Enhancing Intellectual Property Strategies in the Metaverse: An Insightful Guide

Written by Dreyfus17/01/2024

(*Image generated by DALL E 3 Microsoft version)

Web 3.0 and the metaverse represent a new era in the evolution of the Internet, marking a transition from a static, information-centered web to a dynamic and immersive space. These technologies not only push the limits of online interaction but also redefine how we perceive and engage with the digital world. The metaverse, in particular, offers a parallel universe where individuals can interact, work, play, and experience environments in virtual settings. This technological advancement comes with new ways of conceptualizing ownership, identity, and community in the digital world.

At the heart of the metaverse economy are NFTs (Non-Fungible Tokens) and cryptocurrencies, redefining ownership and value in the digital space. NFTs, in particular, have become synonymous with digital ownership, enabling the purchase, sale, and collection of artworks, multimedia content, and even virtual land. Meanwhile, cryptocurrencies offer a secure and decentralized transaction method, essential in a world where physical borders are increasingly irrelevant. Together, these technologies facilitate a dynamic and constantly evolving digital market, propelling the metaverse beyond a mere leisure space into a viable commercial platform.

Emerging Intellectual Property Challenges in the Metaverse

Navigating Copyright Protection In the Metaverse

In the metaverse, copyright issues take on a new dimension. The ease with which digital content can be copied and modified raises concerns about copyright protection.

Existing copyright and image rights legislation applies in the metaverse. This means that when a company creates an NFT incorporating music, for example, for an event in the metaverse, the company must obtain the copyright for this music. Creating NFTs without the necessary rights could result in liabilities for the creator and potentially infringe the rights of those who market them.

Although there is not yet an apparent practice for determining responsibilities in the metaverse, it is likely that there will be in the near future. Those who own NFTs that violate third-party intellectual property rights could lose this ownership (or even the NFT itself could lose value, as the market will know that such an intangible asset has inherent liability).

Additionally, creators and businesses operating in the metaverse must navigate a complex legal framework. They must ensure that their creations do not infringe on others’ copyrights and, at the same time, protect their own works against counterfeiting and unauthorized use. This task is made even more difficult as copyright laws vary considerably from country to country.

Trademark Challenges in the Virtual Spaces

The reality created by the metaverse has opened new business opportunities for companies by breaking down territorial barriers, increasing brand reach to previously inaccessible consumers, and consequently expanding sales and services in both the physical and virtual worlds. While bringing a new market with new connections and possibilities, the metaverse also creates new legal situations that must be carefully evaluated.

When registering a trademark, it is necessary to indicate the category of products or services for which the trademark registration is requested. Trademark law only protects signs as they guarantee the origin of a product or service, not the signs themselves. Therefore, the principle of specificity is fundamental.

However, the metaverse is a virtual environment where physical goods, such as clothing or bags, do not circulate. This raises the question of whether the owner of a trademark registered for products in the category of bags, for example, could exercise their rights in the metaverse environment even though they have not registered their trademark for products covering the class of NFTs, perceived as lines of code.

Some believe that the classification of products and services is insufficient to guarantee trademark protection in the metaverse. In reality, case law (notably the metabirkin case) suggests that a consumer purchasing a clothing item in the form of an NFT (lines of code), which closely resembles a well-known earlier brand in the textile market, will logically assume that the physical world brand has expanded into the digital world.

The mere possibility of characterizing a risk of confusion in the consumer’s mind between NFTs and earlier trademarks demonstrates that an unregistered brand for virtual products could still be protected in the metaverse. However, this argument should be nuanced, as in this hypothesis, the brand in question was a renowned brand.

Instead of risking your brand’s protection by relying solely on reputation, a more conservative legal strategy is recommended, involving obtaining trademark registrations for the digital environment.

Protecting Design And Technological Innovations

The rapid evolution of immersive reality technologies, blockchain, artificial intelligence, interconnectivity, among others, are key to the metaverse bringing about the social revolution it has promised in the coming years. Those close to technological developments will be better positioned to benefit from these advances and identify opportunities in this new world.

In addition to technological innovation, the metaverse allows for numerous advances in aesthetic innovation. A product with an innovative design has relevant appeal and economic value, and it can reach other dimensions in this immersive experience, where forms and colors can be explored without the limitations of the physical world.

Technological innovations in the metaverse can thus be protected by patents, a legal instrument that guarantees an exclusive right over new technology. The main objective is to support technological evolution, as with market exclusivity, the patent holder can recover the investment applied in research and development and reinvest the amount in new developments, thus generating a self-sustaining cycle of innovation. Patents are also a source of technological information, and their content can serve as a basis for other innovations to develop. Consequently, patents can stimulate the development of new technologies that will improve the metaverse in the coming years.

