Metaverse NFT Tokens: Fad Or Revolution? – Trademark

Non-fungible tokens (NFTs) became a hot topic and a potential
cause of panic for many IP owners at the beginning of the year.
Could the arrival of NFTs and the growth of the virtual herald a
revolution for IP rights, asks Aurelie Guetin.

NFTs are digital files that possess a digital certificate of
authenticity. They can be any kind of file from photos to videos
and even pieces of music. As a unique form of property, they can be
exchanged for financial payment, just like physical (or tangible)
property. The difference is that they are works that you can never
hold physically in your hand.

In June 2021, for example, an artist known as Beeple sold a piece of digital art for $69.3 million
sparking the imagination of digital professionals around the globe.
Since then, many NFT projects have emerged, including a
blockchain-based lottery and an immersive adventure game by Ben
Mauro, the creator of Huxley, an NFT comic book series.

Metaverse NFT tokens: A cause for concern?

The appearance of these virtual goods, which are traded for
seemingly excessive sums, has quickly generated concern among IP
owners. In particular, questions are being raised not only about
how to protect these valuable virtual files, but also how to
protect IP rights from infringement in the NFTs being traded and
marketed in the metaverse.

The best-known case – and cause for concern – has been the Metabirkin, a series of NFTs created by artist
Mason Rothschild that represent fur bags ‘inspired’ by the
famous Birkin handbag produced by French luxury design house
Hermès.

Hermès filed a complaint to New York’s District
Court, accusing the artist of being “a digital speculator
seeking to get rich quick by appropriating the Hermès
trademark, Birkin”.

Nike is also involved in another recent case. The footwear giant
launched a lawsuit against the retailer StockX in early February
2022, claiming that it was selling NFTs displaying Nike’s
trademarks without permission.

How can IP owners protect their trademark rights in the
Metaverse?

There are many uncertainties for rights holders in the
fast-evolving digital landscape. Left unmonitored and unchallenged,
there is also the risk that unauthorised third parties may be able
to escape the legal, geographical and social limits in this new
Metaverse world that they face in ‘normal’ life.

As a result, litigation is certain to multiply as fraudulent
activity continues to grow. As important, IP owners will need to
adapt in order to update their everyday processes to this new
virtual landscape. Contracts provide a pertinent example, as prior
to the emergence of the Metaverse and NFTs, agreements did not
provide for such new use.

At present, however, the measures to be taken are not easy to
define because the types of infringement vary. The most common are
the infringing use of a trademark on an NFT in the Metaverse, the
identical reproduction of a work marketed as an NFT, and the
duplication of an NFT giving rise to copyright infringement.

Faced with such infringement, there are several problems to
address, including the geographical challenges of enforcing IP
rights in a virtual world. Add to this the inherent
difficulties:

  • identifying the creator as well as the seller of the NFT;

  • obtaining the withdrawal of the NFT stored on the blockchain;
    and

  • in the case of trademarks, qualifying infringements as
    trademark use.

If they are to protect themselves in this new economy and online
in general, IP owners first need to identify and mitigate the
risks.

For copyright, since protection is acquired at the time of
creation, measures will become clearer with case law. For trademark
owners, considering protection of their rights for virtual goods is
an important first step.

It is to be hoped that the national and regional trademark
offices and judicial bodies will not recognise a difference between
a virtual bag and a real bag. It would be a legitimate argument,
for example, for infringement to be found and sanctioned without
obliging trademark owners to re-file in order to acquire protection
specifically for NFTs.

What is clear is that IP owners need to have proactive online brand protection strategies in place to
support them and their trademark rights in the fast-evolving
digital landscape.

To find out more about trademarks, NFTs and the
metaverse, watch the recording of our recent webinar ‘In the age of Metaverse and NFT: how to
prepare and protect yourself for this new world’ (hosted by
Questel) or contact us below.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.


Be the first to comment

Leave a Reply

Your email address will not be published.


*