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Article · 15.09.2022

Recent judgments and guidelines on the metaverse and NFTs grant new opportunities as well as risks for IP-owners

Correct classification and proper legal action are the first steps to protecting and enforcing your IP rights in the metaverse

This article is written by Attorney-at-Law Christoffer Lindhardt Larsen

The legal aspects of IP rights in the metaverse are ever developing and are very much still in the early stages. Many IP offices as well as national legislation has not yet adapted to these new platforms and new type of use rights. Some have come so far as to acknowledge that current protection granted for “classic” IP rights does not grant sufficient protection for IP rights in the metaverse, hereunder NFTs.

Recent court cases and updates to the IP offices guidelines do however present some guidance as how to act as an IP owner, either directly active and advertising in the metaverse, or where the IP owner’s rights are being infringed in the metaverse, without the owner being present itself.

Due to the – current – lack of earlier court cases to serve as guidance and precedent, IP owners, attorneys, courts, and IP offices are closely studying the few decisions that are being made around the world on related matters. The global presence and accessibility of the metaverses means, that whilst national legislation may be different, the facts and issues of the cases are identical.

On June 21, 2022, a court in Istanbul, Turkiye (formerly known as Turkey) issued a preliminary injunction regarding an NFT. The subject of the proceedings was both physical and digital exploitation of a portrait of a known, late Turkish artist, Cem Karaca. In particular, the portrait was listed for sale on the popular NFT marketplace OpenSea. The court found that the offering for sale of the portrait in NFT form did in fact constitute a possible infringement of applicable law of Turkiye, in line with the conclusion of the report by the expert appointed by the court. Consequently, the court granted the preliminary injunction for the sale of the portrait, hereunder in the form of an NFT. Further, the court blocked the access to infringing websites in Turkiye. The final verdict is still awaiting, and thus we do not know whether the preliminary injunction will be upheld.

A separate and equally important issue is the enforceability of the preliminary injunction in the metaverse, and whether the injunction can be enforced on/against OpeanSea, a company based in the US.

Regardless of the subsequent enforceability, and the pending final decision in the case, the ruling illustrates that the current legislation is applicable for NFTs and activity in the metaverse, although many issues and uncertainties remain.

Contrary to most national legislation, certain IP offices have updated their guidelines to comply with several of the new legal aspects of the metaverse, NFTs and related topics. As an example, EUIPO guidelines state that protection in EU for trademarks or designs for use in the metaverse requires correct classification with the application.

As is with “classic” IP rights, an owner is in risk of forfeiting their right to object to potentially infringing use in the metaverse, by remaining passive.

Our advice is for IP owners to consider the need for protection in the metaverse, hereunder for NFTs when applying new rights, and to review an existing IP-portfolio to ensure sufficient protection for use and against misuse in the metaverse.

Need more info about the metaverse? Contact Christoffer