Metaverse and IP: Intellectual Property in the Digital Future

As the importance of the metaverse continues to grow, so do the questions from IP applicants and owners. This article aims to provide an easy-to-understand insight into what the Metaverse is all about, why IP plays such an important role in it, and what needs to be considered when applying for trademarks, patents and designs.

The Metaverse: Embracing a New Reality

The term “metaverse” refers to a virtual space where people can interact with each other, creating a network between the physical and digital worlds. Unlike conventional websites and social networks, the metaverse is intended to offer a high degree of immersion – i.e., an effect evoked in users that makes them less aware of the fact that they are in an artificial environment rather than a real one. What initially sounds like a dystopian scenario offers numerous opportunities for digital work, shopping, education, games or even travel.

According to the financial and market analysis company Bloomberg Intelligence, the market volume of the Metaverse could be as high as USD 800 billion worldwide as early as 2024. Already in view of these figures, a competitive relationship among the participants within the Metaverse is to be expected. It is therefore advisable for future Metaverse users to start thinking about issues relating to intellectual property and its protection now. As in the real world, the common technical as well as non-technical protection rights come into consideration: trademarks, patents and designs.

Trademarks in the Metaverse: Virtual Identities and Legal Realities

In the metaverse, too, a trademark must ensure that, in connection with a claimed good or service, a mark can serve as a means of distinguishing the goods and services of one company from those of another. The question, however, is whether a trademark registered for a real good also provides trademark protection for a virtual good.
In this context, the European Union Intellectual Property Office (EUIPO) has already issued a guideline stating that virtual goods should be classified in Nice Class 9, which normally covers computers and scientific equipment. From a practical point of view, this means that a trade mark applicant should not apply only for physical goods if the digital counterpart is to be protected.

NFTs (non-fungible tokens), a specific product group that is already growing in importance, also have a special position. These are unique digital certificates that, by being registered in a blockchain, authenticate the objects associated with them, but are distinct from the virtual or non-virtual objects themselves. With them, it is possible to prove digital ownership flawlessly. As such, NFTs should also be included in Class 9. However, the “nature of the digital object authenticated by the NFT” must also be specified. Thus, in connection with trademarks to be registered for NFTs, it is necessary to provide detail about the certified subject matter.
Thus, in relation to trademark applications and the metaverse, a certain amount of foresight is required, as it is necessary to consider the relationship between the physical and digital worlds in which the trademark owner operates. Conversely, for owners of already registered trademarks, this probably also means that a new trademark application is recommended if the commercial activities using an existing trademark are to be extended into the metaverse. Otherwise, it will probably be up to offices and courts to decide whether virtual and physical goods have a certain degree of similarity and whether consumers will assume that these two types of goods have the same commercial origin if they are marked with the same or similar trademarks.

Patents in the Metaverse: Technical Innovation or Disposable Trend?

When considering who might be eligible for patent protection in the metaverse, a distinction should first be made between hardware-related and software-related patent applications – because the requirements may differ depending on whether the invention is a hardware component or a computer-based invention. In both cases, the subject matter of the patent application must be of a technical nature.
In the case of hardware inventions for the metaverse, the technical means of accessing the metaverse are particularly relevant. This includes, for example, screens or devices for interacting with the metaverse, such as VR goggles, sensors, processors or storage media. The decisive criteria for granting a patent are still the novelty of the invention and the inventive step on which it is based.

However, the approval of software-related patents is more complex. At the European Patent Office, for example, computer programs as such are excluded from patent protection unless they have a technical character. In order to have a technical character and thus not be excluded from patentability, a computer program must produce a technical effect when run on a computer. Blockchains and simulation technologies are certainly relevant here.
Blockchains, understood as a tamper-proof decentralised database in which data or transactions are stored in temporally and cryptographically chained blocks, generally fall within the definition of such a computer-implemented invention and are in principle patentable insofar as they relate to cryptography, computers and networks.
As mentioned above, another important area of software-implemented inventions is the simulation, design and modelling of products or processes in the metaverse. These may also be eligible for patent protection, provided, for example, that the simulation of a technical system achieves a technical effect that goes beyond the mere implementation of the simulation on a computer, e.g. by creating an interaction with a real process.
Since the requirements for obtaining a patent differ from country to country, the respective examination practice must also be taken into account in connection with patents and, in particular in the case of computer-implemented inventions, it must be examined on a case-by-case basis whether or not they are in principle amenable to patent protection.

