Are we (virtually) there yet?

Introduction

We are now almost one year on from Mark Zuckerberg’s much talked-about October 2021 letter announcing, among other things, the change of the name of his company from Facebook to Meta, reflecting the company’s commitment to revolutionising social connection through virtual reality.

Zuckerberg’s expansive vision of a metaverse currently remains more of a fantasy than a (virtual) reality: although platforms such as Roblox, Decentraland, Horizon Worlds and Sandbox are expanding their user bases and universes, we are still not at the stage where participants can enter a single online location and participate in an immersive, multi-faceted virtual world that bears any meaningful resemblance to the ‘real world’.

Protecting brands in the virtual world

This has not stopped many companies seeking to get on the front foot when it comes to protecting their trade mark rights in the metaverse, and nor should it. Brand owners know that their best defence is to be ahead of market trends in terms of their brand and trade mark protection.

Nike was one of the first out of the blocks, filing a spate of new applications with the United States Patent and Trademark Office for NIKE, JUST DO IT, the swoosh logo and the Jordan silhouette logo at, probably not coincidentally, the exact same time as Zuckerberg’s announcement was heralding in the metaverse age. The applications, which remain pending, cover things like downloadable virtual goods for use in virtual worlds, retail stores featuring virtual goods for use online, and providing non-downloadable virtual goods for use in virtual environments.

Countless other consumer brands have followed suit in the past year (for those attempting to keep count, the Twitter account of trade mark attorney Mike Kondoudis keeps a close watch on the USPTO statistics, calculating over 3,700 metaverse-related goods and service filings in the first seven months of 2022 alone, dwarfing the 1,866 filed throughout all of 2021). Businesses jumping on this trend range from Ford (for non-fungible tokens or NFTs and downloadable virtual goods for use in online worlds) to Sony (for audio and video recordings featuring live musical performances authenticated by NFTs), Formula 1 (for NFTs, cryptocurrency and other virtual currency services, virtual clothing and sports gear) and even Miley Cyrus (perhaps more entrepreneurially, for virtual currency management software, and the more usual virtual clothing and footwear).

The vast majority of these filings are being made by businesses who are not currently active in the metaverse, and who may simply be taking pre-emptive steps (as any strong brand owner should), either to keep their options open for a future foray into a virtual world, or alternatively to guard against unaffiliated third parties anticipating the trend and seeking to opportunistically register the same or similar trade marks in respect of virtual goods and services for themselves.

Global IP Offices considering scope of ‘virtual’ goods against rights relevant to goods from ‘real life’

In addition to proactively protecting one’s trade marks for virtual uses, recently two USPTO office actions dealt with broad filings covering what are essentially ‘virtual’ versions of the same goods and services that are already offered under these trade marks in the ‘real world’. Trade mark applications by unaffiliated third parties for the trade marks GUCCI and PRADA covering things like downloadable virtual clothing and footwear, retail store services for these virtual goods, and entertainment services for providing non-downloadable virtual goods, received office actions citing existing registrations covering the same or similar goods or services for the ‘real world’.

In a trade mark classification sense, virtual goods would not fall within the same classes as the equivalent ‘actual’ goods: for example, downloadable virtual clothing would fall into class 9 as computer software, while actual clothing falls into class 25. However, the fact that neither brand had existing registrations specifically extending to the metaverse or virtual goods or services did not preclude the raising of an examination objection – and rightly so – on the basis that consumers would mistakenly assume a connection between the trade marks as used in the virtual space and the existing real world brands. It remains to be seen whether the same objections would be raised in respect of less well-known consumer brands, including whether cross-class searching in all IP Offices is sufficiently sophisticated to identify this type of potential confusion. These actions might give some comfort to brands concerned about opportunistic trade mark squatting behaviour in the metaverse, but as noted below, brands should not be relying on their ‘real world’ registered protection alone.

Virtual enforcement often requires both offensive and defensive measures

Of course, enforcement of one’s trade mark rights in the metaverse is another battle entirely, as Hermès knows all too well. Against the backdrop of what promises to be a closely watched and influential Court battle over trade mark rights in the metaverse (see a recent update on its ongoing stoush with artist Mason Rothschild here), Hermès has also gone on the offensive.

It recently filed trade mark applications in the US to register its name as well as the names of two of its most iconic handbags – the Birkin and the Kelly – in respect of a wide range of goods and services associated with the metaverse. Once again, the marks were filed on the basis of an intent-to-use, rather than any actual current use, likely indicating nothing more than that Hermès is merely covering its bases at this early stage while it works out how, if at all, its brand will fit into the metaverse.

Virtual authentication now the next step beyond mere virtual use

It is noteworthy that the HERMÈS application also covers additional services relating to, for example, the provision of virtual currency for use in connection with virtual goods including digital collectibles and NFTs in class 36, and the authentication, issuance and validation of digital certificates and other user authentication-related services in class 42. Legal commentator The Fashion Law has speculated that this could indicate an intention on the part of Hermès to harness the power of new technologies such as NFTs and blockchain to assist in authentication and tracking of its ‘real world’ products, rather than a desire to dive headfirst into the world of the metaverse.

This is perhaps unsurprising given that this world does not align as naturally with Hermès’ ultra-luxe brand identity, which is built on tradition, craftsmanship and exclusivity – a key reason why, one could imagine, Mason Rothschild’s so-called “MetaBirkin” NFTs were such an affront. Hermès’ attitude can be contrasted with other fashion houses who are clearly more eager to be seen at the forefront of technological innovation, as illustrated by Gucci’s partnership with Roblox and Balenciaga’s collaboration with Fortnite on a collection of digital skins, to name just a couple.

Where to (virtually) from here for brand owners?

According to a recent McKinsey report, the metaverse could represent $5 trillion in value by 2030, and brands are clamouring to make sure they are well-positioned to cash in on their slice of this potentially enormous pie when the time comes. We aren’t there yet, and while nothing might ever truly replace the feeling of a buttery-soft box calf leather Birkin (or, for the more adventurous and cashed-up, crocodile skin) under one’s fingers, the consensus is that the metaverse represents the future.

For brand owners, this means having the following steps as part of your trade mark strategy:

1. Think about your potential virtual opportunities, as these will evolve over time, and get on the front foot by making sure your trade mark protection covers both real and virtual uses.
2. Although IP Offices are starting to link the virtual and real worlds in trade mark examinations, you cannot yet rely on this as a way of protecting your virtual opportunities. You will still need to proactively ensure third parties don’t erode your rights or opportunities in the virtual world through use OR registration of the same or similar brands and trade marks, including potentially by expanding the scope of your trade mark and marketplace monitoring to cover additional goods and services, or virtual uses.
3. Don’t forget about the value of self-authentication online to protect your brand, and therefore your virtual reputation.