On the other hand, aesthetic innovations can be protected by industrial design registrations. Monetizing a product with a remarkable design in the metaverse or even the layout of applications will be strengthened with adequate legal protection, capable of preventing inappropriate use by third parties.

Contractual Considerations and Licensing In the Metaverse

Given that the metaverse is an entirely decentralized platform without a single owner or dominant operator, how can we ensure that licenses are fair and transparent? The internet has brought challenges in this regard, particularly concerning the legitimacy of contracting, the limits of protection, the place of operation, and the determination of responsibilities.

Fiscal Implications and Taxation

From a fiscal perspective, assessing the nature of transactions in the metaverse will determine the applicable treatment, jurisdiction, applicable rates, and possibly compensatory planning with other transactions.

However, is a transaction in the metaverse a sale or a license? Is it a national or international transaction? Does it fall under consumer law or B2B law?

Regarding Existing Contracts

In the case of existing ongoing license contracts, will it be necessary to execute contractual modifications to accommodate the metaverse? Will clauses such as licensed objects, time limits, territoriality, ownership limits, collaboration in creation, and forms of remuneration need to be revised in the new contractual environment of the metaverse?

These are questions that must be studied on a case-by-case basis, without legislative or regulatory definitions of the metaverse. This makes the licensing of Intellectual Property assets a major challenge and an excellent opportunity for the virtual world.

While the metaverse offers opportunities for creative developers, businesses, and individuals, it can also present a complicated legal effort for commercial management in this new environment. In the field of intellectual property asset licensing, the metaverse is a dynamic environment that leads us to question whether contractual practices are in line with rights already guaranteed to holders. Obtaining effective legal advice will help individuals and businesses navigate these nuances.

Challenges of the Metaverse for Intellectual Property Lawyers and Industrial Property Advisors (CPI)

The metaverse redefines how we interact with technology, each other, and the digital world in general. This rapidly evolving virtual space poses new challenges for intellectual property law specialists and industrial property advisory firms, who play a crucial role in navigating the legal complexities of this environment.

Role of Intellectual Property Law Firms and Industrial Property Advisory Firms in Navigating the Metaverse Legally

Experts in industrial property rights and intellectual property law are on the front line to help companies navigate the complex legal framework of the metaverse. With the emergence of new forms of digital property, such as NFTs, and the popularization of augmented and virtual reality, issues of copyright, trademarks, patents, and image rights are becoming increasingly pressing.

These experts must not only understand the technical aspects of these new technologies but also anticipate legislative developments and the legal implications they entail. They are obligated to provide strategic advice to protect their clients’ creations and innovations in this new domain, while respecting the rights of others.

Intellectual property specialists help their clients understand the importance of registering and protecting their intellectual property rights from the outset of their venture into the metaverse. This includes registering trademarks, protecting copyright on digital works, managing designs & models, and handling patents for innovative technologies.

For example, in trademark law, it is necessary to ensure that the client has properly registered their trademark for virtual products to better defend themselves in a counterfeiting dispute or to prevent a competitor from registering the trademark for virtual products before them. In copyright law, the intellectual property law expert must ensure that the client has intellectual property rights for digital use, particularly to avoid an infringement action from the right holder.

Proactive monitoring of IP violations and the implementation of protective measures are also crucial. This may involve monitoring metaverse platforms to detect and act against unauthorized or counterfeit uses of IP assets.

Advice for Companies Wishing to Invest in the Metaverse

For companies eager to dive into the metaverse, collaboration with specialized intellectual property firms is essential. These firms can provide advice on how to effectively protect their digital assets, manage risks related to intellectual property, and navigate constantly evolving regulations.

Companies must be aware that traditional business practices may not apply as is in the metaverse. Therefore, brand and marketing strategies must be adapted to align with the unique characteristics of this virtual space.

Securing Innovation and Ownership: Navigating the Future of Intellectual Property in the Metaverse

In conclusion, as the metaverse continues to expand its virtual horizons, it brings forth unprecedented challenges and opportunities in the realm of intellectual property. It necessitates a proactive, informed, and adaptive approach from creators, businesses, and legal professionals.

As they navigate this intricate new world, understanding and safeguarding intellectual property rights is paramount to fostering innovation, maintaining competitive advantage, and ensuring a fair, thriving digital economy.