Designs in the Metaverse: Creativity on the Digital Expressway

Besides trademarks and patents, design protection is a relevant type of intellectual property right for activities in the metaverse. One advantage of designs over trademarks is that they are usually not limited to specific goods and services: If a design is initially registered for a specific product name, e.g. a real object, design protection can still be claimed for any other product that produces the same overall impression.

Another advantage of designs or design registrations in many countries is that they can be used not only for physical products but also for graphic symbols – including logos. For new logos being considered in the future, trademark owners who have not already done so may well consider filing a trademark application for the logo in addition to a corresponding design or design patent application, in order to facilitate the use of the logo in a virtual environment.

For the sake of completeness, however, it should be noted that obtaining protection for a design or designs is subject to the novelty requirement and therefore may not be known to the informed user, subject to any grace periods. Thus, in the case of designs that have been on the market for some time, it may not be possible to protect them retroactively by registering a design.

Metaverse vs. Territoriality: Navigating Boundless Virtual Frontiers

An important question at the beginning of any IP application is in which country protection should be sought. In the context of the Metaverse, the answer to this question becomes more difficult because the Metaverse does not move within national borders. Information about the location of the user, the location of a provider, the location of servers, or the location of an alleged infringer may provide clues as to where an infringement can be traced in the metaverse. The question then arises as to which of these locations has a property right so that action can be taken against an infringing act.

A possible answer to this question, at least in the European context, can be found in the analogous case law on online trading in EU trademark disputes. In this case, the courts of the Member State in which an infringement has been committed or is threatened have international jurisdiction. A distinction must be made between the place of action, i.e. the place where the infringement actually takes place, and the place of effect, i.e. the place where the harmful event occurs. According to a 2017 ruling by the German Federal Supreme Court, it is primarily the place of action that is relevant. If an infringer offers goods on the internet from an EU member state – in this case Italy – which are intended for customers in other EU member states – in this case Germany – the place of action is Italy, but the place of effect is Germany. Accordingly, an Italian court should have local jurisdiction, even if the internet offer is in German.

Drawing a parallel between the typical structures of a cross-border trademark infringement and the metaverse of an IP infringement, and taking into account the case law outlined above, one would have to assume that the place of jurisdiction would be the registered office of the infringer, since this is where the trademark infringement takes place. This argues in favour of broad, international protection – even in markets where one is not active. Due to the complexity of the metaverse, caution should be exercised in the filing strategy and, at least from a territorial point of view, broad protection should be sought, not necessarily limited to the countries of the relevant markets.

However, two other aspects that need to be considered in relation to the enforcement of rights in the metaverse are the anonymity that the metaverse offers its users and its decentralised nature. As a result, it will probably not be easy to find out where the infringer is located in order to take legal action against him. Although the service provider may be able to help provide more detailed information about the identity of the infringer, it remains to be seen to what extent the service provider will be obliged to cooperate or whether the service provider itself, rather than the actual infringer, may be held liable – think of the European Court of Justice (ECJ) decision in 2022, which held that Amazon, as the operator of an online marketplace, may under certain circumstances be prosecuted for trademark infringements by third parties. While there is no guarantee that such rulings will be followed in the case of IP infringements in the metaverse, there are recognisable parallels that will not go unnoticed.

Key Takeaway

The metaverse is undoubtedly an emerging digital environment in which intellectual property protection will play as important a role as in the real world. Applicants and owners of intellectual property rights should therefore consider at an early stage which of their rights need to be protected in the metaverse and what needs to be done to ensure the broadest possible protection – we at LBP are happy to assist.

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