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INTA 2022: Counsel say ‘metaverse is not going away’

Fernanda Magalhaes (left) at Kasznar Leonardos and Kate Nye at The Gap (right) delve into the metaverse

Speakers from The Gap, Reed Smith and Kasznar Leonardos said the metaverse and NFTs created IP and other legal challenges for brands

Speakers delved into the intellectual property challenges brands would face when entering the metaverse or issuing non-fungible tokens at the INTA Annual Meeting in Washington DC today, May 4.

Panelists from The Gap and Reed Smith said the metaverse was going to continue to pose challenges and opportunities for businesses in a session called ‘From Second Life to the Metaverse: What Have You Learned?’.

Sarah Bruno, partner at Reed Smith in San Francisco, said that when the virtual interactive game Second Life came out, everyone thought it would be a big thing, and then it went away. There was some speculation within the trademark community that the metaverse would similarly turn out to be a fad.

“Well, it’s not going away,” she said. “It’s getting bigger and companies are figuring out new ways to engage in the metaverse.”

Metaverse filings

Attorneys said there were multiple IP concerns that brands had to contend with when entering the metaverse, including filing trademarks to protect their digital assets.

Bruno noted that brands had to figure out whether to file class-nine applications – which covered electrical and scientific apparatus – to protect their metaverse assets, adding that several companies had chosen to expand into this class.

Brands also had to navigate enforcement challenges in the metaverse, said speakers.

Fernanda Magalhaes, partner at Kasznar Leonardos in Brazil, noted that some companies might not want to actually enter the metaverse, especially at this point, but might want to pick metaverse platforms to watch to see whether their brands popped up.

“The biggest challenge for us in Brazil is how to monitor the metaverse, but I’m optimistic that we’ll find tools and ways to monitor.”

Businesses should also watch out for publicity rights pitfalls when entering the metaverse, said attorneys.

Bruno said it would be important to evaluate whether metaverse characters and images looked like celebrities and whether those resemblances were intentional.

She noted that if clients didn’t have relationships with these celebrities, they should monitor those images.

NFT nuances

Speakers also delved into the benefits and difficulties of offering NFTs.

Kate Nye, senior counsel at The Gap in Illinois, which launched its first collection of NFTs in January, said offering such services resulted in an opportunity to engage with consumers.

She said that when her company did its second launch of NFTs, it dropped some to consumers as a thank you for their loyalty. “You can keep that relationship going in a way that you can’t with physical goods,” she said.

But panelists noted that NFTs also came with various legal challenges, in IP and other areas of law.

John Feldman, partner at Reed Smith in Washington DC, said there could be consumer protection issues if companies used influencers to promote NFTs. It was also unclear how to tax NFTs, he said.

Nye agreed, adding that charitable promotions with NFTs could prove difficult because both the brand and the charity had to account for the value of the tokens for tax purposes.

The INTA Annual Meeting was held this week at the Walter E Washington Convention Center in Washington DC.

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