Abstract

The metaverse is expanding as we speak and growing and capacity, from the point of integrating the AR/VR in the background to ensuring that the technologies like NFTs, blockchain, smart contracts get the ultimate traction, the metaverse is taking in account multiple factors and along with it certain legal issues that need clarity and, in some cases, redressal. The imperatives of the concept and legality is also being considered in the forefront and it is getting more important to ensure that the rationale for protection in the IPR regime gets clarity and possible protection and some criterion to begin with in the direction of cultivation of innovation in the IPR regime. The growing impact and use case of metaverse also depends upon various considerations as discussed in the body of the research piece. The possibility of intellection and protection under the trademark regime with NICE classification and protectability in Trademarks Act is also considered, also the various other Acts like Copyright Act along with the innovation in software and right duty interface provided in the idea/expression dichotomy, related rights, economic rights and moral rights. Similarly, the use case of IPR regime in the metaverse has also given the credence to Designs Act along with the specific Locarno classification if the design falls in the specific set criterion of protectability of design. Such IPR regime of metaverse should be established whereby it is ascertainable to give it an all-inclusive and cogent protection.

Keywords: metaverse, NFTs, blockchain, smart contracts, IPR etc.

Introduction

The internet has brought a revolution in the intellectual creativity of humankind to the point where it has reached up until a point of zenith in the form of technological innovations. Such a recent addition to the technological pinnacle is the oncoming of the ‘metaverse’ which is a by-product of science fiction – Neal Stephenson is credited to have brought about the coinage of this term by just conjoining ‘meta’ and ‘verse’ and thus it came to be known as ‘metaverse’ to be precise in his book which was brought in the public domain in the year 1992 by the name of ‘Snow Crash’[1]. If we peruse the use-cases of metaverse in general we can find that some technologies like the virtual reality, augmented reality and blockchain can be used as facilitators for the purposes of creating intellection of metaverse as such – it also includes in its garb the various elements like the 3D avatars, digital assets and various other events that include the virtual economy and improvement of social ties. Indeed, the data security and privacy are an important factor of consideration for the metaverse as such but more importantly there is a discussion of accommodating the rights of intellectual property in the relevant domain and for the handling of these rights accordingly. It is relevant for the consideration of IP rights as this is a growing domain and hence it must be seen that it needs to be protected thereof for the furthering of a robust right-duty perspective in the domain of IPR. This study is bifurcated into various segments that range from conceptual and legal underpinning to the rationale for protection of IPR in metaverse, emerging scope and growing impact of the same rights and legal incidents covering the protectability of IPs in metaverse along with the analysis of select cases followed by several inputs that deal with the intellection and protection of IPRs. The study would be an addition to the existing branch of knowledge of protectability of IPRs in the field of metaverse.

Research Methodology

This paper is of descriptive and analytical nature with the help of various primary sources in the form of statutory enactments and secondary sources like various authorities, articles, blogs, and websites for the conceptual and legal analysis of metaverse and protection of its IPRs. The select cases of foreign countries as well as of the Indian origin are also used for the purpose of this study.

Review of Literature

Neal Stephenson in Snow Crash[2] explains about the existence of the metaverse as in the dystopian world where imaginary considerations are considered, and the usage of fibre optic goggles and the network is used for the setting up of this world and the possible underpinning. It is explained in the Metaverse and the Law by Kuber[3] that the metaverse interacts with various technologies like the Non-Fungible Tokens (NFTs), blockchain, smart contracts etc. are employed to achieve various results in the prospect. Eric Hazan[4] discusses about the various possibilities of marketing in the metaverse and the growing impact and scope of its evolution in the forefront. The trademark protection is possibly covered by Kathryn Park[5] in the intellection and IP protection thereof using NICE classification and giving it a protection under moving images and gestures for better protection. Krishi Shah[6] discusses about the Copyright in the Metaverse and actual possible protection of the intellection of the same.

