Insights

New York – May 24, 2023: Crowell & Moring has published Retail in the Metaverse and Beyond, a collection of insights for corporate counsel and executives in the retail industry. The compendium of Crowell’s latest analyses explores the legal challenges that retailers face as they move deeper into virtual and augmented reality, from ownership of digital assets to data privacy concerns, as well as the best practices that will help them navigate the road ahead.

New ways to utilize the internet for fun and leisure have skyrocketed recently. ChatGPT allows people to ask everyday questions and draft novels to their liking thorough AI, and the metaverse is constantly developing new ways to interact with each other in virtual worlds. With these new frontiers in the spotlight, it is important for companies to also consider the current remarkable technology being updated and used by millions of consumers that goes hand in hand with these new mediums. Cloud gaming is a technology that allows users to play video games on remote servers and stream the gameplay to their devices, also called gaming-as-a service. This technology, along with AI and the metaverse, has the potential to revolutionize the media industry by making interactive games and live brand collaborations more accessible and convenient for users.

 

Earlier this year, Hermès filed a trademark infringement suit against Los Angeles-based designer Mason Rothschild for creating and selling faux-fur digital renditions of the luxury Hermès Birkin handbags and using a collection of 100 NFTs, titled “MetaBirkins,” to authenticate the digital images.[1] In response, Rothschild filed a motion to dismiss Hermès’ trademark infringement claim under the Rogers test on the basis that the digital images of the Birkin bags are “art” and, therefore, receive First Amendment protection.[2]  Hermès opposed, arguing that the Polaroid factors— instead of the Rogers test—should apply, to assess likelihood of confusion.[3]  On May 18, 2022, the court denied Rothschild’s motion to dismiss, concluding that: (1) the Rogers test applies to the trademark infringement analysis of the “MetaBirkins” title, and (2) the Polaroid factors apply to the explicit misleadingness analysis.[4]

If your company isn’t on the metaverse yet, don’t wait for it. Because your customers are already there.

Artificial intelligence and the metaverse are two of the most rapidly evolving technologies today, testing the boundaries of intellectual property law. While the swift expansion of AI in all industry sectors can be thrilling, it also presents challenges in terms of protecting and encouraging artistic and scientific endeavors. A principal challenge for authors, creators, and corporations is how to protect creative endeavors from the threat of consumption and reproduction by AI engines, while at the same time realizing the promise of AI-conceived and -developed creative and technological advances. This fundamental IP conundrum also arises in the evolving metaverse.

With the emergence of the “metaverse,” the global marketplace is experiencing unprecedented digital transformation, and brands are tuning in. This type of digital platform provides new opportunities for global companies to connect with their consumers. At the same time, it also offers a new opportunity for unauthorized brand exploitation and infringement. As companies seek to expand their presence in the metaverse, brands have been increasingly interested in how to protect their existing intellectual property from trademark infringement in the virtual world while also obtaining new metaverse-related trademark protection for their own brands.

Endless articles rattle on about the brave new world of the metaverse, as if it’s an unprecedented step for commercial and social life. As lawyers, however, we know that there is precedent for everything. This presentation looks at the legal precedent that will likely inform the development of metaverse law. We will look at virtual-world cases involving both common law and federal law. We’ll also look at the pockets where virtual-world caselaw has yet to be developed and consider what types of precedent will fill those gaps. Finally, we’ll discuss what this all means for practitioners who hope to guide their clients in the metaverse.

Crowell & Moring Partner Kristin Madigan, a member of the firm's Privacy & Cybersecurity Group, will be speaking at this year's Annual Internet of Things Virtual National Institute, hosted by ABA's Science and Technology Law Section, will be taking place virtually September 12-13. Her presentation, "Privacy in the Multiverse of Madness: Protecting Data in Real Life and Beyond," will take place on September 13th from 11:30 a.m. - 12:30 p.m. ET (CLE Offered).

In Collaboration with the IBJ/IJE Intellectual property and information technology law has a broad scope and raises numerous concerns for company lawyers. Furthermore, the question often arises whether traditional concepts can still be applied in a digital environment. Our Technology & IP team will address some of the questions raised in the day-to-day practice, such as: