Metaverse and NFTs: 2023 checklist for brand owners
If 2022 was the year the IP profession woke up to the metaverse and NFTs, then 2023 will be when practitioners really need to get to grips with these technologies. We’ll see brands looking for guidance as they build on their initial forays into this field.
We’ll see new forms of brand misuse as the technologies become more established. And we’ll see decisions being handed down in disputes that were kicked off last year, shaping the direction of brand protection and enforcement strategies to come.
What metaverse?
For those still unfamiliar with the term, the metaverse has been described as the 3D or ‘embodied’ internet: a convergence of the real and the virtual world, enabled by VR and/or AR technology.
In its truest sense, ‘the’ metaverse as a single, interoperable, decentralised web 3.0 environment does not yet exist. But there are multiple metaverse-like environments already operating in parallel.
NFTs (non-fungible tokens) are unique cryptographic, digital tokens residing on a blockchain. They are non-fungible (not readily exchangeable one for another) and are determined by their code and other metadata. An NFT is associated with—but distinct from—an underlying asset, which is either a physical real-world item like a luxury good, or a digital item like a digital music file.
Filing strategy
Much has already been written about the impact of these new technologies on trade mark filing strategy, and various IP offices have already issued guidance on the suitable terminology and classes (see the EUIPO guidance).
High profile disputes
It’s in the field of disputes that we’re likely to see the most interesting developments in 2023.
Many of the most visible disputes so far are playing out in the US. The main cases to watch out for on that side of the pond are:
(1) the MetaBirkin case (Hermès International et al v Mason Rothschild, 22-cv-00384 (SDNY));
(2) the Nike vs StockX case (Nike v StockX, 22-cv-983 (SDNY); and
(3) the Bored Ape case (Yuga Labs v Ripps, US District Court for the Central District of California, No. 2:22-cv-04355).
While all three relate to NFTs, the arguments are relevant to the metaverse as well. With the MetaBirkin due for trial in late January 2023, that may well be the US case generating the first substantive judgment on the merits in this field.
On the European side, the cases generating the most publicity so far are:
(1) the Juventus case and
(2) the Mango case.
In the Juventus case, the Rome first instance court granted a preliminary injunction (PI) against blockchain-based platform Blockeras. The platform had minted, advertised, and offered for sale NFTs and other digital content relating to images depicting Juventus trademarks.
In the Mango case, the Barcelona first instance court also granted a PI, this time against clothing brand Mango. Mango had created a collection of NFTs based on digital copies of works of famous artworks, uploaded on the OpenSea marketplace.
While Mango owned the original paintings, the judge questioned Mango’s ability to digitalise them and convert them into NFTs. The injunction included an order that the NFTs be transferred to a wallet designated by the claimant until a final judgment on the merits is issued. Interested observers should look for developments in both cases this year.
What else?
As with web 2.0, the role of intermediaries will also be central, ranging from simple take-down notices to the suitability of more complex measures such as disclosure orders and other forms of potential injunctive relief. In 2023, we are likely to see brand owners testing the boundaries of NFT marketplaces’ involvement in enforcement matters.
Another thing to watch for will be new procedural devices incorporating new technologies. In 2022, a New York and a London court allowed service of proceedings via NFT. In the UK case, the NFT would be ‘airdropped’ into the digital wallets that were said to contain the allegedly misappropriated assets. We may see more of this mechanism if the number of disputes involving unknown defendants proliferates (eg, in the crypto space).
Alongside all this, the Law Commission of England and Wales will likely publish the outcome of its consultation which closed in late 2022 on proposals to reform the law relating to digital assets.
Overall
The court decisions expected in 2023 will help IP practitioners spot common themes and develop guidance. But in a year’s time, it will likely remain too early to identify coherent trends allowing reliable predictions about future cases. In part, this is because so many of the issues in the cases are highly fact-sensitive.
The overall approach being taken does—properly—appear to be one of refining and adapting existing tests and strategies rather than tearing them up in favour of new ones. There is certainly a lot to look out for this year.
Nick Aries is an IP partner and co-head of Bird & Bird's representative office in San Francisco. He can be contacted at: nick.aries@twobirds.com
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