World Intellectual Property Day: Metaverse and NFTs: Trademarks at risk?

Apr 29, 2022

At az we are committed to innovation and the digital ecosystem. That’s why, on World Intellectual Property Day, we want to highlight the new challenges we face in this area. In this regard, the Metaverse is making waves – technological developments like this create benefits that drive creativity and dynamism, but also bring regulatory gaps and commercial disagreements.

This “virtual world”, which promises a completely digital experience, implies changes in the way we interact, work, play, and even shop. The initiative is innovative and is being driven by different collaborations and companies around the world, however, like any maturing disruptive technology, it has raised legal questions that are worth highlighting.

Among the most relevant discussions are those related to intellectual and industrial property rights – in this aspect, the discussion has mainly focused on issues such as territoriality, licensing, software, trademark infringement, unauthorised use, among others.

Concerns have arisen, for example, regarding the use of non-fungible tokens (“NFTs”) in the metaverse. The growing demand for NFTs within the fashion or design industry has opened up an opportunity to attract new customers and business, but it has also given rise to conflicts.

Some brands have already reported infringement of industrial property rights, such as trademark infringement. Recently, Nike Inc. (“Nike”) filed a lawsuit against the platform StockX-whose core business is the resale of sneakers-alleging that the latter has been creating and marketing, without proper authorisation, nearly 500 NFTs based on the plaintiff’s trademarked products, thereby creating consumer confusion and capitalising on Nike’s reputation.

For its part, StockX replied that its NFTs would not violate Nike’s industrial property rights, arguing that the NFTs would be nothing more than a way of registering ownership over the physical products offered through its platform. In this way, StockX would simply be following the commercial practice of most retailers and marketplaces – using images and descriptions on the web to sell the physical products.

In this sense, it is clear that we are facing a challenging situation for both the legislator and the brands participating in the metaverse, as a non-unified criterion regarding the use of NFTs may lead to controversies, and these may hinder important projects in this new space.

There is no doubt that the metaverse will continue to be talked about in the short and medium term, as the speed of technological development accelerates. Faced with this new reality, it is essential that companies act quickly to ensure the protection of their rights over intangible assets in the face of possible infringements in this environment.

 

For more information on these topics, please consult our IP, Tech and Data team:

Eugenio Gormáz | Partner | egormaz@az.cl

Juan Pablo Zamora | Senior Associate | jzamora@az.cl

Constanza Pasarin | Associate | cpasarin@az.cl

Natalia González | Associate | ngonzales@az.cl

Antonia Nudman | Associate | anudman@az.cl

Camila Arriagada | AZresearch

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