What is Metaverse?

The term ‘Metaverse’ has gained the public eye and invited numerous discussions. Metaverse consists of two words, ‘Meta’ which means beyond and ‘Verse’ which means universe. The two culminated words are the embodiment of a virtual reality which is in a 3D format and reflects the future of internet. The whole universe not only connects people from different parts of world or for the matter a planet but creates a digital world comprising of digital avatars. These digital avatars can have their name, properties bought or sold in this virtual universe which cannot be bartered or transferred in the physical world.

The Metaverse is said to function under ‘Web 3.0’ which will technically operate in the blockchain technology. The transactions would rely on cryptocurrency, NFT (Non-fungible tokens), smart contracts executed through a decentralised method which is to be provided by the blockchain technology. Cryptocurrency is a virtual currency which is secured via cryptography and it is impossible to counterfeit such currency. NFT are the digital assets which include art, music, digital content ; which are non-fungible meaning that it cannot be exchanged as it is unique and does not have a fixed value attached to it. They may be a representation of a digital version of a physical object. They are different from cryptocurrencies as each of such token cannot be replaced by another token .

NFT can be explained through a real life example of William Shatner releasing his collection of personal memorabilia which was a representation of his career through Wax Blockchain and is being sold in millions. William has been able to benefit directly from the sale of his digital images directly without having the need to pay any amount to the publisher or editor. Not only does Shatner benefit from the sale but also the consumer who buys the NFT as storing the same would increase the value of such NFT and could be sold later. The advantage of possessing an NFT is that only the owner can claim its ownership and are open to a network connected worldwide. The data of the NFT is protected with the help of blockchain technology where such data is stored in the central network system. Due to the blockchain technology, the nodes of data are hosted around the globe therefore leading to security i.e. no loss of data.

Is IP Protection required in the Metaverse?

NFTs fulfil the conditions that are required by any consumer or owner of the asset in the Metaverse; then why should there be a need to protect these assets as an intellectual property? This issue could be delved into through two cases that majorly questioned the basic principle of intellectual property and its infringement in the virtual world.

The case of Hermes International and Mason Rothschild has been the recent one that dealt with the question of trademark infringement. Rothschild had created an NFT named “MetaBirkins” which were digital images of the Hermes International and Hermes of Paris, Inc. luxury Birkin handbags. Rothschild earned through the NFTs which came to the knowledge of Hermes and it filed a suit of trademark infringement against Rothschild. NFTs when created are minted so that it can be traded in the digital market. The fashion industry too has entered into creating replicas of their designs so as to promote virtual fashion shows; brands too are sponsoring the show.

In the aforementioned case, Hermes averred that the website, domain name, social media handle created by Rothschild was hampering the BIRKIN trademark which existed in the physical world. Mason had sold 100 NFTs as a tribute to the Hermes and in its defence had argued that the digital images were a form of art. The entrepreneur further argued that under the First Amendment of the U.S. Constitution he had the “right to sell and depict the Birkin bags”. Mason Rothschild stated that the term “MetaBirkins” was a piece of artwork which qualified the test of artistic expressions mentioned in the case of Roger v. Grimaldi , where he was not selling a the bag but a digital image of the Birkin bag. The term used for his NFT was a commentary on the mentioned bag and fashion industry in general. The court favoured Hermes wherein it considered that not every artistic work could be protected under the First Amendment. The court is yet to decide on the matter.

Another case was of StockX and Nike . Nike had acquired the RTFKT which dealt in minting NFT collectible in the gaming region. It came to the notice of Nike that StockX, which predominantly deals in the sale and manufacture of sneakers, had launched NFTs which were in consonance to the physical products and resembled that to Nike’s shoes. Nike filed a trademark infringement suit and the court opined that act of selling NFT by StockX was an attempt to cause confusion among the public.

Quentin Tarantino was sued by Micramax for selling NFT of his 1994 unseen script Pulp Fiction, for trademark infringement, breach of contract, copyright and trademark infringement.

The copyrights in virtual reality are yet under protection of Digital Millennium Copyright Act ("DMCA") but it is difficult to identify the legal personality of the avatar causing infringement; even if the intellectual property is registered under the requisite acts .

Conclusion

Metaverse is the depiction of virtual universe which include issues that are prevalent in the physical world. Intellectual property is one such issue though the NFTs are promising with respect to data protection and ownership of their assets in the form of these tokens. Michelin Star Chef Vikas Khanna has launched with Akshaya.io an NFT of his book which is phygital in nature i.e. physical representation of digital assets. IP protection and determination of principles would not be an issue as the owner of such entity could be determined and legal precedents for such type of work have been provided. The issue of jurisdiction needs to be taken care of in the virtual universe as the NFTs are not bound by laws of any particular country. An NFT of a painting made in US can be sold in India and so would certain intellectual property rights which would change the governing law yet the jurisdiction cannot be determined unless it has been formulated through a smart contract. There is therefore a need for a universal set of rules and regulations that could form a link between physical world and NFTs.

Author: Ananya Sanjiv Saraogi, Final year BA.LLB (H.) student of Symbiosis Law School, Noida, in case of any query, contact us at Global Patent Filing, or write back us via email at support@globalpatentfiling.com.