Conceptual & Legal Underpinning

The term ‘metaverse’ is dependent upon the technology that will share the interface with various allied understandings like in Neal Stephenson’s book, has been characterized as a place that is basically imaginary and which is also accessible to the world in general by the fibre optics network and ultimately available to the fire optics goggles. The combination of various technologies has given rise to the development of various interfaces with the law and its regulation thereof. One interface is basically in the form of Non-Fungible Tokens (‘NFTs’) that are basically cryptographic assets based upon the blockchain containing unique identification codes and metadata thereof[7]. They are basically encoded along with the cryptocurrencies and sold and bought online and are unique and cannot be interchanged thereof. The NFTs basically have been included in the definition of a ‘Virtual Digital Asset’ (‘VDA’) in the Financial Bill, 2022[8] but the legal incidents of NFTs is also unclear in India. Similarly this also has been started integrating into the realm of commerce and various allied contracts in the cyberspace which includes the usage of apparel websites by the way of ‘Augmented Reality’ (AR) that allows the users to try the clothing without the hassle of going to a brick and mortar store, moreover this also shares interface with the smart contracts[9] which basically get fulfilled when the conditions underlying it are completed thereof for instance, in a sale if the seller and buyer complete their relevant obligations, it automatically comes to an end without the intervention of the intermediaries. Another relevant consideration is the operation of smart contracts on certain codes thereof which touch upon the recording of transactions in the form of a code i.e., blockchain. The privacy and security concerns that arise from these contracts are also present whereby there is a discussion upon the discreet policies framed by the entities and might have total access to one’s virtual life and the big data considerations of sharing of targeted advertisements on this point[10].

Rationale for Intellection of Metaverse

The main considerations for the purpose of study are the intellection of metaverse and its relevant issues relating to the protection of its Intellectual Property (‘IP’), and this can be understood by the categorization of characteristics that have to be made the basis of protection of metaverse are as follows:

Persistence: It is established that the metaverse is bound to exist immaterial to the time and place and it would just continue without being prevented from existing.
Synchronicity: The main fact behind this condition is that the participants that are perusing this technology will be thus allowed to interact with each other and with the world in digital sphere by being receptive to the simulations that exist in the virtual space.
Accessibility: The metaverse is an accessible entity and the users and participants in this virtual world are free to join it and stay in it.
Economy: This consideration is based upon the businesses on the commercial standpoint that arise from the creation, owning or selling and the rewards that accrue from their work or contribution as such; many such ‘values’ can be considered like the currency that is used in-game and the newly emerged payment systems like technologies of blockchain and smart contracts.
Interoperability: The metaverse has the essential functions to be operated from anywhere in the world on any platform or device and the currencies can be used accordingly in a cross-platform manner.
Contribution: The contribution factor depends upon the functionality of the metaverse with numerous players who could be a part of it and take in account the activities of the digital world and, the contributors – ranging from independent to commercial enterprises can also be counted for the same.

Expanding Scope and Impact of Metaverse

The metaverse has largely become a platform for the facilitation of consumer trade, for instance, the Gucci and its presence in form of Roblox which was a campaign that allowed themed rooms to be able to pay homage to various campaigns of Gucci – the users’ avatars can use, try on and ultimately purchase the Gucci items[11]. Metaverse is also expanding its boundaries upon the various other relevant considerations that deal with addition of AR in the domain of E-Commerce, for instance, Amazon is bringing the platform of metaverse for the addition of VR headsets, playing of games, collecting coupons and trying on clothing items thereof[12], another use case of the metaverse includes the addition of needs of home improvements by The Home Depot, the VR showroom of IKEA and similarly in the case of Target. Another scope and use case of metaverse is also based upon the marketing which includes the incorporation of innovation and experimentation by giving the consumers immersive experiences in the form of games, events, sponsorships etc. and other relevant additions to complement it – these design incorporations increase the value of products as such and amplify their appeal[13]. This thereof also increases the consumer base, yields better interactions and training of employees and the scope of experimenting with the products on the ground of attaining the desired engagements upon them.

Legal Imperatives

The regime of Intellectual Property allows the inclusivity of ownership and title to ensure that various necessary rights are evenly distributed to include the NFTs as such and hence it can be protected to authorize and authenticate various rights relating to the IP in metaverse. There is also a feasibility of brand protection and registration in the metaverse, and a considerable amount of monitoring is done in the realm of Trademark Watch and there must be a system of detecting online infringement, notification of the problem and immediate removal of the same or some liability should be attached infringer if an alleged infringement takes place.

