What is the metaverse?
Branding opportunities using NFTs and metaverse
Ownership of rights
Not a day goes by without hearing about non-fungible tokens (NFTs) or the metaverse. Many brands are wondering whether these technological developments are really relevant to them, or whether they are just the rantings of geeks, far removed from their customers' concerns. This article looks at the commercial developments that are already being observed and the potential IP consequences of such developments.
The technical definition of the metaverse is:
a vast network of persistent, real-time rendered 3D worlds and simulations that support the continuity of identity, objects, history, payments and entitlements, and can be experienced synchronously by an effectively unlimited number of users.
Facebook's definition is more accessible. It describes the metaverse as "a set of virtual spaces where you can create and explore with others who are not in the same physical space as you".
These definitions give the impression of a "virtual whole". However, the reality that can be observed is closer to a mix of real and virtual, or rather experiences where the real world makes inroads into this virtual world and vice versa. This search for interconnection between the real and the virtual is precisely what makes it possible to imagine how, in the near future, a brand could envisage an experience using NFTs or the metaverse.
Branding opportunities using NFTs and metaverse
Examples of brands' use of NFTs include:
- physical products being sold exclusively via digital means (eg, the collaboration of Dom Perignon and Lady Gaga);
- products sold via NFTs before they are physically produced (eg, the NFT of Château L'Angélus in partnership with CultWines or the Australian Treasury Wine Estates' NFT launched on BlockBar);
- a mix of the sale of real products and exclusive experiences using NFT technology (eg, the 2021 sale by Maison Acker of 16 lots from Domaine Comte Louis-Michel Liger-Belair); and
- digital sales with physical delivery (eg, NFTs for Sarah Jessica Parker's wine brands being auctioned).
NFTs are most often associated with an idea of rarity, even uniqueness – this is what gives NFTs their value. They can also be linked to the fact that the person who created the NFT is the person who is at the origin of the "work" (eg, Tim Berners-Lee selling the program at the origin of the web or footballer Antoine Kombouaré selling his legendary goal at auction). Therefore, there is a direct link between the author and the buyer.
Brands selling consumer products are also making the most of these technological developments – including L'Oréal, which is collaborating with artists for the launch of a new lipstick, and CVS Health and McDonalds, which are planning to purchase stores in the metaverse and taking steps to protect their brands.
It may be more difficult for business-to-business companies to see how their business can enter the virtual world – however, such companies may wish to explore the possibility of virtual games or avatars within the metaverse.
Obviously, as in real life, it will be necessary to beware of counterfeits. Some brands are already taking protective measures, including Dolce & Gabbana and Hermes. Virtual land is also being sold, which is leading to renowned real estate agencies protecting their names for virtual real estate marketplace and brokerage services.
It is logical for brands to extend their trademark protection in the virtual universe. Such an extension is done by means of additional brand protection in the classes concerned – as exemplified by NYSE, McDonald's and Gap.
Companies should be concerned about the protection of their brands in the context of these new technological developments, which largely do not correspond to the classes of activity they usually cover. This is all the more important when brands are valued – such valuation can only take place if the distinctive signs in question are protected.
Registering a trademark for metaverse activities therefore creates the possibility that the value thus created will be sustainable.
It is worth remembering that NFTs do not provide any ownership over the works themselves and are only a certificate of authenticity. The NFT therefore does not give any right to reproduce, modify or exploit the work.
In some cases, NFT management platforms have been created, which raise specific questions about the relationship with the author of the work, the artist (for example, when a representation of the artist themselves is the object of the transaction) and therefore the specific contractual scheme.
The question of the control of rights arises in particular in the field of comics (eg, see Marvel and DC Comics' prohibition of the sale of NFTs relating to their universes) and cinema. In 2021, director Quentin Tarantino announced the forthcoming tokenisation of seven uncut scenes from a script in the form of non-fungible tokens. For their creation, he announced that he would rely on Secret Network blockchain. Production company Miramax reacted by indicating that the studio owned the rights and that it was going to prohibit this sale.
In general, it is essential to integrate NFTs and the metaverse within the media covered by the purchase of rights (eg, logos, drawings, films or architectural concepts).
Companies should analyse the additional protection (including classes and activities) of trademarks that they must undertake to ensure that they hold the rights if they consider exploitation in the form of NFTs or on the metaverse. Companies should also monitor any exploitation that could infringe their rights and constitute economic parasitism.
For further information on this topic please contact Eric Schahl at INLEX IP Expertise by telephone (+33 1 56 59 70 90) or email ([email protected]). The INLEX IP Expertise website can be accessed at inlex.com.