With the increasing presence of technology and artificial intelligence in our lives, we can’t ignore the significance of intellectual property rights and assets in areas such as non-fungible tokens (NFTs) and the metaverse.
Business houses around the world as well as in India have been leveraging their IP assets in the metaverse economy. For example, Disney's partnership with Epic Games to create a "persistent universe" featuring IP assets from Star Wars and Marvel, along with MCM's virtual store, illustrates how brands are expanding into the digital realm. These initiatives demonstrate the potential for traditional retail brands to transition into virtual spaces, using their IP assets to craft new consumer experiences.
What are the key issues?
Businesses are stepping into this new era by actively filing trademark applications tailored to the digital environment, covering metaverse and NFTs. For example, Nike has filed applications for its trademarks Nike, Just Do It, Air Jordan, and Jumpman in categories such as "downloadable virtual goods" and "retail store services featuring virtual goods". This filing trend has gathered good momentum in India. This proactive approach highlights the importance of securing IP rights as businesses expand into virtual markets.
It isn’t just trade mark filings alone. Trademarks are also being enforced. In 2023, the case of Hermès v. Mason Rothschild case highlighted the importance of IP rights in the metaverse when Hermès successfully argued that Rothschild’s 'MetaBirkins' NFTs infringed their trademarks. The court's ruling in favour of Hermès confirmed that trademark rights apply in the digital space, establishing a key precedent for IP enforcement and recognising the legal equivalency of digital and physical goods.
However, transitioning IP laws into the digital domain poses challenges. Copyright laws protect creative works like digital art and music in NFTs, requiring originality and expression. Importantly, buying an NFT does not grant copyright ownership of the original content, a crucial distinction for preventing infringement.
Beyond these specific cases, the metaverse presents broader challenges, including the enforcement of IP rights in an environment where identities can be masked by digital avatars and transactions are anonymised by the blockchain technology. Jurisdictional issues further complicate legal proceedings when claims of infringement are not resolved by the regulatory authority of the metaverse platform or NFT marketplace.
Due to the absence of specific regulations for metaverse and NFTs in many regions, including India, developing comprehensive IP protection strategies is crucial. Brands need to update or create new guidelines covering NFTs and metaverse exploitation. Additionally, clear policies for enforcing IP rights against unauthorised NFT activities and metaverse misuse are essential.
Therefore, when entering the metaverse, businesses must meticulously document how and where their IP assets are being used and commercialised and ensure clear contractual agreements to protect and enforce IP rights. It does become important for brand owners to find a balance between growing and augmenting their IP rights and assets versus ensuring that their IP assets are not misused or diluted.
(The author is a Partner in law firm INDUSLAW. Views expressed are personal)