Feasibility of Trademark Protection

The criteria for filing of these goods according to the classes of goods provided under the NICE classification[14], which range from downloadable virtual goods – computer programs (class 9), retail store services including virtual goods (class 35), entertainment services (class 41), online downloadable virtual goods and NFTs (class 42) and financial services under the head of digital tokens (class 36)[15]. In many jurisdictions, usually the party who first files for the product to be trademarked usually gets it and it is generally carried out well by authorities on those grounds; but is to be ensured that there are no bad faith applications as seen in the cases of Gucci and Prada. In a recent case of Hermes v. Rothschild[16] it was seen that when the established brand of Hermes had protested the sale of MetaBirkins, the NFT sold on OpenSea which was exactly like the look of Birkin Bag produced by Hermes, the brand value of these bags accrues thousands of dollars and similarly this suit was protested by Hermes on that ground. Also, the Indian scheme of Trademark protection envisages that the inclusion of distinctiveness as the criteria in the legislative mandate[17] and the inclusion of moving images, holograms and gestures – motion or moving image marks are also included within the ambit of this criteria and hence it is made protectable (the moving back and forth motion mark of 20^th Century Fox Film Corporation Logo is a sheer example[18]) and the other considerations as provided in the case of Nestle Waters France v. European Union Intellectual Property Office[19] whereby the 3D registration of marks was also observed owing to the factors of aesthetic look was deemed appealing and easily distinguishable as such in the context of shape and other similar goods of that sort.

Copyright Protectability in the Metaverse

The protectability of metaverse on the ground of originality as such can be established by the virtue of it being attached to a fixed medium and thereof deciding upon its veracity as such. The central theme of the metaverse stays constant, that is the integration of an immersive experience in a virtual world for the interaction with NFTs, blockchain, smart contracts and so on – the main modifications in the realm of copyright are all upon the basis of extent and flavour of creativity that is applied by the creator. If we consider the case of Baigent and Leigh v. The Random House Group Ltd.[20] which held that if the general propositions of an idea and the level of abstraction is there then there is no attraction of copyright – so a well-established regime that should fall on the right side of ideas/expression divide has to exist in metaverse to provide an all-inclusive protection to the same. The bundle of rights to exist in the metaverse should range from selling, reproducing, storing etc. as in the computer programme. Similarly, the rights of the author range from moral rights including strong considerations of integrity and author’s resale rights thereof. The technological interdependence with the copyright law should be addressed as a specific requirement to gain prominence on the internet and technology and WIPO Copyright Treaty to give it a shape of wholesome protection – the same can also be understood in the relevance of oncoming of new technologies and rights in the new medium as perused in New York Times Co. v. Tasini[21] whereby the use and reuse of the materials that was done by the infringing party was regulated on considerations of absence of permissions and licensing thereof.

Similarly the metaverse can be accorded protection in the Indian copyright scheme with the implication of the Indian Copyright Act, 1957[22] in the domain of computer programme[23] which is defined as instructions that are dependent upon the words, codes, schemes, or in any other form and it also includes the machine readable medium which can be made capable to make the computer do a particular task and achieve a particular result and similarly, it is also recognized under the concept of literary work[24] within the scheme of the Act. In the case of Accenture Global Service GMBH v. The Assistant Controller of Patents & Designs[25] it was seen that within the scope of computer programme how can a software fall into the criteria of protection in the copyright regime and what forms the scope of this subject matter and in turn, the protectability.

Design Protection and the allied Considerations

If the consideration of Design rights must be there, then an importation of the Locarno Classification can also be observed, and it is very much relevant to accrue the same. If we peruse the Class 32[26] of the Locarno Classification, we can observe that the Graphic Symbols and Logos can be very well covered under the scheme of the Classification and thus find its protection under the Design regime as such. Also, under the Indian scheme of Design law, the Designs Act, 2000[27] covers what is an article within the meaning of the Act[28] that includes the capability of sold and produced separately, it is a possibility that the designs of metaverse in the 2D and 3D forms can be developed for interactions with voice and gestures[29]. In the case of Dover Ltd. v. Nurnberger Celluloidwaren Fabric Gebruder Wolff[30] it was seen that the features of shape, pattern, configuration etc. applied to the article would fall within the scope of registrability under it. Similarly, the requirements of design[31] includes the requirements of being appealing to the eye and capable of being judged in the background thereof.

Suggestions

Based upon the study of metaverse and its conceptual analysis and legal considerations thereof and growing use case and impact therein, the following suggestions can be made to give it the necessary protectability in the IPR regime:

The criterion of metaverse is ever expanding and in that sense, it must be seen that the various characteristics as they form should be ensured in the prospect.
The impact of metaverse on the various sectors of the economy should be gauged over time to determine the IP rights in the background with an effective usage.
The legal imperatives of metaverse should accord trademark protection to the NFTs in metaverse according to NICE classification and Indian scheme.
The copyrights in the metaverse should vest as innovations in software such as computer programme and the definition of first users, moral rights, related rights, and economic rights should be adequately formed.
The design rights can be vested according to Locarno classification and Indian scheme of design as an article protectable with a view of visual appeal and aesthetics.

