Virtual Worlds, Real Rules: EU Parliament’s First Take on IP in the Metaverse

Are trademark rights in the Metaverse as intangible as the world itself, or are they as real as in the ‘real’ world? This is the question the European Parliament addresses for the first time in its Resolution on policy implications of the development of virtual worlds – civil, company commercial and intellectual property law issues, published on October 17, 2024, in the Official Journal of the European Union. The European Parliament asserts without the slightest ambiguity that “the body of EU law on the protection of intellectual and industrial property rights, including copyrights, trademarks, patents, designs and trade secrets, fully applies to virtual worlds”. In other words, the Metaverse may be a virtual world, but European intellectual property regulation is very real, and the Metaverse cannot escape it.

This Resolution marks the first detailed position taken by an EU institution on the subject of intellectual property—and, in particular, trademarks—in the Metaverse. The European Commission had already addressed the issue in its Communication titled An EU initiative on Web 4.0 and virtual worlds: a head start in the next technological transition, but it merely stated that the “legal framework (such as (…) the Regulation on the EU Trade Mark and the Directive on the Protection of Trade Secrets) applies generally to Web 4.0 and virtual worlds” without providing further explanations.

While this Resolution is welcome in that it definitively dispels certain doubts by confirming the theoretical application of trademark law in the Metaverse, it unfortunately leaves many questions unanswered regarding the practical implementation of trademark law in virtual worlds.

European Parliament Weighs in on Theoretical Applicability of Trademark Law

The main insight of this Resolution is the confirmation of the applicability of Intellectual Property Law in the Metaverse. Right holders’ exclusive rights must therefore be respected by all stakeholders of virtual worlds—platform operators, service providers, and users. This is to ensure that virtual worlds respect the EU’s “ethical values, principles and fundamental rights.” To guarantee the growth of a Metaverse that aligns with European values, the Parliament formulates a concrete general rule: “virtual worlds should be developed and deployed in line with the general principle that what is illegal offline should be illegal online.” From a legal perspective, the virtual nature of the Metaverse carries no consequences. In doing so, the legal rules designed for the physical world as we know it are meant to apply in virtual worlds. Therefore, as confirmed by the Parliament, “the following pieces of legislation already apply to different aspects of virtual worlds: (…) the Regulation on the EU Trade Mark.”

The second contribution of this Resolution is the unprecedented confirmation by an EU institution that the Nice Classification is capable of encompassing trademarks for virtual services and goods. So that they can be registered by national offices and the European Union Intellectual Property Office (EUIPO). The Resolution indeed states that the Parliament “welcomes the update brought about by the twelfth edition of the ‘Nice classification’, which allows for the registration of trademarks in classes covering their use in virtual worlds.” The changes introduced by the 12th edition of the Nice Classification, which came into force on January 1, 2023, are twofold. First, it is stipulated that virtual products and services should not be registered in classes for equivalent ‘real’ products and services, but rather be concentrated in class 9. However, this choice to concentrate all virtual goods and services seems unwise to me, as it suggests (wrongly) that virtual products and services should be treated differently from their real-world counterparts. Second, the 12th edition of the Nice Classification introduces the term “downloadable digital files authenticated by non-fungible tokens” in class 9, allowing for the registration of trademarks used for NFTs.

More Guidance Needed on Practical Implementation of Trademark Law

To assert that trademark law is applicable in the Metaverse and that trademarks used for virtual products and services can be registered is certainly a necessary step, but it is insufficient to guarantee the protection of right holders’ exclusive rights in the Metaverse. The practical application of trademark law in virtual worlds still needs to be determined. And this proves to be far from straightforward. As the Parliament points out, “the development of virtual worlds poses new challenges when it comes to intellectual property enforcement, identification of infringers and issues concerning the conflict-of-law rules on applicable law and jurisdiction.” Unfortunately, the Parliament provides no answers—nor even hints of answers—to these challenges.

In particular, the European Parliament remains notably silent on the following questions—crucial ones, in fact:

Should trademarks be re-registered for virtual products and services when one has already registered a trademark for equivalent real-world products and services? The practice has been to file new registrations en masse, but I don’t believe this is necessary, and in fact, early decisions by offices and judges in Europe and around the world seem to be moving in this direction (as evidenced by the MetaBirkin saga in the United States). A registration for real products and services thus allows the registrant to prevent a third party from using the trademark for equivalent virtual products and services in a virtual world. Furthermore, a new registration for equivalent virtual goods and services is not only unnecessary, but also dangerous. What happens in a situation where a right holder, who thought it wise to register a trademark for virtual products and services, has lost their rights to this registration but has registered the same trademark for equivalent real-world products and services? We would find ourselves in an extremely paradoxical situation where someone, stripped of their right to prohibit use and deemed unworthy of exercising such a right, can nonetheless continue to exercise that right based on a different registration.

How can the Metaverse be reconciled with the principle of territoriality that lies at the heart of trademark law? This principle states that the trademark holder can exercise their right to prohibit use within the territory for which the trademark right has been granted. Trademark law is thus intrinsically tied to the concept of borders. Yet, by definition, the Metaverse transcends borders. In this context, where should the use of a trademark in a virtual world be located in the real world?

Virtual Worlds are Not Above the Law

Ultimately, while many questions remain regarding the practical application of trademark law in virtual worlds, the Parliament’s Resolution definitively confirms that trademark law is enforceable in the Metaverse. Such enforceability should not surprise us: the Metaverse is not the “virtual world” it purports to be. There is only one world—the real world—in which virtual reality finds its place.

And in our world, right holders’ exclusive rights are far from being virtual.

Image Source: Deposit Photos
Author: wacomka
Image ID: 236672872