Brand protection in the metaverse: NFTs and how to handle them
Emma Green of Bird & Bird explores four important areas for brand owners to consider when looking at the realms of the metaverse
Whether you are deep into the realms of the metaverse, or still trying to distinguish your Web2 from your Web3, there is no escaping the growing conversation around NFTs.
The infiltration of digital assets into the consumer brands ecosystem presents a number of trademark challenges but may also yield opportunity. Four important considerations for brand owners are outlined below:
1. Take the time to review your portfolio: digital assets can be protected in Class 9 and are well worth integrating into new trademark applications to ensure your business is best placed to tackle infringing content. Consider protecting not only word marks but also important figurative marks which may be of interest to digital artists. It is a perfect opportunity to audit your existing portfolio to identify vulnerabilities and to ensure your protection also matches your real-world expansion plans for the next three to five years.
2. Have a robust infringement strategy. Creators of digital wearables are not bound by the traditional manufacturing and supply chain barriers which means the creation, minting and distribution of NFTs is very quick. New ‘stock’ can hit the digital shelves of platforms within hours, not weeks. Brands must therefore be able to react quickly to tackle the issues which arise before they escalate. Understanding the infrastructure of NFT marketplaces and the interface with social media is essential to identify the source of infringements. Be sure to look for aliases, linked profiles and associated accounts, and remember that sales may happen on private platforms as well as on the open market. Thorough due diligence will help to maximise the potential success of an action. Be clear on the issues you want to tackle – what is your position on cryptoart v digital wearables? Will you approach at B2B level first, file a take down notice or instruct external counsel?
3. Curate bespoke undertakings: handling NFTs is not the same as handling a consignment of infringing goods, so standard settlement terms need to be updated to reflect the new terminology. For example, a minted NFT can only be ‘deleted’ by sending it to a NFT blackhole (an inaccessible digital wallet address) in a process known as burning. It will be impossible to recover minted NFTs which have been sold, so focus on what can be achieved – seek undertakings that minted NFTs in possession of the infringer will be burned, and that the underlying image or digital files are deleted, transferred or amended to remove infringing content.
4. Consider collaboration: Digital wearables, collectibles and cryptoart are all unique, making them highly covetable. NFT collectors are also fiercely loyal and quick to help brands establish cult status and grow their following. Getting involved may help your brand stay ahead, enabling you to reach new audiences and provide a platform to tease product launches or drive engagement around initiatives and immersive experiences. If you do not intend to create your own digital works, consider a strategic collaboration with a carefully chosen artist or creator to add brand value and access the potential of the NFT community.
Senior associate, Bird & Bird