Taking every element of this new virtual Eldorado, we can consider that the existing law makes it possible to resolve disputes related to trademarks and copyrights (ownership, protection) and thus to organize their protection in this emerging environment.
What is the legal arsenal to protect brands in the metaverse?
The use of blockchain to create NFTs does not change the issues related to ownership of virtual or physical works or products to which NFTs are associated. Even those related to the ownership of the right to use trademarks and copyrights, excluding the use of trademarks attached to copyrights or by third parties, resellers of authentic products.
Of course, if the protection of trademarks in Web3 can increase the difficulty of identification and localization of actors, and therefore even in the territorial jurisdiction of the courts, they have become classics in the age of the Internet. Practitioners and courts are familiar with these difficulties, and trademark and copyright law, as well as civil procedure, provide useful legal tools for owners to protect their rights and trade in their metaverse.
For example, director Quentin Tarantino offered to sell NFTs for digital copies of his famous screenplay written for “Pulp Fiction.” Miramax Studio assigned the director. In light of the subpoena, the case revolves around whether Tarantino’s reserved rights in the 1993 grant of screenplay rights, such as rights to edit and publish the screenplay, allow him to sell NFTs related to handwritten elements of the screenplay.
For its part, Nike is suing StockX, which offers to sell NFTs related to original Nike shoes in what it claims is a high-security air-conditioned safe. Buyers of NFTs can resell them or exchange them for the corresponding original shoes Nike sued StockX for trademark infringement and unfair competition. StockX protects itself by terminating trademark rights after the first sale of genuine shoes by the licensee and valid use of the mark by resellers of genuine goods.
NFT, Blockchain: Myth of Truth?
As a reminder, an NFT and blockchain technology only guarantee ownership or authenticity to the buyer because the contract associated with the NFT (i) relates to a virtual or physical product or work whose seller is actually the NFT. Owner, and (ii) provides Buyer access to the Product or Work in an adequate and sustainable manner.
When NFTs are offered for sale by trademark owners and/or copyright holders of a work, they offer a firm guarantee of the authenticity of the product or work. But if the product or work authenticated by NFT infringes the copyright or trademark of a third party, the seller and/or buyer may face action for infringement as mentioned above.
In such a situation, the versatile security of blockchain and NFTs will not help.
Similarly, neither NFTs nor blockchains provide exploitation rights to goods or works, unless the contract associated with the NFT expressly provides for this and the seller of the NFT actually owns exploitation rights. So, an NFT purchase for virtual clothing from a fashion designer or virtual sports shoes does not allow the buyer to reproduce the virtual product (or certainly a real product).
What value do branded virtual goods carry in the metaverse?
Beyond the specific characteristics of NFTs, and the limitations associated with the guarantees promised by blockchain, we must now look to the virtual universe in which these new products have evolved. The metaverse is not yet a unified scheme of commercial or social interactions: one might even say that for now… the metaverse does not exist.
Indeed, transferring avatars and/or their accessories from one virtual world to another is a key issue in the metaverse, but it is not yet a reality.
A buyer of a virtual designer dress cannot therefore transfer it from World of Warcraft to The Sims, League of Legends to Fortnite or other open multiplayer video games, or between these games and different open universes known as metaverses such as The Sand Box or Decentraland. . As for virtual sports shoes, the acquisition of RTFKT by Nike to develop them and the virtual spaces in which they can be worn remains to be discovered.
Once the fad has passed, virtual products sold by brands or individuals will have more or less interest and value that consumers can use in one, more, or all virtual environments.
NFT, Blockchain…: Like any other contract
The sustainability and accessibility of virtual goods raises technical and legal issues that are not addressed by NFTs and blockchain.
The solution for brands is to make their virtual products more attractive beyond the fads of the nascent metaverse. The challenge when offering branded virtual goods for sale to buyers will be to identify as precisely as possible the content and scope of property rights and possibly intellectual property rights.
Only in this manner can NFTs fully play the role of guarantee of authenticity, when they are executed by legitimate owners of trademarks and other intellectual property rights with appropriate contractual provisions.
* Stefan Naumann leads the intellectual property practice of Hughes Hubbard & Reed LLP A Paris. He is registered with the Paris Bar And from California, And is on the list of Its referee i am‘World Intellectual Property Organization, especially for domain names.