Managing Global Intellectual Property in the Metaverse

welocalize • May 9, 2022

Metaverse is the next big thing in business and technology. According to Bloomberg, the global metaverse market is projected to reach US$800 billion by 2024. What started as immersive, persistent 3D games has expanded to live entertainment, such as virtual concerts and sporting events. Now, prices for virtual land are skyrocketing as companies and individuals place their stake in the metaverse.

The metaverse operates with its economy using contracts based on the blockchain, payments using cryptocurrencies, and digital assets like virtual products and non-fungible tokens (NFTs). These assets represent the intellectual property (IP) of their owners. And like intellectual property (IP) in the real world, IP in the metaverse must be protected from theft and counterfeiting to maintain its exclusivity, scarcity, and value.

 

Where’s the IP in the Metaverse?

The United States Trademark and Patent Office (USPTO) has seen a flood of trademark applications to protect virtual goods and services in the metaverse. IP in the metaverse encompasses a wide range of assets, including technologies, standards, and virtual goods.

Technologies

Some of the IP related to new technologies include optical devices, such as VR goggles, wearable devices, and connectivity and networking technologies. The tech also includes image and video processing and generation technologies. All these technologies are used to create these 3D worlds.

Standards 

Instead of a single metaverse, the industry expects multiple interoperable metaverses, allowing users to switch from one virtual world to another using the same avatar. These interoperability requirements, protocols, or standards for the metaverse will need to be protected and patented.

Trademarks

Brands need to protect their current copyrights and trademarks in the metaverse. These include their logos, brand names, slogans, as well as packaging and design materials. New brands that exist only within the metaverse must do the same.

Virtual Goods

Digital items are already more than a $10 billion market in 2021. Companies are already creating branded digital items, such as virtual Gucci bags for Roblox avatars, Nike downloadable virtual goods, and the recreated metaverse version of the O2 arena in Fortnite.

 

Implications of the Metaverse on Global IP 

It’s one thing to protect IP in the physical world, with established and enforceable IP laws in various jurisdictions worldwide. It is another to do so in the metaverse. These are some challenges presented by the metaverse on global IP:

  • Virtual items are easier to copy. Unlike physical goods, digital goods, such as virtual clothing, digital art, and 3D cards, are far easier and quicker to duplicate and at a far lesser cost.
  • Ownership is harder to verify. Since digital assets are easy to reproduce, it’s hard to identify who owns them.
  • Contracts are limited to each virtual world. Each metaverse platform has its agreement and terms and conditions, which is not enforceable on other platforms.
  • There are no boundaries in the metaverse. Because legal jurisdictions don’t cover virtual worlds, as they don’t exist in a physical location, IP laws are challenging to implement.

 

How Can Brands Manage This?

Pending new global IP laws that apply to the metaverse, brands must look for ways to protect their IP against counterfeiting in virtual worlds. Here are some recommendations.

Develop a Clear Strategy

Brands should determine what their strategy is when it comes to the metaverse. Whether they plan to set up business in the metaverse, brands should ensure their IP is protected and monitor violations of their IP in every metaverse platform. They should think about how best to enforce their rights and how they should work with the various metaverse platforms to enforce those rights.

Establish a Broad Scope 

At this point, companies must deal with individual metaverse platform providers, which may be interested in licensing agreements. Brands should make the scope of the license as broad and flexible as possible, including future uses. Otherwise, their rights over their IP and digital assets may be limited to just one platform and for one particular use.

Set the Boundaries of Usage

Even as they broaden the scope of their IP rights, brands should restrict the boundaries of usage. They need to set limitations on how platform providers and their users will use their trademarks or virtual items. Brands should also know how these platforms will deal with infringements.

Consider NFT Technology 

Given the challenge of working with individual platforms to implement global IP rights, brands should consider using NFT technology to embed and establish ownership and rights over their digital items. This way, the information is accessible to anyone across platforms, even outside the metaverse.

Take a Holistic Approach 

Brands must take a proactive approach by registering their trademarks for use in virtual worlds. They should register their assets as downloadable virtual goods for virtual environments. Further, they should consider getting a design patent or copyright for their virtual products.

Like IP in the real word, IP in the metaverse must be protected to maintain its exclusivity and value. In this latest update @welocalize shares how global brands can manage their IP in the metaverse. Click To Tweet

 

IP Interactions in the Metaverse with UGC Content 

Virtual worlds leverage user-generated content (UGC) by enabling users to create and sell games, avatar skins, and accessories. Users could use the logo, symbol, and design of brands without permission. This could be seen as free advertising and customer advocacy. On the other hand, this freedom can be abused. So, brands should closely monitor and enforce their IP with UGC.

However, companies risk negative publicity and consumer backlash if they are too restrictive. One alternative is to embed symbols of authenticity into digital goods to discourage counterfeits. Another way is to grant limited permissions for fan art and other UGC, such as allowing users to create work using brand IP but not for commercial use or financial benefit.

Learn more about UGC laws and regulations so you can remain compliant with user-generated content.

According to TurnTo Networks 9 out of 10 consumers report that UGC influences their purchasing decisions. Download Welocalize’s Guide to User-Generated Content for insights into how to leverage content published by your global customers.

 

Work With Welocalize

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