Trademark Issues in The Metaverse

Introduction

With e-commerce sweeping the globe at a rapid pace, the world is indeed changing. Recently, several celebrities attracted millions of users for their virtual performances and the tech giant Facebook decided to operate as Meta to leverage the opportunity of becoming the face of the upcoming future of the world, the ‘Metaverse’. The metaverse can be understood as an online experience that is immersive and utilises advanced virtual and augmented reality to produce a world of unlimited imagination.  It is believed that the coming of age, metaverse would provide a newer experience for people to communicate and fulfil their personal and professional commitment in the virtual world with their self-curated ‘Avatars’ representing them. For instance, Walt Disney is working on a Disney-themed Park metaverse and has already announced new technologies and voice assistants for seamless integration of the physical, digital and virtual worlds of Disney.

Protection By Way of IPR

Since there is a very high possibility that consumer interaction will be taking place in the metaverse, efforts are being put in to give it a much more realistic feel by encouraging brands and businesses to set up there. Recently, ‘Mcdonald’s filed trademark applications seeking brand protection in the Metaverse. Apart from Mcdonald’s, even ‘NIKE’ filed applications for getting design marks for its ‘swoosh logo’ mark as well as the tagline, ‘Just do it’, covering various virtual goods and services. Similarly, brands like ‘CROCS’ are eager to protect their goods covering footwear, clothing and accessory goods, and entertainment services in a virtual environment as well as ‘WALMART’ for covering the creation and sale of virtual goods such as electronics, toys, decorations, sporting goods, and personal care products.

Infringement in the Virtual World Possible or Not?

A Trademark is infringed when a person uses a mark identical or similar to a registered trademark in respect of identical or related goods/services, thereby causing consumer confusion.  From the point of the metaverse, legal issues may arise when virtual goods (such as virtual apparel) bearing a registered trademark of others in the real world are used (such as worn by an avatar) in the metaverse. Thus, it can be said that one way that trademark issues may arise is when Avatar’s wear directly infringes a trademarked brand. Apart from the wearables, imagine you are hanging out in the metaverse and you find a restaurant by the name ‘Slarbucks’ believing it to be your favourite coffee place, ‘Starbucks’, you decide to place an order only to have a different coffee delivered to your doorstep because you placed order at a wrong place after being deceived due to the apparent similarity in the names.  Not only this but the naming of Avatar can also pose likely trademark issues; what if an Avatar is named ‘Captain America’ or ‘Hermione Granger’? Even this is likely to confuse the minds of the people that the avatar is associated with either Marvel or Harry Potter.

But a few questions arise here for consideration :

    • Firstly, is the existing legal framework in India exhaustive enough to incorporate the aspect of trademark protection in the metaverse ?
    • Secondly, if not, what are the plausible recommendations for the same?

Present Regulatory Framework Vis A Vis A Trademark Issues In The Metaverse

Well, the difference between the infringement of goods in the real world and the Metaverse is not very distinct. One fundamental thought to consider here is whether the infringement in the metaverse took place on account of just ‘advertisement’ or ‘actual sale’. If the former is the case, then, recourse may be found under section 30 of the Trade Marks Act, 1999 which provides for the defence of nominative fair use which is explicitly embodied under sections 30(2)(a) and 30(2)(d) of the TMA. section 30(2)(a) of TMA provides that use of a registered trademark, or a mark similar or identical to it, by a third party as a descriptor of its goods or services, does not count as infringement.  This doctrine of nominative fair use has come to the aid of a lot of VR developers when infringement proceedings were initiated against them.

However, if we take our SLARBUCKS and STARBUCKS example, it may be said that the brand SLARBUCKS can be held liable for trademark infringement but issues still arise concerning the traceability of the infringer in the virtual world.

  • Jurisdictional challenges

At present India’s Intellectual Property Rights (‘IPR’) regime is silent on how the issues of any potential trademark infringement within the realms of metaverse would be dealt with. We know that trademarks today protect the aspect of the sale of goods and services in an online environment and for the same, no separate application is required to be filed. With big players in the market choosing to opt for trademark filing for virtual goods in the metaverse, which in itself is a revolutionised version of the Internet, it becomes confusing as to whether the regulatory framework would differ by leaps and bounds in the metaverse, making it a plausible jurisdictional issue as well.

  • Intellectual Property licensing laws at the rescue

Metaverse cannot be left to be an unregulated virtual space or an open universe and thus it is clear that the same would inevitably be owned and governed by particular entities and for seamless exhaustion and protection of IP rights therein, the owners are required to sign IP licensing agreements with each platform provider. Herein, the prevalent licensing laws come to the rescue. Fortunately, the Indian IPR regime has provided requisite licensing laws. Section 49 of the TM Act states that the registered user and registered proprietor shall apply jointly by way of an agreement in writing to the Registrar for permitted use of the trademark. The corresponding provision of licensing of IP rights for Copyright, Patent and Design Act is given under sections 30(3) of the Copyright Act, Section 68 of the Patents Act and section 30 of the Design Act respectively.

Conclusion

In the upcoming time, there will likely be new opportunities for brand owners as technological advancement continues to take place. With the urge for the creation of newer experiences for the market by the means of AR and VR devices, it is expected that the rights inherent in this intellectual property would become fundamental for the brands to thrive in the Metaverse. As a result, there will also be new opportunities for IPRs in this field and we may see a range of new brand trademarks with special emphasis on the nuances of this virtual world. As exciting as it may seem, it is also a matter of serious consideration that these rising opportunities are not discouraged due to the sorry state of affairs that exist in our country on account of execution and enforcement of these IP rights when practicality is concerned.

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