Conclusion

Thus, it can be observed that the metaverse is the future of e-commerce and the interaction of internet in the digital space with newly emerging technologies of blockchain, smart contracts, crypto and NFTs and this is in conjunction with the metaverse which must be intellected thereof and protected in that prospect. The broad considerations of concept that is still in the nascent and growing stage should be allowed to further in the direction of evolution to include more facets of IP rights and the emergence should be monitored to keep a tab on development on the right-duty interface of IPR. The protection under the aegis of IPR flows from various classifications as seen in the case of NFTs and allied classification in NICE, and the relevant trademark regime of India, also in the copyright domain whereby the originality of work is to be seen on the touchstone of the related rights and computer programmes and the design rights on the basis of visual appeal and aestheticism should also be able to give certain perspective according to the Locarno classification.

Name: Suhail Khan

College Name: Jamia Millia Islamia

[1] VOX – UNDERSTAND THE NEWS, https://www.vox.com/technology/2023/3/6/23627351/neal-stephenson-snow-crash-metaverse-goggles-movies-games-tv-podcast-peter-kafka-media-column (last visited April 9, 2023).

[2] Id.

[3] METAVERSE AND THE LAW, https://www.legalserviceindia.com/legal/article-8439-metaverse-and-the-law.html#:~:text=The%20Metaverse%20is%20not%20limited,reality%20in%20a%20virtual%20world. (last visited April 10, 2023).

[4] MARKETING IN THE METAVERSE, https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/marketing-in-the-metaverse-an-opportunity-for-innovation-and-experimentation (last visited April 10, 2023).

[5] TRADEMARKS IN THE METAVERSE, https://www.wipo.int/wipo_magazine/en/2022/01/article_0006.html (last visited April 10, 2023).

[6] INDIA: COPYRIGHT IN THE METAVERSE, https://www.mondaq.com/india/copyright/1239234/copyright-in-the-metaverse#:~:text=Since%20the%20metaverse%20is%20by,Act%2C%201957%20(Act). (last visited April 10, 2023).

[7] NON FUNGIBLE TOKEN: WHAT IT MEANS AND HOW IT WORKS, https://www.investopedia.com/non-fungible-tokens-nft-5115211 (last visited April 9, 2023).

[8] THE FINANCIAL BILL, 2023, https://www.indiabudget.gov.in/doc/Finance_Bill.pdf (last visited April 9, 2023).

[9] WHAT ARE SMART CONTRACTS ON BLOCKCHAIN?, https://www.ibm.com/topics/smart-contracts (last visited April 10, 2023).

[10] Supra note 3.

[11] INSIDE GUCCI AND ROBLOX NEW VIRTUAL WORLD, https://www.voguebusiness.com/technology/inside-gucci-and-robloxs-new-virtual-world (last visited April 10, 2023).

[12] AMAZON IS BRINGING ITS METAVERSE TO 5 CITIES THIS FESTIVE SEASON, https://www.voguebusiness.com/technology/inside-gucci-and-robloxs-new-virtual-world (last visited April 10, 2023).

[13] Supra note 4.

[14] NICE CLASSIFICATION, https://www.wipo.int/classifications/nice/en/ (last visited April 10, 2023).

[15] Supra note 5.

[16] 22-CV-384 (JSR).

[17] The Indian Trademarks Act, 1999, § 2(zb), No. 47, Acts of Parliament, 1999 (India).

[18] USPTO 1.928.424.

[19] Case No. T-305/02.

[20] [2007] EWCA Cir. 247.

[21] 533 U.S. 483 (2001).

[22] Indian Copyright Act, 1957, No. 14, Acts of Parliament, 1957 (India).

[23] Id., § 2(ffc).

[24] Id., § 2(o).

[25] 1398/DELNP/2003.

[26] INTERNATIONAL CLASSIFICATION FOR INDUSTRIAL DESIGNS, https://www.wipo.int/export/sites/www/classifications/locarno/en/pdf/LOC_10E_Final_16MAY2013.pdf (last visited April 12, 2023).

[27] Designs Act, 2000, No. 16, Acts of Parliament, 2000 (India).

[28] Id. § 2(a).

[29] DESIGNING THE METAVERSE, https://venturebeat.com/datadecisionmakers/designing-the-metaverse-challenges-and-questions/ (last visited April 11, 2023).

[30] [1910] 27 RPC 498.

[31] Supra note 17, § 2(d).

Dissecting the Legal Imperatives of Metaverse in the IPR Regime