Branding in the metaverse - how brand owners can find growth in the virtual realm

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This is part 2 of our IP Update series exploring the evolving landscape for Internet, Digital Media and e-Commerce.

Part 1: “NFTs: Art meets crypto – traditional copyright issues in a tokenized world

Overview of the metaverse

Facebook’s recent re-branding to Meta1 has significantly increased interest in the “metaverse”. Although the concept of the metaverse is still evolving, it is generally understood to be a persistent virtual environment where users can interact with each other, and increasingly with brands. This new environment will pose both challenges and opportunities for brand owners seeking to extend their engagement with consumers to the virtual world. For instance, brand owners seeking to promote their trademarks in the metaverse may be able to do so through a variety of means, including virtual billboards, hosting virtual sponsored events, and even in virtual “malls” where consumers may explore a brand owner’s virtual offerings. Indeed, some brand owners are already actively engaging with consumers in the metaverse, through various decentralized game applications and by selling exclusive virtual clothing lines using Non-Fungible Token (“NFT”) technology (see our previous article explaining NFTs).

What is the metaverse?

The term metaverse refers to a persistent virtual world, a “place” parallel to the physical world, which incorporates augmented reality, virtual reality, 3D holographic avatars, video and other means of communication, where people can "live" and interact in real-time with others within a digital universe.

The metaverse offers the potential for individuals to gather online for work, play and stay connected with friends, family and colleagues through everything from concerts and conferences to virtual trips around the world.

How brands are currently engaging in the metaverse

One early avenue for brand owners to engage with consumers in the metaverse has been to offer scarce or ‘limited edition’ digital versions of goods through online games and digital marketplaces. For example, Louis Vuitton’s Louis the Game allows players to customize their own avatar with virtual Louis Vuitton branded prints and colorways embedded in the game as NFTs2. Not to be outdone, Dolce & Gabbana has created an exclusive line of branded NFT-based digital wearables that also provide fans of the brand with the additional benefit of gaining access to the physical form of the wearable at an exhibition IRL (in real life), creating a unique integration of their branded digital and physical goods3.

Brand owners have also started collaborating with existing metaverse-like online platforms to release exclusive digital items, which is providing access to a new segment of younger digitally savvy consumers. For instance, Gucci recently collaborated with the popular online game Roblox to provide players with the chance to win a limited digital version of their Gucci Dionysus bag. Remarkably, the digital version of the bag was re-sold on the Roblox marketplace for over $4,100, exceeding the price of a physical Gucci Dionysus bag4.

Protecting and enforcing brand rights in the metaverse

Well executed marketing efforts in the metaverse, such as the above-noted examples, may increase brand loyalty (particularly among younger tech-savvy consumers) and increase sales of both digital and IRL (real-world) goods. However, as more and more brand owners start offering branded digital goods and services in the metaverse, trademark infringement and counterfeits will inevitably follow. Since the exact form of infringement may be difficult to predict, it will be important for brand owners to secure enforceable trademark protection that extends to the metaverse.

Brand owners who fail to secure their trademark rights for virtual goods and services may find it difficult to combat infringement and effectively enforce their rights in the metaverse. Some forward-looking brand owners have already taken steps by applying to register their trademarks for goods and services relating to the metaverse, including downloadable virtual goods for use in online virtual worlds, retail stores featuring virtual goods, and providing digital collectible services.

Some recent examples of brand protection in the metaverse include the following:

  • Nike recently made headlines5 by filing trademark applications with the United States Patent and Trademark Office for such goods and services for many of its iconic brands like NIKE (Application # 97095855), JUST DO IT (Application # 97096236), and its AIR JORDAN logo (Application # 97096945);
  • Converse has also filed multiple applications to obtain trademark protection for virtual goods and services for its famous marks, such as the well-known ALL STAR CHUCK TAYLOR logo (Application # 97107382); and
  • Abercrombie & Fitch has filed trademark applications for its bird and moose silhouette designs (Application #’s 97106352 and 97106342) covering virtual goods.

Conclusion

The metaverse provides challenges and opportunities for brand owners seeking to engage with a new consumer base and increase brand loyalty using digital and virtual goods and services. As more and more brand owners begin providing goods and services in the metaverse, it will become increasingly important to secure trademark protection for virtual goods and services to combat inevitable infringement.

References

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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