By: Andrea Terese Timpone, Esq.
Although digital tokens and virtual reality have been around for some time, their growing audience may be attributed in part to the coronavirus pandemic which brought on a new perspective to how we can connect, shop, create, and work remotely. Perhaps this has focused our individual and business attention on ways we can thrive in these spaces. The Metaverse, which was announced by Mark Zuckerberg on October 28, 2021 has now given us a new medium to develop, and with it, a new way to look at intellectual property.
This article will provide a high-level overview of existing intellectual property rights and ways these rights can be considered through the lens of what is on the horizon. We will also explore current trends and how artists and businesses can prepare to protect their creations.
Overview of Current Intellectual Property Rights.
Trademarks.
Perhaps these are the most familiar forms of intellectual property because they are everywhere we look. Trademarks are words, slogans, sounds, colors, designs, or logos businesses use so that consumers can distinguish the source of the products and services they purchase. In short: a source-identifier. It would be hard to find a person who cannot connect the Starbucks mermaid logo with coffee or a check mark with athletic apparel. That’s why trademark issues can come up if consumers might be confused about the source of their product or services.
Of course, there are specific rules that go along with each depending on what country you are in (since not every business will be able to trademark a color like the Louboutin red sole or Tiffany blue without considering what factors are required to do so).
Trademarks help your business develop goodwill among customers. For example, if you are an apparel company, you might aspire to have consumers see your trademark and make a purchase because they associate your trademark with lasting quality fabrics or sustainable initiatives.
Depending on your business options, it is important to consider what trademark rights are available to you before launching a new trademark or co-branding initiative. This includes consulting with an attorney to assist with the appropriate due diligence, such as a trademark search, to consider what options and risks your business might have.
Copyrights.
Copyrights exist in the realm of artistic creations. In the United States, these include, without limitation, pictorial, sculptural, architectural, literary, and musical works. Copyrights do not protect ideas, facts, methods, or useful components. For the most part, copyright law will not protect the cut of a garment, such as a solid black t-shirt.
Although copyrights attach the moment an artistic work is created, copyright owners should take care to evaluate if and when they should register their creative works with the United States Copyright Office. This is particularly important since the 2019 Supreme Court decision in Fourth Estate Public Benefit Corporation v. Wall-Street.com now requires a copyright registration to bring a lawsuit.
While we have not entirely entered the Metaverse quite yet, we are already in a constant content exchange using popular applications such as TikTok and Instagram to reach our audiences in new ways. Businesses may want to partner with a well-known influencer to promote their latest styles or make a video using a trending song or dance.
Businesses should evaluate their agreements with any third parties that contribute to their copyright assets to ensure they maintain their ownership or hold the appropriate licenses.
Patents.
Patents are used to protect any new and useful process, machine, manufacture, or composition of matter (or their improvements). The two main kinds of patents are utility patents and design patents. An example of a utility patent would be the underlying technology that allows you to use a thumbprint to unlock your phone. An example of a design patent would be the iconic shape of a Patrón bottle.
Why Care About the Metaverse?
The introduction of the Metaverse has brought on a rush of excitement from businesses and creators. According to Zuckerberg, we are still in the “building phase” of the Metaverse and part of this includes the creation of the ecosystems, avatars, apparel and accessories, and architectural spaces, etc. that will fill it.
While the Metaverse promises a limitless range of possibilities it will allow us to enter a digital world using a headset and motion-sensing controllers. We will be perceived and interact with others as an avatar that may appear like us. We will be able to design our virtual home and shared workspaces with NFTs from artists and fashion brands. Since everything in the Metaverse will be a human creation, almost everything we interact with will be some form of intellectual property with varied levels of protection. Businesses are now competing to create and capitalize on those valuable digital assets and will need to consider what intellectual property rights are available to them when entering this space.
Non-Fungible Tokens (NFTs).
Although NFTs have been around before the announcement of the Metaverse they have rapidly gained momentum because they will form a substantial component of our experience within it. NFTs can take many forms including a visual graphic, music sample, video file or a tweet. With the Metaverse in clear view, creators are becoming more practical and designing NFT furniture, houses, and apparel for your avatar.
To illustrate the breath of NFT possibilities, consider Walmart’s recent trademark applications indicating an intention to sell a series of “downloadable virtual goods” including “electronics, appliances, indoor and outdoor furniture, home décor, toys, sporting goods, outdoor recreation, health, beauty and personal care products, household essentials, apparel, grilling products, jewelry, and pet products for use online and in online virtual worlds.”
Even though you might feel an original NFT is easily reproducible when compared to an original Picasso (a simple screenshot versus mastering a unique artistic style) the NFT may actually be more difficult to forge or infringe. This is because each NFT is tracked by its “TokenID” making every transaction (or provenance) publicly available from the current owner all the way to the initial creator.
Depending on the smart contract, as in most cases, the original creator will maintain the actual copyright to the NFT and will have the opportunity to collect automatic royalty payments from resale transactions.
While our existing intellectual property laws may seamlessly apply to original NFTs, it may not be the same for NFTs that are based on property that already exists in our world. As discussed below, we are already witnessing the first stream of court cases that will provide a foundation for this issue.
Current Trends.
In addition to the host of businesses that will provide virtual goods and services to make the Metaverse seem all the more “real” a number of brands are collaborating with digital artists to create iconic NFTs that will personalize your experience. Here are a few trending events that are demonstrating the range of possibilities in the Metaverse and digital platforms:
· On December 14, 2021 – Adidas announced its collaboration with Bored Ape Yacht Club to design its first NFT: Indigo Herz. Indigo might be our contemporary Mona Lisa but unlike Mona Lisa, Indigo is adorned in iconic adidas stripes and comes with their own personality and story: “Indigo Herz is a rebellious optimist who sees the world through heart eyes. They are community focused – one of us – and excited to represent adidas in the swamp club…”
· On January 6, 2022 – Hip-hop artist Nasir Jones (a.k.a Nas) announced a partnership with the investment platform Royal to release a portion of the streaming royalty rights to his songs “Ultra Black” and “Rare.”
· On January 21, 2022 – Hermès filed suit in New York federal court against the artist Mason Rothschild who created MetaBirkins NFTs alleging trademark infringement and dilution. This court case will be a forerunner when interpreting existing copyright and trademark laws that involve a luxury fashion brand. While Rothschild’s attorneys are posturing that this is similar to Andy Warhol’s First Amendment right to make a Campbell’s soup can painting Campbell’s was unlikely planning on entering the art market any time soon.
Intellectual Property in the Metaverse.
For the time being, it is likely that the majority of our intellectual property laws and concepts will be able to conform to the various scenarios presented by the Metaverse and other digital platforms. However, courts and legislators will likely need to opine on how certain thresholds may need tweaking to fit in with our new world.
New businesses and artists may find more challenges than those that are already established considering the importance of certain facts that may not be detectable in the Metaverse. For instance, federal trademark rights begin with the first sale in interstate commerce but how will jurisdiction be viewed in a completely digital realm? And while trademark rights are essential for building goodwill (for example, purchasing from a luxury brand for their quality or reputation) how will goods and services be valued in an entirely different experience? It will be exciting to witness how creatives in all industries will find ways to adapt to Web 3.0 and certainly how attorneys will be able to foster their endeavors.
Disclaimer: The information contained in this post is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls and communications. Contacting us, however, does not create an attorney-client relationship.