People are predicting that the metaverse will be the next big thing in the evolution of technology and the internet. Big tech companies including Meta (previously known as Facebook), Microsoft and Amazon are investing massive resources into building it. This is expected to be a strong environment for selling digital goods, among other opportunities.

One of the big challenges facing brands hoping to profit from the metaverse is protecting their IP. Currently, when infringement occurs in the form of digital goods, brands have little recourse other than to approach the courts. As the metaverse grows, the platform may benefit from implementing non-judgmental protocols that help brands enforce their IP rights.

The term “metaverse” first appeared in Neil Stephenson’s 1992 novel. was coined in snow accident, While today’s metaverse is in its infancy, it is envisioned as a vast digital world where people can socialize, work and play.

Technology such as virtual reality and augmented reality hardware devices will be used to access and engage in virtual places and experiences. Mark Zuckerberg has referred to the Metaverse as “the successor to the mobile Internet”. The metaverse will also lead to a digital economy, enabled by digital currencies and non-fungible tokens “NFTs”, in which users can create, buy and sell digital goods.

Market research firm Gartner predicts that by 2026:

  • 25% of people will spend at least one hour a day in the Metaverse for work, shopping, education, social and/or entertainment.
  • 30% of organizations worldwide will have products such as apparel, automobiles, artwork, and other items available as NFTs in the Metaverse.

Therefore, it’s no surprise that analysts such as investment bank Jeffries forecast the NFT market to reach $35 billion by 2022 and over $80 billion by 2025.


Intellectual Property Challenges in the Metaverse

The metaverse presents significant opportunities for companies looking to expand into the sale of digital goods, as opposed to just physical goods. But it also poses legal risks, especially in the area of ​​intellectual property. A plethora of IP issues are likely to arise, including patent and trademark infringement. Just like in the physical world, the decentralized nature of the metaverse will force brands to deal with counterfeiting and theft by violators looking to profit. We are already seeing alleged breaches happening, and brands are taking steps to protect their IP.

One of the most high-profile examples is a lawsuit brought by luxury brand Herms against a digital artist. Herms alleges that the artist created images of Herms Birkin bags, molded them as NFTs, and then sold them to NFTs for $23,500. Herms argues that “NFT infringes Herms’s intellectual property and trademark rights and is an example of counterfeit Herms products in the metaverse.”

One of the biggest IP challenges brands will face in the metaverse is the fact that it is so easy to create and sell digital products, such as the image of a Birkin bag, relative to the cost and complexity of creating and selling a physical counterfeit product. As a result, brands will be forced to pursue aggressive enforcement actions in the metaverse, and if those actions should be pursued through traditional lawsuits, it will get real expensive real fast.


A Non-Judicial Alternative to Patent, Copyright, and Trademark Enforcement in the Metaverse

The metaverse is emerging as the next phase of the Internet, with what is referred to as “Web 3.0”. Web 3.0 runs on the blockchain which allows it to function as a decentralized environment. Web 2.0, on the other hand, is the Internet as we know it today, dominated by a few large companies in areas such as search, social networking, and online commerce.

If Web 3.0 is about who controls the Internet of tomorrow, then the metaverse is about how we will experience it. And part of that experience will almost certainly include aspects of commerce, including brands advertising and selling digital goods on the Metaverse platform. This means new IP challenges will arise for brands, and if the decentralized ethos of Web 3.0 flourishes in the metaverse, enforcing IP rights will become a difficult, costly undertaking.

While Web 2.0 may seem archaic in the not-too-distant future, we can look back and realize that its major players have leveraged the Metaverse platform to enable robust economic activity while protecting against large-scale IP infringement. helped to pave the way for

As e-commerce has grown significantly over the past decade on Web 2.0 platforms such as Amazon and Etsy, patent and trademark infringement has become a major problem. For many years, brands had no choice but to run to court to seek a definitive remedy, as the platforms on which the infringement took place were poorly equipped to deal with the problem of IP infringement by vendors.

The solution that emerged on the Web 2.0 platform was the establishment of non-judicial options for resolving IP disputes, such as Amazon’s neutral patent evaluation system, to streamline dispute resolution for patent infringement claims.

According to the neutral patent evaluation system, one party can file a complaint alleging infringement, and if an accused party responds, Amazon can have a qualified patent attorney to serve as the neutral assessor to assess the claims. will choose. If an accused party (1) fails to respond to the complaint or (2) loses the valuation, the relevant product listing will be removed by Amazon. The entire process may only take a few months, and if a patent infringement claim is prosecuted through the judicial system, the expense is significantly reduced.

Amazon has other procedures in place for sellers on the Platform to identify and address other forms of IP infringement, such as trademark and copyright infringement. Other e-commerce platforms that allow third parties to sell goods, such as Etsy, also have similar policies and procedures.

As Web 2.0 platforms matured, they took it upon themselves to enable brands to seek recourse to infringement without having to resort to the judicial system. And while we’re currently in the “Wild West” phase of the metaverse, platforms hoping to monetize by enabling third-party commerce (for example, the sale of digital goods in the form of NFTs) may want to consider the latter. Rather than building in, similar protocols to help protect against IP infringement.

To the extent that the Metaverse platform has no means to curb IP infringement, it stands to reason that brands selling digital goods would be less likely to use such platforms, instead insisting on IP protection. In an infinite metaverse made up of bits, IP enforcement, and resolution protocols—enabling brands to avoid costly lawsuits—could create a competitive advantage.


To acquire more trendy topics and news about the metaverse, check out Lexyom’s Legal News publications.

Legally Yours,