Legal mechanisms to protect your brands and inventions in the metaverse

16 november 2022

Author: Carimer Guzmán

While the regulations of the metaverse are updated and a favorable legal system is created, we recommend being proactive in protecting your trademarks and inventions, creating legal strategies adapted to the needs of your company.

A novel digital environment to market brands and investments
The progressive development and integration of new technologies such as virtual reality, blockchain and NFTs (non-fungible tokens) are creating new business opportunities, one of them being the metaverse.

This is a virtual space where companies can market their brands and inventions, both for their existing products/services, as well as for the innovative products and services that they will use within this universe; therefore, it will be essential to ensure the legal protection of these assets to prevent and defend against possible infringements.

Before diving into the topic of this article, which is to analyze the current legal ways for companies to mitigate the risks to their industrial property rights in the metaverse, it is very important to understand what this new world consists of.

The metaverse: what does this new digital business world consist of?
The word metaverse in plain language means “beyond the universe.” The concept is used to refer to a digital [1] world that acts as an extension of reality. This digital, virtual and three-dimensional world merges with the physical world and in turn replicates it in all its aspects.

In the metaverse, users can -through virtual characters- interact and establish connections with each other in multiple ways, including: exploring, working, buying, selling, etc. So the brands and inventions will have a great role.

Undoubtedly, this new concept will continue to evolve and adapt to user requirements and to all the new challenges that will arise. Being aware about the scope of the metaverse and what is presumed to be its impact on the digital world, highlights the importance of activating legal protection mechanisms, especially industrial property rights, whether or not there is an interest in being part of the metaverse.

[1] Unlike Web 2.0 (current) Web 3.0, in addition to interacting, creating content and communicating with other users, Web 3.0 allows you to own a space on the Web. This in turn is decentralized, allowing a more democratic management of the Internet.

Legal protection in the metaverse: a long way to go
In any new technological scenario legal challenges arise. In the metaverse, industrial property rights will play a fundamental role in guaranteeing adequate legal protection for the companies that participate in this new universe and for the consumers that want to access it.

Companies that want to form part directly or indirectly in this world will want to have the protection of their intangible assets (distinctive signs, inventions, projects, etc.) and the appropriate legal tools to deal with possible infractions.

Currently, there is no specific legal protection path within the metaverse and, unfortunately, legislative progress is much slower than technological progress. However, the international doctrine is inclined to consider that the legal protection we have in the real world would be sufficient to face the new challenges that will arise.

It is evident that eventually, local and international legislation will have to adapt and evolve in the face of current times and design a mechanism to guarantee the adequate legal protection of intangible assets already registered, as well as new assets that may arise in this new space.

While this adaptation is taking place, it is common for companies to have the same question: how do I protect the intangible assets of my business in a virtual world in which: i) there is still no particular regulation that completely shields them from malicious third parties and ii ) where current legislation is still not adapted to these new challenges?

Real-world legal tools to protect your intangible assets in the virtual world

The metaverse entails some challenges for big brand owners and those planning to have investments in these platforms. Being a virtual world, the greatest concern is that there is still no competent regulatory body where rights are registered and which deals with cases of infringement that may arise within this new virtual reality.

Another situation is that the protection of trademarks in most jurisdictions is territorial and many laws are governed by the principle of first in time, first in law. Consequently, this implies that the first to obtain the registration of a trademark will be the first to acquire the rights of exclusive use of it.

In view of the above, just as it happens in the real world, having a trademark registered with the National Intellectual Property Office (ONAPI) certifies ownership of that asset in favor of your company, so it is the first step to have a robust legal tool that protects against infringements. This legal strategy seeks to prevent unauthorized third parties from using it for their own benefit.

Therefore, you must be proactive with the registration of your current and new trademarks, protecting the products and services that your company will market within the metaverse. We recommend that you register in the Dominican Republic and/or in the countries where you market or will market the corresponding product or service.

Likewise, to mitigate the legal risks of possible infringements against your trademarks within the metaverse and, in turn, strengthen them, we recommend strengthening the scope of protection of already registered trademarks and new trademarks; by expanding the products and services that will be offered in this new virtual reality.

Currently, the trademark offices of all countries do not have standard guidelines or criteria to determine in which classes of the Nice International Classification, trademarks must be registered, in order to properly protect them in the metaverse. For this reason, the current trend is to register trademarks in the following class categories: technological products class 9, online sales services 35, entertainment services in the virtual world 41, and technological services 42.

We also recommend specifying that the products “shall be marketed in the virtual environment” and that the services would also be offered within this “virtual environment” to the global community via the internet.

This legal strategy to protect your marks must be supported by robust and efficient surveillance and/or usage of monitoring in the metaverse to detect unauthorized use.

Adopting these measures will not eliminate legal risks 100%, but they will place trademark holders in a better position, since companies (even without being part of the metaverse) that do not have registration and/or strengthen them for the virtual world, will have fewer merits to have their rights recognized and will be more vulnerable and susceptible to infractions within this world.

Patents have the same regulatory situation. As with trademarks, the legal strategy will be to register the inventions that are created and/or arise. This point has very complex aspects since the inventive universe encompasses many aspects that deserve a particular study (blockchain, augmented reality, and virtual reality).

What will happen to the ownership of patents that are created by an avatar? Will the protection of some metaverse products also apply to the real world? These are some of the aspects that are being studied and that still do not have a defined and agreed response.

In comparative law, cases are currently being discussed that will shed light on some of these aspects. However, there is still much to analyze to answer these questions, so it is better to wait for the metaverse to continue to develop and advance, in time to create a solid base that allows us to define the appropriate legal strategies.

If your company wants to develop products in the virtual and real world and if you want to innovate on any product or service that is directly linked to the form of access to virtual worlds (such as avatars or any technology related to blockchain-), we recommend submitting an invention registration application to the Patent Office (whether as a patent, utility model or industrial design, as the case may be), so that it can be protected against third parties in the same way as trademarks.

A strong legal strategy is a must to maximize the benefits of the metaverse
There is still a lot of work to be done in the metaverse regarding industrial property regulations. As it happens with technology, also in this area the law must evolve to adapt and respond to the future needs of the metaverse. Not only to protect the companies that invest in this new virtual environment but also those who use it.

It is clear that this new virtual dimension not only forces the holders of industrial rights to adapt to this new business model, but that governments and international organizations must also do their part to update their regulations.

While the regulations are updated and a sufficiently favorable legal system is created, it is advisable to be proactive in protecting your trademarks and inventions, creating strategies adapted to the needs of your company.

As we have indicated, one of the first steps is to extend the protection of its trademarks to include classes 9, 35, 36, 41, and 42 and to incorporate the “virtual environment” within the scope of protection of these classes. In the case of inventions, they must have their timely registration.

Clearly, the metaverse is here to stay. This digital world offers countless opportunities and benefits for those interested in doing business there (directly or indirectly), as long as they have a solid legal strategy for their industrial property.