Jens De Maere December 19 2022 Metaverse domains: both virtue and vice for trademarks owners GEVERS | Intellectual Property - International Jens De Maere Intellectual Property IntroductionWhat are metaverse domains?Metaverse domain dispute resolutionIdentifying squatters of metaverse domainsMetaverse-related traditional domain namesCommentIntroductionThe metaverse is widely considered to be the next best thing. Simply put, it is a network of interconnected three-dimensional virtual spaces in which users can interact with each other via avatars. It enables people to experience things that cannot be experienced as easily in the real world. Via the metaverse, for example, it is possible to walk across the Great Wall of China with a simple click of a mouse.This new reality offers countless opportunities for trademark owners since they now have an unlimited number of new worlds in which they can promote and offer their goods and services. For example, a metaverse called "Nikeland" was created for the world-renowned sports brand Nike. Visitors to Nikeland can meet other enthusiasts of the sports brand, socialise with them, take part in promotions and buy Nike goods. Nikeland thus creates a new sales market for the owner of the Nike trademark.However, as well as new opportunities, the metaverse also presents new challenges for trademark owners. They must contemplate how to adequately protect their trademarks in the metaverse to ensure that they are well armed against third-party infringement. This not only means that trademark owners must think about adapting the class descriptions of their existing trademark portfolio, and possibly adding new classes, but also that trademark owners must make sure that their brand is represented in metaverse domains.What are metaverse domains?Metaverse domains emerged alongside the rise of the metaverse. The main difference between metaverse domains and traditional domain names is that they are decentralised. While traditional domain names are used to gain access to a website or operate a mailbox, a metaverse domain gives the sole ownership of any digital asset or digital entity paired with it to its users. An easy-to-remember shortcut to crypto wallets is an example of an application of a metaverse domain. Normal access to such wallets occurs via complex and lengthy algorithms, but they can be accessed more easily through metaverse domains. This enables crypto payments to be made smoothly.Trademark owners should certainly consider registering metaverse domains. They are important if trademark owners want to enable crypto payments for their goods and services. Nike, for example, could register a metaverse domain with extensions such as ".eth" or ".crypto", which would enable visitors to Nikeland to buy goods with cryptocurrencies. However, Nike – and trademark owners in general – may also want to register metaverse domains for a more defensive reason.Metaverse domain dispute resolutionA consequence of the decentralised nature of metaverse domains is that there is no centralised dispute resolution process, unlike for traditional domain names. Traditional domain names are primarily managed by the Internet Corporation for Assigned Names and Numbers (ICANN), which offers uniform and centralised dispute resolution mechanisms and policies. One of the purposes of metaverse domain names is to reduce the dependency on ICANN. While decentralisation has its advantages, the lack of a centralised dispute resolution mechanism makes metaverse domains a key target for squatters.When a squatter owns a metaverse domain that incorporates a trademark owned by another party, that party has no resolution mechanism comparable with the Uniform Dispute Resolution Policy (UDRP) to retrieve the metaverse domain. The UDRP is an efficient tool for trademark owners to claim the ownership of a traditional domain name incorporating their trademarks quickly and at a fairly low cost, under certain conditions. A comparable efficient tool does not exist for metaverse domains and for this reason, they have attracted the attention of squatters. There has already been a significant number of cases in which squatters have registered metaverse domains incorporating the trademark of a trademark owner and offering them for sale to that owner at a very high price. This practice would be easy to address via the UDRP in the case of a traditional domain name, but since a comparable policy for decentralised metaverse domains does not exist, trademark owners are left empty-handed.Identifying squatters of metaverse domainsClassic legal measures may still be used to act against squatters of metaverse domains, but their decentralised nature creates yet another problem: there is no WHOIS search tool for metaverse domains.Normally, in the case of traditional domain names, the WHOIS search tool offers an insight into the owner of a domain name and its contact details. In absence of such WHOIS data, it is very hard, if not impossible, for trademark owners to identify the infringing party and take legal action against it. This is another reason why metaverse domains are popular with squatters.Metaverse-related traditional domain namesAs well as the squatting that has been seen in relation to metaverse domains, squatting has also taken place with regard to traditional domain names including the term "metaverse". In particular, squatters have registered traditional domain names that combine this term with a trademark belonging to a third party in the second-level domain of such domain names. For example, in one case, a squatter registered the domain name "instagram-metaverse.com". While Instagram succeeded in retrieving the domain name via the UDRP, it still had to invest time and money that would not have been necessary if it had registered the domain name itself.CommentThe key takeaway for trademark owners with regard to metaverse domains and traditional domain names including the term "metaverse" is that it is always better for them to own these domains themselves, rather than having to claim ownership over them via legal actions. While traditional domain names can still be claimed via procedures such as the UDRP, legal measures to claim metaverse domains are more scarce. Not only do metaverse domains and traditional domain names including the term "metaverse" represent an interesting asset for trademark owners, their ownership thereof may be more important from a defensive point of view, as squatting can be stopped and time- and cost-intensive procedures can be avoided. Registering such domain names should thus be high on the list of priorities for trademark owners.For further information on this topic please contact Jens De Maere at GEVERS by telephone (+32 2 715 3711) or email ([email protected]). The GEVERS website can be accessed at www.gevers.eu.