy
What to file?
Extending existing brands into new areas to cover digital assets in the virtual world is likely to be a feature of brand protection in the metaverse. However, occasionally brand owners may create new brands or sub-brands in this sphere. In any event, brand owners must consider carefully which branding elements are crucial for the metaverse. Focus should be on core brands initially. Less important branding aspects can be reviewed further down the line.
What to protect?
Trade marks are protected in respect of particular categories of goods and services, the so-called 45 “classes” of the Nice Classification system. The Nice Classification is updated annually, however, it is not always adept at keeping up with the pace of new technological developments. Consequently, it is not entirely clear for brand owners at this stage how certain goods and services related to the metaverse and NFTs are best protected.
Trade mark rights and engagement with the metaverse
The world of virtual reality and NFTs are increasingly being viewed as opportunities by organisations to improve the way they engage with customers. This is none more so than in the world of sport.
In advance of the recent French Open 2022, Roland-Garros inaugurated a virtual Court Philippe-Chatrier and launched its first ever collection of NFTs. Fans could purchase a unique collection of seats located in the lower stand of a virtual Court Philippe-Chatrier and acquire NFTs that enable interaction with a community of members and provide exclusive access to prizes and other events.
Roland-Garros is a very well-known and prestigious event with the brand being widely protected across multiple classes of goods and services. Trade marks registered in class 41, which covers entertainment, sporting and cultural activities, are of prime importance to the tournament. It is likely that rights registered in this class will apply to entertainment and sporting activities both in the physical world and the metaverse.
The position is likely to be different, however, for goods, where tangible items are potentially completely different to their virtual equivalents. For example, a tennis ball in physical form is probably sufficiently different to a virtual tennis ball to require separate trade mark registrations under class 28 and class 9 respectively. Getting this right is important when it comes to trade mark infringement proceedings as a brand owner will need to show that the marks and goods or services in question are identical or similar.
An existing registration for a tennis ball could provide some protection to stop a third party selling a virtual version in the metaverse – but there is no solid law to confirm this. Filing distinct rights for the virtual tennis ball would increase protection and the scope for enforcement. Seeking protection for digital assets in the metaverse is therefore particularly relevant for those brands who are actively targeting the metaverse.
In some cases, different brand owners operating in the real and virtual spaces may use the same platforms to sell, market or otherwise offer both tangible and virtual goods. In this scenario the items would be available through the same trade channels and targeted at the same consumers. This could give rise to an argument of a likelihood of confusion – a ground for claiming trade mark infringement.
For brand owners selling or otherwise marketing their brands on a metaverse platform, care should be taken over the wording of any class 35 specifications to ensure they cover the sale of virtual goods. Class 42, which covers technological services, is another class that brand owners operating in the metaverse should carefully look at. Other classes may be important too depending on the particular business concerned.
Well-known brands may have more tools at their disposal to combat potential infringements – they may be able to rely on their established reputation. However, this does not diminish the importance of careful drafting of the wording of the specification of goods and services provided in the metaverse to maximise protection against third party infringements.
Given that we do not yet have case law around metaverse registrations, it is difficult to predict how valuable existing registrations covering digital goods and services will be in protecting brands in the metaverse. However, by filing for digital versions of goods, brand owners can significantly increase their level of brand protection. Brand owners should seek advice on this issue to ensure that the most cost-effective and efficient filing strategy, but which does not compromise on the scope of brand protection, can be developed and implemented without delay.
Where to protect?
As trade marks are territorial in nature, in the real world brand owners are advised to protect their brands in those countries where they do business currently or intend to do so in the future. The metaverse brings with it some new challenges.
Unlike websites that can be targeted at specific jurisdictions and usually contain some evidence as to which countries are targeted, the metaverse is unlikely to be clearly associated with a particular country or countries. This means that brand owners have to give careful thought as to which countries to register their brands in having regard to the peculiarities of the particular countries selected, both in terms of registration and enforcement. The chances are that until we know the status of the metaverse, the metaverse jurisdictional filing strategy may closely align with the real world strategy, with perhaps some nuances.
Conduct trade mark clearance searches
Where a brand owner is looking to expand an existing brand into the metaverse, it may be tempting to save on costs by not carrying out prior trade mark clearance searches. However, where a brand consists of a mark that may be a common word and registrations are going to be sought in new classes – as with our example of taking the real world tennis ball into the virtual space to protect it as a digital asset – it will be commercially prudent to check whether existing third party rights could put obstacles in the way of strategic expansion plans prior to proceeding with new trade mark filings.
Monitor third party uses
It is advisable to implement a trade mark watching service, or to revise any existing services already in place, to ensure that any third party applications for identical or similar trade marks are identified early so that appropriate enforcement action can be taken without delay. Implementing watching services is already an essential part of best practice brand management in the real world and this same advice carries across to the virtual world too.
IP strategies and education
Brand management in the metaverse will require some new tactics to be adopted. For example, it will be important for individuals across the business to be on the lookout for actions which compromise brand strength and integrity, including when engaging in their own metaverse activities. Brand owners should implement or update their internal IP strategy policies to ensure that everyone working in the business is full trained on how to spot branding issues in the metaverse and how to escalate those within the business to the people best placed to respond.
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