Metaverse, brands and the debate within

Public attention nowadays is predominantly focused on the metaverse, a platform whose literal meaning is quite difficult to find. Mark Zuckerberg defines the metaverse as a virtual world where people can socialise, work and play. He believes that the metaverse will be the future of today's technology.

Actually, we can see the image of the metaverse in various online games that use augmented reality where players interact using certain avatars or characters. Online persona plays an important role, so it has become commonplace for players to buy clothes or other accessories to support their appearance. That's roughly how the metaverse will look in the future.

Currently, the development of the metaverse has only touched the world of digital fashion where users will hunt for items in the form of clothes, hats, accessories and more to dress up their avatars. Various well-known brands have entered this virtual world; one of which is Gucci which launched a limited collection in its virtual garden on Roblox last June. There, the Gucci Dionysus bag is sold for 350,000 robux (Roblox currency) or equivalent to $4,115 in the real world. Some other brands, including Nike, have also marketed their products in the metaverse.

The metaverse is considered capable of bringing massive profits to brands, but French luxury goods brand Hermès has a contradictory experience. This is a new problem in the world of the metaverse, because it is not uncommon for a product to be marketed not by the brand holder.

Los Angeles-based digital artist Mason Rothschild created 100 bag designs that resemble Hermès’ famous product, the Birkin Bag, and marketed them under the name MetaBirkin. Mason made a profit of 8 ETH or about $450,000 from the series.

Hermès saw Mason's action as an act that tarnishes the Birkin trademark because to market the products, he only added the word Meta which basically refers to the virtual world of the metaverse to the famous Birkin trademark. Hermès then filed a lawsuit against Mason in a New York City Federal Court for trademark infringement, trademark dilution and cybersquatting.

The question is, are the current laws and regulations capable of tackling cases of trademark infringement that have occurred in the metaverse?

Protection of trademark rights in the metaverse

Agung Sujatmiko in his journal "Aspek Yuridis Lisensi Merek dan Persaingan Usaha" stated that the right holder has exclusive and monopolistic rights, which means that only the right holder can exercise the right and give permission to other parties who wish to use it. This is intended to protect right holders from unfair business competition.

Trademark infringement can occur if a party in marketing their products uses a trademark which is identical or confusingly similar to a trademark belonging to another party to the products or services which the registration covers. This also applies to the metaverse as it can create confusion among consumers about whether the item has been licensed or is sold by the original owner.

However, answering the question of whether the current trademark-related policies can reach the world of the metaverse requires further discussion. That is because if we make an interpretation based on the current law, the answer for now is "yes". However, further explanation is needed whether the use of trademark on virtual products is the same as the use of trademark on real goods that are protected by the Trademark Law, as written in Lexology. Hermès’ lawsuit is a pioneer that will provide a new perspective on this matter.

On the other hand, Indonesian law provides protection for well-known brands that are harmed by trademark infringement (taking advantage of the reputation of a well-known brand by creating a new brand that resembles the well-known brand). Article 83 of the Trademark Law No.20/2016 allows the holders of well-known marks to file a claim for compensation and/or the termination of all actions related to the mark. A similar policy applies in countries with the common law system, where holders of well-known marks can, with court ruling, (1) request the termination of the defendant's actions and/or material compensation, and (2) immaterial compensation for trademark dilution.

Other interesting points that need to be taken into consideration in carrying out law enforcement in the metaverse are related to territory and which parties can be held accountable. Ronaldi Reisman, co-founder of the RSPS told TFR that, “Law is generally territorial in nature, which means that Indonesian law can only apply in Indonesia. Legal action based on Indonesian law can only be applied in Indonesia.” In addition to the legal scope that is able to reach the metaverse, another interesting point to note is who will be sued. "This is quite difficult because it happened in the metaverse," Ronaldi explained.

He further said that, "In the event of a digital crime, the action that can be done is to hold the server/host/operator accountable." However, in order for them to be held accountable, it is necessary to find out whether the entity is registered in Indonesia. "If there is a violation in the metaverse, the marketplace that markets the product can be held accountable," he said.

In this case, Ronaldi explained that, “There are two parties who can be held accountable. First, the merchant or the party who sells the product in the metaverse and a lawsuit against them can be filed in the country where the merchant is registered. The second action is to file a lawsuit against the marketplace operator who enables the sales of the product”.

This explanation is in line with the move taken by Hermès, i.e. filing a lawsuit against Mason in the New York City Court on the grounds that Mason markets his products to the public in New York City and submitting a request for intellectual property removal to OpenSea so that Mason's content is removed from the platform.

Efforts that can be made

Right holders who want to enter the world of the metaverse should first register their trademark like what Nike did, namely registering its trademark with the United States patent and trademark office.