Trademarks and the Metaverse: Gerben’s Complete Guide
The metaverse provides a unique opportunity to offer virtual goods and services in a realistic 3D digital environment. It literally creates a new world for growing your brand and your business – not just for existing products, but for innovative new goods and services tailored specifically to a 3D environment.
As businesses commit to providing goods and services in the metaverse, it is increasingly important to secure legal trademark protection to discourage and defend against trademark infringement in the virtual world.
With that in mind, here is a guide that explains the metaverse and how it relates not just to your trademarks, but to your company’s future.
Understanding the Metaverse
What is the metaverse?
The metaverse is an immersive, 3D virtual environment where users can socialize, work, play, or conduct business in real time by creating a personalized, interchangeable digital persona, or “avatar.” The avatar is more than just a representation of the user; the user interacts as if they are actually alive inside the metaverse.
It is an interactive environment that includes realistic representations of people, places and things. An avatar can participate in cultural, artistic, social, and economic activities such as shopping, gaming, communication, and commerce.
Some experts see the metaverse as the evolution of the Internet. However, the Internet is a two-dimensional communication network that doesn’t require interaction with another person to achieve the user’s goals.
By contrast, users are fully immersed in the metaverse, allowing them to interact and easily lead digital lives. The metaverse serves as a digital twin to the real world. Eventually, there will be realistic, digitally rendered locations such as stores, homes, schools, churches, businesses, nightclubs, and other venues that currently exist in the physical world.
So far, the metaverse is not a single virtual world, but a network of interconnected 3D environments. Digital platforms such as Sandbox, Decentraland, Somnium Space, and Roblox allow users to create, build, customize and interact with their environments and each other.
Users are currently using computers and smartphones, virtual reality, augmented reality, 3D modeling, and other technology to access the metaverse. Using Decentraland as an example, log in as a guest, create an avatar, and enter the metaverse.
What attributes does the metaverse have?
The metaverse offers a multitude of possibilities that could affect your business.
Real-time, personalized interaction. Because the metaverse is defined by total immersion and personal contact, it provides the opportunity for a real-time presence in a realistic digital environment.
Rapid audience growth. Gartner predicts that by 2026, 25 percent of people will spend at least one hour a day in the metaverse. Compare that with the average Internet user, who currently spends an average of seven hours a day online. When you consider an existing worldwide Internet user base estimated at around 4.6 billion, the growth potential is enormous.
Choice and customization. An avatar’s clothing and appearance will be customized for mood, style, occasion, or current trends. This presents unique opportunities, particularly for clothing and fashion retailers.
Interoperability. Whether there is ultimately one sprawling metaverse or many virtual worlds that are interconnected, users will have the ability to move easily within or between those virtual worlds. A vigilant trademark monitoring strategy will help ensure that your metaverse trademarks are protected in any environment.
Access to a younger audience. The metaverse audience is largely made up of a customer base of Gen Z (ages 10 to 25) and Millennials (26 to 41). According to a new study by Razorfish and Vice Media Group, Gen Z embraces the new technology, spending twice as much time interacting in the metaverse than in real life.
A virtual economy. Currently, the metaverse involves a number of types of cryptocurrency – virtual money to spend in the virtual world. Gen Z consumers embrace the metaverse largely for gaming and customizing their interchangeable avatars, Millennials tend to purchase virtual goods – especially luxury items – and engage in real estate opportunities, Non-Fungible Tokens (NFTs), and cryptocurrency speculation. As the metaverse evolves, each cohort will expand their activities accordingly.
Collaboration. No person or company will control the metaverse. It will require collaboration and cooperation between governments, regulators, businesses, courts, developers, and other stakeholders.
This level of cooperation will be especially important for protection of metaverse trademarks and other intellectual property. We encourage companies to file for branding and trademark protection in the metaverse to anticipate any developments that may affect your intellectual property.
When is the metaverse expected to grow?
Growth is already underway. Bloomberg Intelligence estimates that the global metaverse market was $478 billion in 2020, and predicts that the figure may reach $800 billion in 2024.
Over the longer term, Citi has estimated that the metaverse economy could be worth between $8 trillion and $13 trillion by 2030. Research commissioned by Meta (formerly known as Facebook) has taken a more conservative stance, estimating the global value at $3.01 trillion by 2031, while the venture capital firm Epyllion says the market could grow to $30 trillion in the next 10 to 15 years.
