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January 31, 2022

Immersing Intellectual Property Rights in the Metaverse

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What is the Metaverse?

For now and the foreseeable future, the metaverse can be explained as an immersive online experience that utilizes virtual reality (VR) and augmented reality (AR) technology and devices—theoretically, a world of unlimited imagination. Although many believe the metaverse to be the next-generation of the Internet, it is not a new concept. In fact, it has been under serious discussion and in development for at least 10 years, building on a concept that has been well-established in science fiction for decades.

Of late, the metaverse has gained a higher profile because major tech companies, such as Meta (formerly Facebook) and Microsoft, have announced their plans to develop new metaverse platforms  for both entertainment and working purposes. This has stimulated enthusiasm from other industry players to develop ecosystems compatible with the major players’ metaverse visions, in a manner that is increasingly accessible for general users. However, we are yet to witness the creation of actual products and services, which will be necessary for general users to truly understand this technology.

The industries most likely to experience an immediate impact from the metaverse are entertainment, gaming, education, and finance. In addition, cryptocurrencies are likely to be used heavily in the metaverse ecosystem, providing a boost to that already rapidly expanding industry.

Amid all these changes, it will be crucial for anyone involved in the metaverse to understand the intellectual property rights (IPRs) associated with the digital components that comprise it. This article will discuss the anticipated challenges and opportunities of IPR owners with respect to the upcoming world of the metaverse.

Opportunities for IPR Owners

In the short term, there will likely be new opportunities for brand owners in the technology industry to develop AR and VR devices, enhance their user-friendliness, and make them cheaper and more comfortable for longer use. There will also be more opportunities for AR technology-related devices for use with a larger variety of items, such as eyewear and other objects that make AR and VR more accessible to general users.

As a result, there will also be new opportunities for IPRs in this field, such as new patents for device- and software-related technologies. With new technologies, we will see the creation of new brands or product lines, and thus, new trademarks which may be used in both the physical and virtual worlds.

To fulfill their proper function in the immersive experience of the metaverse, these trademarks will likely be nontraditional (such as moving image marks or sound marks), which will lead to an increase in the volume of protection afforded to such nontraditional trademarks. Moreover, it will be very important for IP owners to consider the proper classification of these new trademarks since they will be used with new types of goods and services. For example, some existing trademark classifications that may apply to metaverse goods and services include class 9 (downloadable virtual goods), class 35 (retail store services featuring virtual goods), and class 41 (online entertainment services).

As new online platforms are created, there will be opportunities for new patentable technologies and copyright protection for software-related inventions and games, including patents for blockchain-related technologies and cryptocurrencies.

Managing and Mitigating Risks of Infringement

As identifying and locating infringers in the metaverse could be more challenging, more advanced investigation methods will be necessary. This risk applies to all categories of IP assets in the metaverse. For example, the sale of copyrighted NFT artwork in the metaverse may consist of both authentic and fake NFT artwork, and there may be risks of trademark infringement in the buying and selling of items in the virtual marketplace. Patent infringement issues might also arise as the process of developing technologies could infringe patents related to the metaverse, and potential trade secret misappropriation issues could occur in virtual meeting rooms hosting discussions of confidential information.

These challenges and risks can be guarded against by proactive trademark registration for new types of products and services—especially nontraditional trademarks. Using a trademark consistently while conducting business in the metaverse can create acquired distinctiveness, which can make a nontraditional trademark registrable. Furthermore, regular monitoring and searching to collect evidence and identify patterns of online infringement can help strengthen the development of new IP enforcement strategies.

Proactive Enforcement Strategies for the Metaverse

Brand owners can stay in control of their trademarks or copyrights by engaging in more advanced investigation methods, adapted to identifying risks of infringement in the metaverse. In addition to regularly monitoring and searching for potential infringement, virtual investigators (involving people, automated systems, and artificial intelligence) will possibly need to be deployed to help IP owners keep track of how their intellectual assets are used in the metaverse.

Essentially, the metaverse is made up of online services, and major service providers may be located outside the country where infringement occurs. A host server being located outside the IPR holder’s country can pose challenges to online enforcement, so laws in each country may have to be individually analyzed to assess local notice-and-takedown procedures and website-blocking mechanisms. This is complicated, however, by differences in the development of IP legislation and practices in different jurisdictions. In some countries, IP enforcement tends to take place through administrative procedures, whereas in countries with more mature IP practices, court injunctions tend to be more common and accessible. Regardless, the collection of infringing evidence is a very important preliminary step, and it may be most effective to focus on comprehensive trademark and patent prosecutions in countries with large numbers of users.

Future of IPRs in the Metaverse

IP appears to have a promising future in the metaverse, which will usher in new types of nontraditional trademarks, new goods and services encompassing a range of trademark classifications, and new patentable VR- and AR-related technology. The shift to virtual reality may also create additional issues related to maintaining the confidentiality of trade secrets. As the establishment of appropriate measures to maintain secrecy is one of the fundamental legal requirements for protecting trade secrets, the virtual landscape will require new methods to maintain this secrecy beyond the orthodox methods of signing nondisclosure agreements or limiting access with biometric technology.

The metaverse will present challenges for IP law and IPR holders, but there will also be important opportunities for IP to evolve and become compatible with the metaverse ecosystem. Grasping these new opportunities to adapt to the metaverse will be both valuable and necessary to sustain the continued adaptation of IP law to novel technological advancements.

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