Metaverse and NFT marketplaces explained

Our pace of life is getting faster, and nowhere is that more true than in the metaverse. This hot new segment of the internet is evolving faster than ever, bringing tons of opportunities and threats with it.

In our previous article about the topic, we introduced the basics and took a look at the state of IP infringements on metaverse marketplaces and NFTs. Now, the time has come to check into the metaverse again and see what’s new. Buckle up, it’s going to be a speedy ride!

Realising the potentials offered by the metaverse, an increasing number of brands enters this lucrative segment with virtual products. One of the latest and hottest additions to our virtual universe is Gucci’s new space, Gucci Town on Roblox.

The luxury brand is no stranger to the metaverse. Gucci already cooperated with Roblox on various projects, including the highly successful Gucci Garden in 2021. The newly opened Gucci Town provides Roblox users “a place to discover more about the House and its heritage … as well as to express one’s own individuality and connect with like-minded individuals from all over the world.”

Players can find mini games, a creative corner for artists, and a shop to buy digital Gucci products for their avatars with in-game money.

Screenshot of gucci.com displaying the virtual Gucci storefront on Roblox

But the Italian luxury giant is not the only brand offering virtual products on Roblox. Ever since January 2022, Ralph Lauren has also been present on the platform, producing jackets, hats and sunglasses for fans of the brand. Similarly, Nike sells virtual sneakers and accessories for users’ avatars in the metaverse.

Interestingly, prices in the metaverse are currently more varied than in real life, at least when it comes to virtual luxury clothing. While most Ralph Lauren products on Roblox cost under $5, the virtual version of a Gucci bag valued at $3,400 in real life sold for over $4,000 on Roblox.

Likewise, sneaker collectors don’t seem to mind if a luxury pair of Nikes is made of megabytes instead of textile: the average price for a virtual pair of Nikes is between $6,000-10,000.

With promising figures like that, it’s no wonder brands have woken up to the potentials of the metaverse and began to take steps to protect their assets.

Nike and Gucci were amongst the first brands to apply for trademark protection in the US for their digital goods. This movement, gaining ground since late 2021 showcases a shift of awareness towards the metaverse. Brands increasingly look at this segment as a serious source of revenue - and IP infringements.

Besides Roblox, there are other virtual world marketplaces where people can buy digital goods. These platforms can be grouped into two main segments: NFT (non-fungible token), and general metaverse/gaming marketplaces.

While virtual world marketplaces operate on very similar principles and practices to the ones in the real world, there are a few significant differences worth noting. Let’s take a look at each of these groups.

Like their name suggests, NFT marketplaces trade NFTs, i.e. one-of-a-kind digital assets, or crypto-domains, like .eth. Listings on NFT marketplaces can be either fixed-price or auction.

Payments are usually in cryptocurrencies (mostly Ethereum), and escrow services can be used to protect customers. Since NFTs are downloaded from the internet, shipment is not a problem. However, you can expect some payment transaction fees due to the payment options used.

To get started with your NFT shopping, you need to set up a digital wallet on the platform of your choice, along with a cryptocurrency account if you don’t have one yet. The NFTs purchased will appear straight in your wallet once the transaction is cleared.

The most popular NFT marketplaces are OpenSea, Crypto.com, Nifty Gateway, Rarible, NBA Topshot and Mintable.

Screenshot of OpenSea’s homepage

These marketplaces can be found either directly in the metaverse, or on the internet in general. Their specific operation depends on their location and the goods they’re selling. Some accept real money or cryptocurrencies, while others require you to change your money into their in-game or in-universe currencies to make a purchase. For example, although the marketplace for the universe of Second Life is located on the “regular” internet, you need to change your currency into in-game Linden dollars before buying something.

Your purchases can usually be downloaded once the transaction is complete. And what can you buy? Well, anything from in-game items, in-game money, digital clothing and accessories to entire metaverse accounts and their login details.

The most important platforms in this category are the Second Life marketplace, Roblox andThe Sims Catalog.

Screenshot of the homepage of The Sims Catalog

Copyright and trademark protection of virtual goods is not a new thing. After all, think about e-books and music: electronic versions of copyright-protected works of literature and music have been available to consumers worldwide for decades.

However, trademarking virtual versions of real world products and brand imagery is new and can be directly tied to the metaverse and immersive video games. Luckily, the legal category already exists and can be extended to these virtual goods as well. By the way, the situation is similar to how the availability of streaming services and mp3 downloads changed and added a different perspective to brand protection in the entire music industry.

According to the recent study Trademarks: The classification of "virtual goods" in trademark applications,the Nice Classification “of goods and services applied for the registration of marks” can be used when referring to virtual versions of real world branded products and brand imagery.

Using the analogy of e-books, downloadable virtual goods can be classified as class 9 (“recorded content”), while non-downloadable virtual goods can belong to class 41 (“services”).

Since the legal basis is there, it’s up to brands now to take the necessary steps and trademark their imagery and products on the metaverse too.

And, as several high profile cases suggest (for example, Hermès’ “MetaBirkins” lawsuit about the unauthorized use of its Birkin bags as NFTs, as well as Nike suing StockX for their sneakers appearing in NFTs without their consent), taking action sooner rather than later is essential for preserving a brand’s reputation and assets.

While all brands have to take measures to protect their IP rights on the metaverse, not all products are in equal danger of being virtually copied and sold without authorization. In our experience so far, the imagery and products of luxury brands are more likely to fall victim to such acts.

It’s easy to understand why: due to the nature of the metaverse, a whole array of everyday household items like tin can openers, hairdryers, etc. are not necessary, which means they’re not likely to be replicated.

Plus, the metaverse is all about appearances. How cool is it to have your avatar drive around in an Audi TT convertible while wearing Gucci shades? Consumers are more likely to desire those things for their virtual selves than no-name cars and sunglasses.

Naturally, some luxury products have little usefulness in the metaverse. Although we have found a couple of listings for perfumes and cosmetics, they are less at danger than, say, sports cars or designer clothes. However, no brand can sit back and relax: fraudsters who sense a demand will come up with ways to use your brand name and imagery, even if your products don’t translate well to the metaverse.

Brand names and logos may appear on T-shirts, as sponsors of virtual sporting events, or even as an NFT. In fact, we’ve encountered many NFTs infringing on our clients’ IP rights on all the major marketplaces.

Luckily, our marketplace, image and domain monitoring services work just as well on the metaverse as on any regular marketplace. And the same goes for enforcement.

While some metaverse marketplaces cooperate fully with us regarding takedown requests, others are sometimes not entirely aware of what constitutes an IP infringement and that some of their products are in breach of a brand’s trademark rights. Therefore, some of these marketplaces may need a little nudging to do the right thing. Nevertheless, we do all the nudging, reasoning, demanding and whatever else it takes until our takedown requests are met.

Interestingly, the metaverse has given takedowns another layer. While in real life we “only” demand the takedown of an infringing listing, image or domain, in the metaverse we’re also aiming to gain control over the items in question, especially in the case of NFTs. This would help prevent the reappearance of it.

Another very useful tool in protecting your trademarks on the metaverse is a test purchase. Just like in real life, our test purchase gathers evidence about the seller and the origins of the product and/or the NFT minters. However, in the case of the metaverse, this service is also essential for holding the marketplace accountable for repeated IP infringements and thus forcing them to put proactive measures in place to prevent the reappearance of such products.

While relatively new, the metaverse will quite likely become a fixed feature of our modern lives. Don’t let others make money off your brand’s IP rights and steal your revenue; contact globaleyez and let us protect your brand on the metaverse as well.