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IP in the Metaverse: A Crash Course for Creatives

  • 27 June 2022
  • Studio Legal

Written by Alyce Evans, Harry Croft and Jennifer Tutty, Principal

From Facebook (now Meta) and Nike, to Snoop Dog, Jay-Z and Quentin Tarantino, it seems that everyone is talking about (and putting money) into the metaverse.

As technology hurtles us towards a new layer of reality, many people are asking: what is the metaverse? Alongside this question are many others: Where is the metaverse? Why does it matter? What does this mean for creatives?

When it comes to intellectual property (IP) in the metaverse, there are a wide range of considerations relating to IP ownership, commercialisation, infringement and enforcement. As always with new technology, the answers aren’t crystal clear from a legal perspective.

In this article, we explore the operation of IP in the metaverse, providing a guide for artists, musicians, film makers and other creatives.

What is the Metaverse?

The metaverse is a broad term, with many layers and differing definitions. Effectively, it will bring together both the physical and the virtual world. The metaverse will bridge the gap between the 2D internet and social media platforms we know today and 3D immersive technologies such as augmented reality and virtual reality. In doing so, it will create new spaces to work, play, learn, socialise, shop and more.

Why Does it Matter?

The Metaverse presents a wide new world of opportunities for companies, brands, creators, founders and society generally. Included in these opportunities is the creation of new jobs. Recently, Nike advertised two job positions for ‘Virtual Material Designers’.

In addition, architects, interior designers and furniture designers have already begun moving their creations into the virtual world. One example of this is Andrés Reisinger, who earlier this year sold ten unique pieces of furniture as NFTs in an online auction.  These virtual items can exist in the metaverse, where the owners can display them in virtual galleries and homes. Ownership of these NFTs also grants the right to use these 3D models in the development of games, animations and CGI movies.

As the metaverse expands, people will be looking to populate this new world with the things they love. Whether that’s art, fashion, interiors, cars, access to exclusive events, or something else entirely, it presents an exciting new revenue stream for creatives. That’s where intellectual property comes in.

Intellectual Property in the Metaverse

If you’re a creative, it is important to consider how you deal with your IP and other people’s IP in the metaverse. Infringement of IP in the metaverse is still unlawful!

Intellectual property (IP) is a form of personal property, meaning that a person can have intellectual property ‘rights’ over certain things (such as brands, logos, art works, literary works, songs and more). Patents, designs, trade marks and copyright are all types of IP.  

It will be particularly important to consider copyright and trade marks law within the metaverse.  As a starting point, you will firstly need to identify the type of products you are dealing with (i.e. a virtual artwork or a physical artwork attached to an NFT) and secondly, what IP rights attach to these products (i.e. copyright will attach to a virtual artwork and trade mark rights will attach to a branded virtual sneaker).

When promoting and selling your own goods and services via the metaverse, it’s also important to set appropriate conditions of use of your IP.  For example, will a purchaser be able to modify or on-sell the goods?  Likewise, when purchasing or using goods and services via the metaverse, you need to understand the extent to which you can lawfully use the goods.

Copyright in the Metaverse

If you are dealing with products in the metaverse that embody copyright material, you will either need to own the copyright material or have a licence from the copyright owner to deal with it expressly in the metaverse.

Many contracts negotiated in the past (e.g. a contract between a music label and a singer, or a fashion label and a print designer) may not deal with the rights to use the products within the metaverse. This can make it unclear who owns the rights to use the work in the virtual world. For example, a fashion label may have the right to create a dress using a designer’s design drawings in the physical world, but can they replicate that dress in the virtual world? This creates confusion, uncertainty and potential liability for both sides (see some real-life examples below).

Jay-Z and NFTs

This situation has already manifested into real life disputes in the NFT space. Jay-Z and Damon Dash (the co-founders of Roc-A-Fella Records) are currently in a dispute, with the record label seeking to stop Dash from selling an NFT of Jay-Z’s first album ‘Reasonable Doubt’.

Miramax v Quentin Tarantino

In the film industry, Miramax LLC has filed a complaint against Quentin Tarantino for breach of contract, copyright infringement, trade mark infringement and unfair competition. The legal action came after Tarantino announced that he planned to sell seven ‘exclusive scenes’ from Pulp Fiction as NFTs.

Copyright Tips: 

It’s important to consider the use of copyright in the metaverse in any new contracts you enter, whether or not you plan to venture into this new world just yet.  For artists, granting rights to use their copyright in the metaverse may entitle them to higher payment for the IP licence or assignment. For brands, businesses or companies, holding the rights to use copyright material in the metaverse will expand the ways those brands can use and commercialise the copyright assets.  Due to the potential value of digital assets, be careful not to give away the rights to use your copyright in the metaverse without careful thought and appropriate consideration.

Trade Marks in the Metaverse

Want to do business in the metaverse? Then you need to be thinking about protecting your brand in this space via trade mark registration.

Trade marks can be registered in 45 classes of goods and services.  Because of the class system, most brand owners will not yet own the exclusive right to use their brand in the metaverse.  For example, a fashion designer may have a trade mark for designing clothes (class 42) and selling physical clothing products (class 25) but they probably don’t have a trade mark for virtual clothing products (class 9) or clothing for use in virtual reality entertainment platforms (class 41).

We are already seeing brands such as Nike, Balenciaga and Gucci get moving on this. In October of this year, Nike filed seven new intent-to-use trade mark applications relating to its word marks ‘Nike’, ‘Just Do It’, ‘Jordan’ and ‘Air Jordan’, as well as a number of its logos. These applications were filed in the U.S, Singapore, Switzerland, Mexico and Canada for goods including ‘downloadable virtual goods…for use online and in online virtual worlds ’, ‘non-downloadable virtual footwear and clothing… for use in virtual environments…’ and ‘retail store services including virtual goods’.

Trade Mark Tips

Brands need to review their trade mark portfolio.  They also need to top up trade mark registrations to include new classes of goods and services which can be traded within the metaverse.  Consider whether your brand is protected in class 9 for virtual goods, 35 for online retail services via virtual worlds and class 41 for online entertainment services.

Written by Alyce Evans, Harry Croft and Jennifer Tutty, Principal

Further Information

If you have any legal questions about intellectual property and contracts relating to the metaverse, digital and virtual goods or NFTs, please contact us through our online form or via email at hello@studiolegal.com.au.

DISCLAIMER

The information in this article is of a general nature. It does not constitute formal legal advice, and should not be relied on as such. Please see the full disclaimer in our website terms. Please contact Studio Legal if you are seeking advice about a specific legal matter.