Tech Forum: Protecting Brands in the Metaverse’s Uncertain Legal Landscape
As fashion brands move fast to plant their flags in the metaverse, they are negotiating boundaries between the real world and a new digital world that — at least from a legal perspective — are still pretty fuzzy.
But soon, lines will be drawn.
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And the logged-in legal types are watching the two early and still developing intellectual property-based lawsuits — brought separately by Hermès and Nike — that are expected to help clarify just what will fly in the metaverse and what won’t.
“What we don’t know is just how much IP law in the real world is going to carry over to the digital world and that’s what we’re looking for right now, to see where the court draws the lines,” said Rola Daaboul, litigation special counsel with Akerman.
Daaboul spoke with WWD technology reporter Adriana Lee at the Fairchild Media Tech Forum in a session titled, “What Brands Need to Know About IP Protections in the Metaverse.”
“People are in a rush right now because the metaverse infrastructure is being built out at a rapid speed, so the digital world and Web3 are all at the top of people’s minds,” Daaboul said. “And major and minor brands are flocking to this as another avenue to get their brands out to get sales up.”
But in that rush, Daaboul said it is important to continue to secure trademarks and copyrights to protect logos and brands fully.
“What happens if you don’t do this is that, because you’ve got this anonymous and pseudo anonymous threat [in the metaverse], it’s very hard if you don’t protect yourself at the outset to go and find those infringers and enforce your rights after the fact because then the proof of ownership burden falls on you in court,” she said.
“Whereas if you obtain the trademark and if you obtain the copyright in those digital assets, then that in and of itself is proof of your ownership,” she said. “So the burden automatically falls on the infringer to prove that they’re not infringing…that is the seat that the company wants to be in.”
Protecting a brand in the metaverse could also support claims made IRL.
“What you don’t want to do is for your brand to become diluted,” Daaboul said. “If you don’t take the necessary steps in the metaverse it becomes more and more difficult in the real world with respect to your brand because you’re already allowing people in an alternate forum to infringe.”
Hermès and Nike are certainly taking their meta rights seriously and early on.
In January, Hermès sued Mason Rothschild, alleging trademark infringement and dilution over his MetaBirkins NFTs resembling furry versions of Hermès’ signature Birkin. The complaint described Rothschild as “a digital speculator” with a scheme to “rip off Hermès’ famous Birkin trademark by adding the generic prefix ‘meta.’”
Daaboul said Rothchild’s case mirrors the argument used to defend Andy Warhol’s famous painting of a Campbell’s soup can, claiming that the NFTs are art or parody.
“What we don’t know is whether a whether a consumer viewing that art would mistake it for an NFT created by Hermès or whether they would recognize it as a parody and that goes back to the tried and true intellectual property law that we have already established in the real world, which is decided on a case by case basis by the court,” she said.
Just a month later, in February, Nike sued StockX, claiming the marketplace was “blatantly free-riding, almost exclusively, on the back of Nike’s famous trademarks and associated goodwill. StockX is ‘minting’ NFTs that prominently use Nike’s trademarks, marketing those NFTs using Nike’s goodwill, and selling those NFTs at heavily inflated prices to unsuspecting consumers.” StockX countered that StockX Vault NFTs were not virtual products, but tokens that are tied to a specific physical pair of sneakers it holds for the NFT owner.
The legal lines represented in these cases might be fuzzy now, but they seem likely to solidify sometime soon and fashion brands are going to have to be ready.
And to be ready, Daaboul argued that brands need to connect with an attorney who’s blockchain savvy and understands the licensing and other agreements taking root in the metaverse.
She advised companies to find legal help that is “already expanding the scope of their intellectual property practices into these new areas.”
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