You must have been living on Mars lately to not know that the metaverse is the next best thing. One can give several definitions to the metaverse, but – simply put – it is a network of interconnected 3D virtual spaces in which users can interact with each other via avatars. The fun thing about such a metaverse world, is that people can experience things which cannot be experienced, as easily, in the real world. Via the metaverse you can for example walk across the Great Wall of China with one simple click of your mouse while doing the same thing in real life will cost more effort and money.
Needless to say that this new reality offers countless opportunities for trademark owners. The metaverse offers them an unlimited number of new worlds in which they can promote and offer their goods and services. A famous example in this regard, is the world-renowned sports brand Nike for which a metaverse world was created with the name Nikeland. Visitors to Nikeland are able to meet other enthusiasts of the sports brand, socialize with them, take part in promotions and buy Nike goods. Nikeland thus creates a new sales market for the owner of the Nike trademark.
While the metaverse offers new opportunities for trademark owners, it also comes with new challenges. Trademark owners must namely contemplate on adequately protecting their trademark in the metaverse in order to be well armed against third parties infringing their trademark in these new worlds. This does not only mean that they must think about adapting the class descriptions of their existing trademark portfolio, and possibly add new classes to this portfolio, but they must also make sure that their brand is represented in metaverse domains.
Indeed, along with the rise of the metaverse also came the emergence of metaverse domains. The main difference between these domains and the traditional domain names everyone knows is the fact that they are decentralized. Whereas traditional domain names are used to gain access to a website or to operate a mailbox, metaverse domains give the sole ownership of any digital asset or digital entity paired with the domain to its users. An easy-to-remember shortcut to crypto wallets is an example of an application of metaverse domains. Normal access to these wallets occurs via complex and lengthy algorithms, but by using metaverse domains such wallets can be accessed more easily which allows smooth crypto payments.
Registering metaverse domains is something trademark owners should definitely consider doing so. Such metaverse domains are in the first place interesting if they want to allow crypto payments for their goods and services. Nike could for example register a metaverse domain with extensions like “.eth” or “.crypto” which would allow visitors of their Nikeland to buy their goods with crypto currencies. However, another – and maybe more important reason – for Nike (and trademark owners in general) to register metaverse domains is a more defensive one.
One of the characteristics of metaverse domains is, as already mentioned above, that they are decentralized in nature. A consequence of this decentralized nature is that there is no centralized dispute resolution process that is present with traditional domain names. Those traditional domain names are mainly managed by the Internet Corporation for Assigned Names and Numbers (ICANN) which offers uniform, centralized dispute resolution mechanisms and dispute resolution policies. One of the purposes of metaverse domain names is precisely to take off the ICANN dependency. This decentralization has of course its advantages, but the lack of centralized dispute resolution mechanisms makes metaverse domains an interesting target for squatters.
When such squatters own a metaverse domain incorporating the trademark of a certain trademark owner, there is thus no mechanism for this owner comparable with the Uniform Dispute Resolution Policy (UDRP) to retrieve this metaverse domain. Indeed, the UDRP is an efficient tool for trademark owners to quickly claim the ownership of a traditional domain name incorporating their trademark at a fairly low cost and under certain conditions. A comparable efficient tool does not exist for metaverse domains and that’s why they have attracted the attention of squatters. A significant number of cases are already known where squatters had registered metaverse domains incorporating the trademark of a trademark owner and offering them for sale to that owner at a very high price. This squatting practice would be easy to address via the UDRP in case of a traditional domain name, but since such policy is not existing for the decentralized metaverse domains, trademark owners are left empty-handed.
Of course, classic legal measures could still be used to act against squatters of metaverse domains, but the decentralized nature of these domains create yet another problem. A consequence of this nature, and the independence from ICANN, is that there is no WHOIS lookup for metaverse domains.
Normally, and as is the case with traditional domain names, the WHOIS data offer an insight into the owner of a domain name and its contact details. In absence of such WHOIS data, it is very hard, if not impossible, for trademark owners to identify the infringing party and take legal action against this party. Yet another aspect showing why metaverse domains are popular with squatters.
Apart from the squatting that is occurring with metaverse domains, squatting has also took place with regard to traditional domain names including the term “metaverse”. Squatters have indeed also engaged in the registration of traditional domain names combining this term with the trademark of trademark owners in the second level domain of such domain names. There has for example been a case where a squatter registered the domain name Instagram-metaverse.com. While Instagram succeeded in retrieving the domain name via the UDRP, they still had to invest time and money which would not have been necessary if they had registered the domain name themselves.
This is in fact the key takeaway for trademark owners with regard to metaverse domains and traditional domain names including the term “metaverse”. It’s always better for them to own these domains when they include their trademark than having to claim the ownership over them via certain legal actions. While traditional domain names can still be claimed via procedures like the UDRP, legal measures to claim metaverse domains are more scarce. In other words, not only offer metaverse domains and traditional domain names including the term “metaverse” an interesting asset for trademark owners having plans in a metaverse context, the ownership of such domain names is maybe even more interesting from a defensive point of view as squatting can be stopped and time/cost intensive procedures can be avoided. Registering these domain names should thus be high on the list of priorities of trademark owners!
If you have questions regarding the metaverse and how it is impacted on a IP level in Europe, do not hesitate to contact us.
Jens De Maere – Intellectual Property Attorney