That potential for growth is one of the factors driving trademark applications that will protect existing brands in the metaverse. New trademark applications are also being filed with an eye on potential business opportunities in the new marketplace.
Why is the metaverse important to businesses?
The metaverse offers growth potential for virtually every provider of goods and services. It not only allows the sale and extension of existing brands, but also creates an entirely new income stream – and potential customer base – with goods and services tailored specifically for the virtual world.
The metaverse eliminates the physical constraints of the real world. Advertising and marketing can be deployed quickly at reduced cost, with rapid feedback and adjustment. Development and manufacturing of virtual goods will be considerably cheaper and faster than the real world.
The metaverse will also add new options for running your business more efficiently. For example, your search for a new vendor or supplier could include a digital “on-site” visit, a virtual tour of their facilities, and a meeting with company leadership without ever leaving the office.
How can the metaverse benefit businesses?
What kind of products or services can businesses offer in the metaverse?
If you provide goods for sale in the real world, it’s extremely likely that you can make and sell those products in virtual environments. However, you can identify additional opportunities that take full advantage of personalized interaction and customizable digital assets.
These opportunities include:
- Manufacturing and selling other virtual goods, including automobiles, sporting equipment, electronic devices, jewelry and anything you can buy in the physical marketplace.
- Real-time 3D product demos, as well as customer support, training and troubleshooting.
- Buying, selling, renting, or even creating real estate, as well as building or improving your investments.
- Attending or sponsoring courses, trade shows, conferences, and other participatory experiences.
- Creating a virtual VIP experience to build customer loyalty.
The metaverse economy has received a lot of attention through the market for NFTs. They are unique digital assets that can be purchased through cryptocurrency, with proof of exclusive individual ownership. Examples include 3D artwork, clothing items, sports and entertainment memorabilia, real estate, written content, music, games, tickets, and even alcohol.
How will the metaverse provide value to your company?
While revenue growth and customer acquisition are powerful drivers, other aspects also provide considerable value.
- Cost reductions. They include research and development; customer acquisition; expansion and sales without additional labor; no digital inventory requirements; rapid product customization; and no construction or maintenance of tangible, physical structures.
- Immersive, inexpensive marketing channels. Possibilities include Pop-up stores, billboards, branded items, sponsored events, theme parks, product placement, and creation of user communities.
- Customer interest, satisfaction and retention. A personalized experience will strengthen loyalty, create positive brand perception, and provide an opportunity for personalized customer service.
- Exclusive products and services. The metaverse will be especially advantageous for businesses who understand how to develop innovative new goods tailored to a virtual environment. The potential for real-time testing adds a useful dimension.
- New opportunities for gathering data. You can capture and sift through data quickly, and make the appropriate adjustments for consumer preferences or market conditions.
- Expanded licensing opportunities. By obtaining and protecting your metaverse trademark now, you can quickly capitalize on new licensing opportunities that arise.
How are companies currently using the metaverse?
The fashion industry has been one of the early adopters of the virtual marketplace, with its aggressive strategy toward protecting and introducing metaverse trademarks. There are intriguing opportunities for customizing avatars with shoes, headgear, glasses, and other accessories. But the metaverse adds the unique ability for customers to easily move between shopping environments.
A recent example was the first-ever Metaverse Fashion Week in March 2022, hosted by Decentraland. More than 100,000 attendees were able to view digital garments from 60 brands without traveling to New York, Paris, London, or Milan. Participants included iconic luxury names like Dolce & Gabbana, Perry Ellis, Tommy Hilfiger, and DKNY, as well as a number of smaller brands.
The four-day event also featured a luxury shopping district, where many providers used virtual storefronts and popups. The famous U.K. luxury retailer Selfridges used the occasion to open its first virtual store.
In addition:
- Nike reports that nearly 7 million people have visited its virtual Nikeland to compete in various games for branded prizes, and to purchase branded digital clothing and accessories.
- Chipotle used Roblox to re-create its first location, which opened in 1993. Customers can work behind the counter as part of the “Burrito Builder” game, and earn “Burrito Bucks” through various activities.
- Hyundai offers a Mobility Adventure targeted at a younger audience. It not only features the automaker’s four-wheeled products, but also provides interaction between users and robots.
- Gucci partnered with Sandbox on Gucci Garden, an interactive exhibit. Visitors move from room to room as neutral mannequins and add various elements to their avatars. When their visit is complete, their avatar has a look unlike any other.
How to ensure brand protection in the metaverse
How do you get brand protection in the metaverse?
