Why tried and tested tactics will still protect brands in the metaverse – for now

The continued development of the metaverse sparks equal parts uncertainty and excitement throughout the global IP community. Firms and brand owners are doing their best to navigate this virtual Wild West, attempting to fit protections into established IP frameworks while anxiously awaiting regulatory changes that feel inevitable.

We taxed trademark experts from WTR’s annual Global Leaders to explain the metaverse’s impact on brand behaviour and to outline their best strategies for protecting intellectual property in this brave new world.

Their responses emphasise that brands’ desire to rapidly expand their digital profile and fear of third-party infringement may lead some to question traditional IP protection strategies. However, our thought leaders feel differently. Unless and until sweeping regulatory changes arrive, they will utilise established strategies to expand and protect IP portfolios in this ground-breaking digital space, while keeping a close eye on opportunities and risks.

Metaverse expansion alters brand behaviour

The exponential growth of the digital landscape simultaneously yields opportunities for brands to boost their IP portfolios and obstacles to protection, Ashwin Julka of India’s Remfry & Sagar claims. “Brands are recognising opportunities to expand branding and business in these domains” but are growing increasingly weary of third-party usurpation and “overlap with other new-age rights”, he says. In India, these growing concerns are coinciding with a rapid increase in trademark applications “covering digital brand activity”.

Spring Chang of Chang Tsi & Partners is also seeing “more and more trademark applications filed in Classes 9 and 38 before [China’s] IP office to protect virtual products and services”. This trend recently culminated in the Hangzhou Internet Court’s impactful decision in Fat Tiger Vaccinated – the first of many suits to address growing global infringement of NFTs.

Global Leaders across Western jurisdictions likewise profess a need to keep up with the massive influx of this brand-new asset class. These experts extoll the use of unified, well-established brand strategies that keep protection from devolving into a game of whack-a-mole – despite concerns about regulatory uncertainty.

On this front, Juan Carlos Amaro of Mexico’s Becerril Coca & Becerril calls for “new laws and regulations specifically for NFTs and metaverse technologies”, particularly in mainstream industries such as music and sports. Michael Kelber of US firm Neal Gerber Eisenberg LLP echoes this, adding that commercial failures of NFTs in the turbulent global market threaten to slow “the speed at which companies are embracing the metaverse”, possibly miring brands in further legal uncertainty.

How leading IP firms can protect their clients

Practitioners worldwide assert that, until major regulatory changes arrive, firms’ tactics to monitor brands’ digital expansions and fight infringement should mirror tried and tested protection tactics.

For Chang, maintaining clear, consistent communication with brands is essential to this, with an emphasis on “discussing processes to audit and update their current IP portfolios to add necessary protection in the metaverse”. This dynamic can prove invaluable in a landscape dominated by numerous uncertainties concerning the legal standing of digital assets and how they fit into established IP frameworks.

It is further crucial to stay abreast of impending “legal and regulatory developments related to the use of NFTs and metaverse technologies [that] may emerge, which could impact brand protection and IP rights”, states Amaro. This effort is especially important as widespread interest, investment and, unfortunately, infringement in the global virtual space often outpace the institution of corresponding regulations, creating increased opportunities for bad actors.

The similarly rapid growth of related spheres – chiefly, NFTs, Web 3.0 and blockchain technology – makes it non-negotiable that firms and brands continue to invest time, money and energy into monitoring this evolving ecosystem. Julka urges brand owners especially “to keep an ear to the ground (rather, eye to the screen!), analyse business interests and future visions and proceed accordingly” to best protect their assets.

However, while the winds of change continue to blow, Jürg Simon of Swiss firm Lenz & Staehelin insists that “the metaverse is no reason to fundamentally question or change established brand strategies”. His experience navigating this rugged digital landscape yields a three-pronged approach to tackling third-party infringement: “regular monitoring… policing and… if necessary, complement[ing] trademark claims if new forms of offer come into question or if these complements can facilitate the enforcement of rights”.

Finding tangible success in the virtual world

The metaverse allows brands to boost their visibility and raise the value of their digital IP portfolios by creating new platforms and experiences. Conversely, it also exposes them to a seemingly unfamiliar array of third-party infringements that threaten their sense of security.

This dichotomy explains why the virtual space continues to be a trending topic in IP circles and why some brand owners are questioning whether leading firms have the tools to protect them.

Amid this uncertainty, those at the top of their game maintain that brands should continue to evaluate possibilities for growth. But they also urge rights holders to keep faith in leading firms’ dedication to evaluating this evolving ecosystem, preparing for needed regulatory changes and utilising successful protection strategies to ensure the longevity of IP portfolios.

Global Leaders is WTR’s annual opportunity to showcase some of the world’s top private practice trademark experts, allowing them space to share valuable insight into the most pressing issues dominating the IP space and their thoughts for the future. The next edition is due to be published in July 2023.

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