Two reports have recently been published by the International Trademark Association (INTA) that consider the challenges and best practices on trademark protection in the metaverse and NFT environments.  Legal concerns, including but not limited to privacy and data protection, antitrust or anti-competition laws, freedom of speech and defamation, and intellectual property issues ranging from copyrights to patents and trademarks, exist in digital space much like they do in the physical world.

One of the primary trademark infringement issues that may arise in the metaverse is of trademark squatting. Trademark squatters would use trademark registered under physical goods in the metaverse (virtual goods), thus commercially exploiting the trademark and posing a commercial threat to the prior registered owners of such trademark.

Since virtual goods fall under the specifications of Class 9 of the Nice Classification, those brand owners who have not protected their brands under Class 9 would face difficulty in defending their rights over the use of the trademark on a virtual good in the metaverse, especially in “first-to-file” countries such as China, Austria, Italy, UAE and mostly all GCC countries etc.

To mitigate and avoid the risk of falling prey to trademark squatters in the metaverse, brand owners can proactively adopt the following measures:

• Register trademark under Class 9: To strengthen their protection of the brand, brand owners must seek to file a further trademark application to protect their brands under lass 9 as well, so that they can enforce trademark protection in the metaverse space as well.
• Watch services: Engaging worldwide trademark watch services is a useful way to monitor whether a third party is attempting to register a brand in their name and stop them from doing so using legal measures.
• Using the trademark: Registering a trademark under a certain classification is winning only half a battle. It is important that after registering a brand under Class 9, brand owners also use the trademark in the said class, otherwise brand owners may be at a risk of facing a cancellation action on the grounds of non-use of the trademark. This may lead to the cancellation of the trademark registration and a third party would be able to register the same brand in their name and commercially benefit from it.

It is anticipated that the assessment of these applications by trademark offices will result in more consistent descriptions of goods and services, along with the identification of classification concerns. However, trademark owners have no certainty that their trademarks for physical goods will allow them to ensure their rights in the metaverse without additional registration or the use of a mark specific to the metaverse.

Protecting brands in the metaverse will be critical for brand owners. To expand their presence in the metaverse, it is advisable for businesses to develop their virtual marketplace with adequate trademark registrations, a strong monitoring plan, and suitable licenses and terms of use. Even those who do not plan to enter the metaverse will find it useful to re-evaluate their trademark portfolio to determine whether new filings are necessary. The need for advocacy efforts to prevent illegitimate use of trademarks as blockchain domains is also acknowledged by INTA.

The author of this Galadari Insight is Raka Roy. Raka is Head of the Intellectual Property and Data Protection practice at Galadari. If you have any queries regarding the above, or are facing any intellectual property challenges, please get in touch with Raka.

Raka Roy Partner raka@galadarilaw.com