Every brand should be filing for its metaverse trademarks as soon as possible. Here are some best practices to keep in mind:
- Submit your applications quickly. Start now by filing any additional trademark applications to protect your existing trademarks or create new trademarks in the metaverse.
- Decide how your existing trademarks might be used in the metaverse. Protecting your brand is always important, and never more so than for your existing trademarks. By securing your metaverse trademarks quickly, you can turn your attention to other aspects, and take advantage of licensing opportunities.
- Explore possibilities for metaverse-specific trademarks. Think ahead to new goods and products that may not be practical or possible in the physical marketplace, but a perfect fit for the metaverse. Capitalize on the power of an immersive, customizable experience with imaginative goods and services, then protect yourself with federally protected metaverse trademarks.
- Consider legal guidance. The metaverse is a challenging environment that is rapidly evolving. It also requires a thorough understanding of the classification system. An experienced intellectual property attorney will have the latest information about metaverse trademark requirements.
- Identify your trademarks correctly. The Circle R, the TM, or SM symbols will be especially important in the metaverse, clearly identifying the validity and ownership of your metaverse trademark and serve as a warning against potential infringement by others, as well as copycats or counterfeiters.
- Keep a watchful eye for potential infringement. It has always been your responsibility to monitor existing trademark infringement in the physical marketplace. But now you or your legal counsel will also be responsible for monitoring your metaverse trademarks.
Why is brand protection important in the metaverse?
As in the real world, a legally protected trademark creates documented ownership of the name as part of your business. This can prove to be a tangible, valuable asset. You’ll have a powerful legal tool to challenge or prevent anyone from damaging the integrity of your brand – not just through infringement or counterfeit digital goods, but for other types of infringement that may be difficult to predict at this point in the metaverse’s evolution.
Owners who fail to secure their metaverse trademark rights may find it difficult to combat infringement and effectively enforce their rights in the metaverse. Even brands that do not plan to establish a presence in the metaverse still need to protect their trademarks from counterfeiting and other inappropriate use.
What is the process for filing a metaverse trademark?
Obtaining legal protection for a virtual trademark utilizes the same process as the traditional marketplace. It starts by filing a trademark application with the United States Patent and Trademark Office (USPTO).
If you need to protect existing trademarks for product or service offerings in the metaverse, you still must file a separate application with the USPTO. This is because it is very likely your previous trademark registration covered only goods offered in the “real world” and not in “virtual worlds.”
Whether it’s an existing trademark or a new trademark that will be used only in the metaverse, use the USPTO’s Trademark Electronic Search System (TESS) to make sure no one else has claimed that trademark for virtual goods and services.
The nature of the metaverse is likely to provide easier access to international markets. Since metaverse trademark law is constantly evolving, it’s also advisable to search the Global Brand Database of the World Intellectual Property Association (WIPO). More than 50 million trademarks worldwide are available in the database, which is commonly used to find out whether a trademark is being used in other countries.
That information can help you prepare for any potential conflicts that might arise with a metaverse trademark as the virtual marketplace evolves. It also highlights the need to file trademark applications in countries outside the US in order to be fully protected in the metaverse. If you are going to be interacting with customers from other countries, you should plan to file your trademark application in each country from which you solicit business.
Our experienced trademark attorneys can help you select the correct classification categories to protect your trademarks as you enter the digital marketplace and also counsel you on the most effective international trademark registration strategies for the metaverse. They can tailor a USPTO application that includes the appropriate classes for its use in the virtual marketplace and that can be relied upon as the “basis” for any international filing. They’ll handle issues that arise along the way, and advise you how to proceed once the USPTO and any other country approves your application.
What kind of protection does a trademark provide in the metaverse?
As in the “real world,” a federally registered trademark is an effective way that allows existing trademarks to avoid legal issues over ownership in the metaverse. For new trademarks, it greatly reduces the risk of someone else applying earlier, especially since there is likely to be a great deal of competition in these wide-open virtual worlds.
When should you trademark your metaverse brand?
We always advise filing any trademark application as soon as possible, whether it’s in the physical or virtual world. The approval process is lengthy – taking as long as a year or more – and it’s important to begin protecting your trademarks as soon as possible.
Trademark applications are examined in the order they are received by the USPTO. Moreover, the “national priority date” in your trademark is the date the trademark application is filed with the USPTO.
You can apply on an “Intent to Use” basis, meaning that you intend to use the trademark in commerce; or a “Use in Commerce” filing, which means you’re already actively using the trademark in commerce.
Your trademark protection will date back to that original filing, and you will need to provide “proof of commercial use” only after the USPTO reviews and approves the application. When filing the proof of use, you can also delete any of the goods or services you do not provide.
What classes should you include in your metaverse trademark application?
The metaverse requires additions to typical classes used in real-world goods and services. Specifying the “class of goods and/or services” under which trademark protection exists can make a huge impact on your ability to protect it in the metaverse.
Whether for existing or new trademarks, companies are filing for protection in several different metaverse-specific classes:
Downloadable virtual goods, such as:
- Image files containing artwork that is authenticated by NFTs.
- Multimedia files containing video that is authenticated by NFTs.
Retail store services or online marketplaces for:
- Virtual clothing and accessories.
- Entertainment services in the metaverse.
- Buyers and sellers of blockchain-based non-fungible assets.
Class 36
Virtual financial services, including:
- Creation and issuance of NFTs, digital assets, digital tokens, crypto-tokens, utility tokens, cryptocurrencies, digital currencies and virtual currencies.
- Distribution, trading, lending, exchange, storage and transmission of NFTs, digital assets, digital tokens, crypto-tokens, utility tokens, cryptocurrencies, digital currencies, and virtual currencies.
- Cryptocurrency processing systems.
Class 38
Communications services, such as:
- Broadcasting or electronic messaging.
- Online streaming of audio, video and digital media content, including electronic and video games.
- Internet chat rooms or online forums for computer users, for transmission of audio, video, real-time news, entertainment content, and other information.
- Data streaming, including computer-aided transmission of information and images.
- User access to digital images, text, audio, video, games, multimedia content, and NFTs.
- Electronic transmission of virtual and augmented reality content and data.
Online, non-downloadable clothing and accessories for use in virtual environments, as well as:
- Other non-downloadable virtual goods, including digital collectible images using NFTs and blockchain technology.
- NFTs used with blockchain technology or a distributed ledger.
- A collectible series of images as embodied in NFTs.
- Creation of online retail stores for others in the nature of web-based service that allows users to create hosted crypto collectible and blockchain-based NFT stores.
- Providing a website featuring technology that enables internet users to create, bookmark, annotate, and publicly share data.
As the metaverse evolves, the descriptions of goods and services, as well as classifications, will likely become more standardized. In any event, these classes should provide a foundation for shifting standards.
What businesses can do to prepare for the metaverse
How to develop a strong business plan for the metaverse
Any successful business strategy includes protection of metaverse trademarks and other intellectual properties. However, succeeding in the metaverse involves a well-thought-out business plan, with nimble response and adjustments as the metaverse evolves.
- Identify and understand your audience. Customers may be searching for a unique retail experience, fashion, gaming, social interaction, entertainment, explore new experiences, or other possibilities. Conduct focus groups with consumers who are active in the metaverse, even if they don’t necessarily represent your core audience. Use them as a valuable resource for understanding the virtual marketplace.
- Build a marketing strategy around the metaverse user experience. Determine your priorities for delivering on customer expectations and gaining new customers, and develop a comprehensive marketing plan to grow your business deliver on your brand promise in the metaverse.
- Encourage experimentation and innovation. Continue your exploration of the metaverse through participation and test development. Create a test business, such as a retail shop, in a controlled environment to test sales and marketing of your goods.
- Involve your employees and stakeholders. Educate and encourage them to visit the metaverse, share their experiences with others, and ask questions that could lead to valuable insight. Fight through any skepticism, and clearly communicate the importance of the new marketplace, as well as the need for commitment to your business goals.
- Cultivate or acquire expertise. Metaverse developers and strategists will play a huge role in your company’s success. Identify employees who might be a good fit, but look outside the organization if necessary.
The metaverse is here, and the time is now for brand owners to develop and implement their strategy — complete with metaverse trademark filings, virtual policing and enforcement procedures, as well as being flexible and receptive to any new opportunities that emerge.
Our experienced trademark attorneys can help you prepare a comprehensive strategy for the metaverse. Contact us today to learn more.
Josh Gerben, Esq.
Josh Gerben, Esq. is the founder and principal of Gerben IP. In 2008, Mr. Gerben started the firm to provide high-quality trademark services at reasonable prices. Today, he is recognized by the World Trademark Review as a top trademark filer, having registered over 7,500 trademarks. The contents of this blog are for informational purposes only and may not be relied on as legal advice.
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