While a fully-functioning “metaverse” is still likely years away, some of the world’s leading fashion brands — including Louis Vuitton, Tommy Hilfiger, and Dolce and Gabbana — have become early adopters of the technology. The companies are testing the waters of the new digital world in various ways, such as creating online games, launching non-fungible tokens (NFTs) and selling virtual clothing collections.
As with most novel technology, the law is currently playing “catch up,” with agencies such as the U.S. Patent and Trademark Office (USPTO) just now beginning to address the intellectual property (IP) issues that arise in the new all-digital world. Because many questions still remain, it is important to be proactive in protecting your rights, even if your company is not yet ready to embrace the metaverse.
What is the Metaverse?
It is difficult to clearly define the “metaverse” because it is still evolving. Author Neal Stephenson first coined the term in his 1992 novel “Snow Crash,” in which characters immerse themselves in the online world as a means to escape a dystopian reality.
Today, the metaverse generally refers to a 3D virtual world where peoples’ avatars can interact through the use of virtual/augmented reality headsets and other technology. Current examples include online gaming and virtual reality platforms like Second Life, Roblox and Fortnite. However, most predict that this is just the beginning of the metaverse, with future technology creating a more expansive digital world that allows users to seamlessly move between multiple experiences offered by different platforms.
While some expect the metaverse to someday replace our current mobile experience, the evolution of the metaverse is not expected to happen overnight. Mark Zuckerberg, who rebranded his company Facebook to Meta, has acknowledged that it may take 10 to 15 years for metaverse products to be “fully realized.”
How Should You Protect Your Brand in the Metaverse?
Because the metaverse allows users to create, buy and sell goods, businesses are increasingly looking to the digital world as a source of new opportunities. For the fashion industry, the metaverse offers new ways to connect with potential customers and increase brand awareness, particularly among younger, tech-savvy users.
Of course, the metaverse is not without risks. At this point, it is still unclear how much consumer demand there will be and which digital platforms will actually take off. There are also significant legal uncertainties regarding intellectual property rights.
While well-known marks generally enjoy protection beyond the products and services covered by a trademark registration, this is not necessarily the case for lesser-known marks. So, even if your company holds a trademark for use of your logo or brand name on clothing, it is yet to be determined if that protection extends to virtual clothing.
Much like in the real world, unauthorized use of well-known brands can not only lead to consumer confusion, but also harm the trademark owner’s reputation. Given the potential risks, brands ranging from Louis Vuitton to Abercrombie to Adidas have filed proactive trademark applications covering new classes for virtual products and services.
In most cases, companies have filed trademark applications that indicate use or intended use in either Class 9 for “downloadable virtual goods including NFTs,” Class 35 for “retail stores for virtual goods” or Class 41 for “entertainment services in virtual environments.”
Have Trademark Authorities Issued Guidance?
In response to the influx of trademark applications, agencies like the USPTO and the European Union Intellectual Property Office (EUIPO) are beginning to offer guidance on how they plan to treat applications involving virtual goods and services.
In addressing the issue for the first time, the USPTO recently advised Nike to revise its trademark applications. The athletic shoemaker made headlines when it filed applications for its name, Swoosh logo, “Just Do It” slogan and “Air Jordan” marks for use on “downloadable virtual goods” (in Class 9), “retail store services featuring virtual goods” (Class 35) and “entertainment services, namely, providing on-line, non-downloadable virtual footwear, clothing, headwear, eyewear, bags, sports bags, backpacks, sports equipment, art, toys and accessories for use in virtual environments” (Class 41).
However, a USPTO trademark examiner found that Nike’s descriptions were “indefinite” and “unclear,” advising the company to add clarifying language expressly stating that the specified goods are for use online “in online virtual worlds.” With regard to Class 41, the trademark examiner suggested that Nike specify that the entertainment services are for use in virtual environments “created for entertainment purposes.”
The EUIPO issued similar guidance to applicants, and confirmed that “virtual goods are proper to Class 9 because they are treated as digital content or images.” However, it further advised that “the term ‘virtual goods’ on its own lacks clarity and precision so must be further specified by stating the content to which the virtual goods relate (e.g., ‘downloadable virtual goods, namely, virtual clothing’).” The EUIPO also noted that services relating to virtual goods will be classified in line with the established principles of classification for services.
While the guidance is helpful, it is important to recognize that the legal framework for the metaverse is also still evolving. As with other new technology, it will take time to develop a robust and reliable body of law.
Key Takeaway
The metaverse creates untapped markets and new ways to interact with customers; however, it is not without significant risks. Whether or not fashion companies are ready to enter the metaverse just yet, it is still advisable to develop brand protection strategies that address the new digital world and consider whether it may be prudent to take advantage of the intent-to-use trademark option.
Howard D. Bader is a NYC attorney who serves as general counsel for clients in a wide range of industries on an international scale. With over three decades’ worth of legal experience, he has represented clients in numerous legal matters, including commercial litigation, intellectual property, bankruptcy, creditor’s rights and mergers and acquisitions, as well as numerous corporate transactions and business law matters.
Howard D. Bader
hbader@sh-law.com
(212)784-6926
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