22 September 2022
Metaverse September 26.9.2022 – 1 of 4 Insights
"Your avatar can look any way you want it to […]. If you've just gotten out of bed, your avatar can still be wearing beautiful clothes and professionally applied makeup. You can look like a gorilla or a dragon…" While this may sound like an advert for the latest virtual online game, it is taken from Neal Stephenson's Snow Crash published in 1992. As most readers will know, the sci-fi novel coined the term "Metaverse" and described in some detail what people could do virtually on "the Street". Interestingly, the above-mentioned quote already introduces two concepts that are likely to become of increased importance in the coming years: avatar customization and virtual fashion.
As mentioned in our introductory article (which can be accessed here), the Metaverse is expected to become the successor of today's internet as we know it, resulting in a convergence of our physical reality and the digital space. The Metaverse will consist of countless interoperable 3D worlds that will integrate into our everyday lives. Consumers will be able to do almost anything they can think of in these virtual worlds – work, travel, study, play games, meditate, meet their family or make new friends.
Most of these activities will be experienced by consumers through their avatars. These items can be understood as virtual representations of a person. Much like the main characters in a video game, they will serve as a digital action figure that consumers steer through the different virtual worlds. At first, this might still be done via mouse and keyboard. However, it is expected that the role of AR/VR or some other type of technology will increase with time, allowing consumers a more immersive experience.
As consumers will spend more time in the virtual space, they are likely to care about how they are being represented virtually and, at some point, may start to identify with their avatar(s). Mark van Rijmenam predicts in "Step into the Metaverse" that consumers are likely to have several avatars suited for different purposes (e.g. work, leisure etc). Some consumers may want to spend their free time online as an anime-themed super hero, while they might prefer something subtler for other occasions. There might also be certain technical or legal restrictions for the types of avatars you can use in specific scenarios.
And just as in the real world, consumers will want to express their individual character through the way they dress their avatar. The interest surrounding events like the first Metaverse Fashion Week held in March 2022 or the recent Digital Fashion Summit in Berlin foreshadows the role that digital fashion may play in the years to come. Leading sports and fashion brands, such as Gucci, Balenciaga and Nike, have already successfully launched collections of digital fashion and accessory items – with some individual products changing hands for hundreds if not thousands of Euros.
And unlike the real world, the Metaverse will not be restricted by the laws of physics or reasons of practicality. Something that might be impractical or unsafe in real life could be perfectly fine in the Metaverse. Skiing in a kimono, snorkelling in a space suit or cycling in high heels? No one will stop you. More importantly, however, consumers may feel greater freedom to experiment with their own style preferences. They may try out particular new looks more readily or simply decide to dress differently in the Metaverse.
In view of the above, a whole industry might emerge around the creation of avatars and virtual fashion. While most platforms will offer free or cheap items to their users, more exclusive options will come at a premium. And since the whole idea of the Metaverse is build around the concept of interoperability, consumers will be able to purchase their avatars and clothing items in one world but also use them elsewhere. This means that consumers might be willing to spend additional money on, say, a custom-made avatar or digital outfit, knowing that they will be able to enjoy them across different worlds.
There are many technical challenges when it comes to such true interoperability. For instance, finding suitable standards across different platforms will not be an easy task. It will require joint and continued efforts from the leading market players. The work already done by initiatives such as the Metaverse Standards Forum is therefore certainly good news (see https://metaverse-standards.org). Many also hope that NFTs, blockchain technology and cryptocurrencies hold the key to creating a decentralized and open metaverse where digital assets freely travel from one virtual world to the other.
Perhaps equally challenging are the legal issues that accompany the emergence of an economy surrounding avatar customization and virtual fashion. In this new market, established apparel companies and digital-native brands are likely to compete side by side. Securing adequate trade mark protection in both the virtual and the real world will be crucial for the continued success of these businesses. But how? Should existing companies file for additional trade mark protection in respect of virtual goods? If so, how are these products classified? Are virtual items similar to their real-life counterparts? How do you prove genuine use in the Metaverse? How can you show the use relates to the territory of the EU? The list of question seems endless.
We have already provided some initial guidance on the above issues in our earlier pieces (see here and here). These issues have also been briefly addressed in a recent webinar organised by the EUIPO (see here), as well as in additional information issued by the Office (republished by MARQUES here).
However, many questions remain unanswered. In the coming weeks, we will start a "deep dive" into the world of avatars and virtual fashion. Taking these virtual products as an example, we will examine what brand owners can do now to prepare for the Metaverse and the pitfalls they should avoid. We will analyse at the emerging case law, discuss the guidance issued by IP offices and, where none exist, explore possible solutions based on established EU trade mark principles. As always, we look forward to your feedback and to discussing these emerging issues with you.
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