By staying ahead of evolving legal frameworks, embracing new protective strategies, and fostering collaborative relationships with specialized IP firms, stakeholders can not only mitigate risks but also harness the full potential of the metaverse. As we step into this new era, the intersection of technology, law, and creativity will become increasingly complex yet undeniably exciting, shaping the future of digital interaction and ownership.

For expert guidance and strategic solutions tailored to your unique needs in the Metaverse and Intellectual Property matters, contact the Dreyfus law firm team today. Let us help you navigate this new digital frontier with confidence and security.

Deciphering Brand Confusion: A Deep Dive into Linguistic Analysis in the EU Trademark Law

Written by Dreyfus12/01/2024

Introduction: The intersection of language and law in EU Trademark Disputes

In a landmark decision on July 26, 2023, the European Union Court underscored the critical role of linguistic analysis in adjudicating cases of brand confusion. This case, involving the nuanced understanding of language in trademark law, sets a precedent in legal circles and offers a comprehensive look at the intricate nature of trademark disputes within the EU’s dynamic linguistic landscape.

Background: The Case of Frutania vs. Frutaria

In 2013, Markus Schneider filed a trademark application for EU figurative trademark “Frutania,” covering various products and services. Frutaria Innovation, SL, holder of the EU figurative mark “Frutaria” registered in 2010, filed an opposition.

In July 2023, the European Union Court acknowledged a risk of confusion between the “Frutania” trademark application and the earlier “Frutaria” mark. The Court indeed emphasized that, in assessing confusion between two EU trademarks, linguistic knowledge must be considered.

Linguistic Considerations: Assessing the Risk of Brand Confusion

A crucial argument in this case involved the definition of the concerned public. The group of consumers considered relevant in assessing the risk of confusion can be challenged, namely the Bulgarian, Croatian, Slovak, Czech, Polish, Slovenian, Hungarian, Estonian, and Finnish populations, for whom the use of the term “frutaria” was arbitrary and therefore distinctive.

The inclusion of the Lusophone and Hispanophone public in this assessment is also questionable. These populations perceived in the earlier “frutaria” mark an evocation of the Spanish term “frutería” (grocery, fruit store). Therefore, the overall and particularly conceptual differences between the “Frutaria” and “Frutania” signs are significant enough to exclude any risk of confusion.

Nevertheless, in its decision, the appeal board indicated that it could not be assumed that consumers in Slavic-speaking countries as well as in Hungary, Estonia, and Finland had sufficient knowledge of Spanish to understand that the term “frutaria” was close to “frutería,” which designated a fruit store.

Legal Precedents and Linguistic Proficiency

Jurisprudence confirms this viewpoint, asserting that mastery of a foreign language cannot be generally presumed (cf. particularly the decision of the European Union Tribunal of September 13, 2010, in the case Inditex/OHIM v. Marín Díaz de Cerio (OFTEN), Case T-292/08 [paragraph 83]).

Although it is generally accepted that most consumers know basic English terms, it seems that this is not the case for the Spanish language. Consequently, the verbal element “frutaria” is distinctive and predominant compared to the simple figurative elements, which are therefore secondary.

In this particular case, the tribunal noted that the Appeal Board had correctly assessed the intrinsic distinctiveness of the earlier mark, taking into account the importance that the word element of the earlier mark could have for the part of the relevant public composed of Bulgarians, Croatians, Slovaks, Czechs, Poles, Slovenians, Hungarians, Estonians, and Finns. Therefore, the tribunal concluded that the Appeal Board had made no error in judgment by focusing its examination of the risk of confusion on this specific part of the relevant public.

Implications: A Refined Approach to EU Trademark Law

The Tribunal, referring to relevant jurisprudence, highlighted that when an earlier mark on which opposition is based is a European Union mark, it is not necessary for the risk of confusion to exist in all Member States and all linguistic areas of the European Union. The unitary nature of the European Union trademark allows it to be invoked against any subsequent trademark application that could potentially infringe on the protection of the first mark, even if the confusion is limited to a specific part of the European Union.

In other words, just because the risk of confusion could be ruled out for Lusophone and Hispanophone countries, based on conceptual differences, does not mean it did not exist for other countries of the European Union.

Conclusion on Linguistic Factors in EU trademarks

The EU Court’s decision in July 2023 marks a pivotal moment in trademark law, weaving linguistic intricacies into the fabric of legal reasoning. As businesses continue to operate in an increasingly globalized market, the significance of linguistic considerations in legal strategies becomes ever more pronounced. This case not only sheds light on the complexities of trademark disputes but also establishes a precedent for incorporating linguistic analysis into legal practice within the European Union and beyond.

The Birkenstock pattern trademark: Balancing tradition and distinctiveness in intellectual property

Written by Dreyfus10/01/2024

The history of Birkenstock dates back to 1774 when Johann Adam Birkenstock opened his first shoemaker’s shop in Frankfurt. In 1897, the Birkenstock company was founded with the aim of creating comfortable shoes for workers and people with foot problems. The brand’s popularity grew in Germany and expanded internationally in the 1960s. Today, Birkenstock is synonymous with comfort and foot wellness. The Birkenstock sandal has become an icon of fashion and comfort, thanks to its cork and latex footbed that is moulded to the contours of the foot.

The brand’s outer sole pattern, which features a wave-like design, has become iconic and has been the subject of several legal decisions in German and European courts. Birkenstock has sought to protect this pattern as a trademark.

Background:

In 2016, Birkenstock obtained position trademark protection in Germany for a distinctive pattern on the sole of its shoes (registration number 3020150531693).

– A position trademark is a type of trademark that is characterised by its specific position on a product or its packaging, rather than by traditional word or figurative elements.

A third party applied to the German Patent and Trademark Office to cancel the trademark, claiming that it lacked distinctiveness and clarity for goods without soles.

– Distinctiveness refers to a trademark’s ability to distinguish itself from similar goods or services on the market.

The German Patent and Trademark Office declared Birkenstock’s trademark invalid for lack of distinctiveness.

Birkenstock appealed against this decision to the German Patent and Trademark Court (Case No. 28 W (pat) 24/18).

The German Patent and Trademark Court dismissed Birkenstock’s appeal on the basis of existing case law on design trademarks. The court confirmed that the mark lacks distinctiveness for goods with soles or related to soles as well as for goods not related to soles.

– A trademark must be sufficiently unique to enable consumers to associate it with a particular commercial source. It is this distinctiveness that gives a trademark its value and legal protection.

Alongside these proceedings in Germany, a similar decision was made at the European Union level. The General Court of the European Union confirmed the cancellation of Birkenstock’s trademark for the entire European Union (Case T-365/20).

Ultimately, Birkenstock’s position trademark was declared non-distinctive for the relevant goods in both Germany and the European Union.

However, if Birkenstock’s orthopaedic shoe does not gain consensus, it remains a fashion icon eligible for copyright protection. The company has already obtained protection for its ‘Madrid’ model. Birkenstock still has options to safeguard its intellectual property assets.

Why was Birkenstock’s position trademark rejected?

The issue of the distinctiveness of this trademark was examined by the German Patent and Trademark Court, which confirmed the lack of distinctiveness.

In assessing distinctiveness, the court reiterated the consistent case law on trademarks: the criteria for assessing distinctiveness are the same for all types of trademarks.

However, the German Office emphasises that signs consisting solely of the shape or three-dimensional representation of goods are not necessarily seen by the public in the same way as traditional verbal or figurative trademarks, which are independent of the appearance of the marked goods.

If goods or their packaging lack figurative or verbal elements, the average consumer will not usually infer commercial origin from their shape. Therefore, a trademark only has inherent distinctiveness if it significantly departs from the standards or practices of the relevant sector and fulfils its essential function of identifying commercial origin.

When evaluating whether a product design is considered common by the public, it is important to focus primarily on the relevant sector. Designs from adjacent sectors may also be considered if, under specific circumstances, the relevant public may shift its perception to the relevant sector.

The Court applied these criteria to Birkenstock’s trademark.

– The judges found that soles often have a profile for better grip, whether for work, leisure or sport. The Court referred to various sole designs available prior to the filing date. Based on these earlier designs, the Court held that the contested trademark was merely a variant of soles with criss-crossing and wavy lines.

– Birkenstock argued that its design gave the impression of bones. The Court rejected this argument because the relevant public would not see the pattern as resembling bones.

– Therefore, the trademark was found to be devoid of any distinctive character in respect of goods which have or are (part of) a sole.

The example of Birkenstock highlights the challenge of securing trademark protection for the appearance of goods in Europe. To be considered distinctive, patterns that constitute a trademark must be unique, unusual, or have gained recognition and a well-known character through extensive use. As pattern trademarks gain popularity and companies seek to safeguard them, courts may need to clarify the criteria for distinctiveness of these types of trademarks. The decision in the Birkenstock case issued by the CJEU may impact the assessment of other trademarks.

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