Role Of Intellectual Property In Metaverse
Author: LawSphereX
Category: Intellectual Property
Published:
Updated:
ROLE OF INTELLECTUAL PROPERTY IN METAVERSE
Auroshis Kumar Mohanty, Xavier Law School
INTRODUCTION
The 21st Century is considered the era of technology and advancement. Every now and then, companies come up with new technology and try to make the life of people simpler. The latest such technology is METAVERSE and NFTs (Non-Fungible Tokens). In the past few months, we all have come across the words "Metaverse," "NFTs," "Cryptocurrency," “Augmented Reality," and "Virtual Reality. " We all have seen the movie "The Matrix," which was a blockbuster back in 1999. Metaverse is just like "The Matrix," where people have their avatars and do things that are beyond the laws of physics of our world. Metaverse is a mirror image of our world without the laws of physics. As we know that every technology has its own drawbacks, and disputes arise when people do a transaction of the property so it is unavoidable not to have any disputes in Metaverse.
Our world and Metaverse are analogous, and with no particular laws to oversee the Metaverse, there can be a large number of legal disputes on the safety of the Metaverse and the various other transactions that are done on a day-to-day basis in Metaverse. Some of these disputes can i. Disputes related to Intellectual Property ii. Disputes related to Privacy iii. Disputes related to minors iv. Crimes related to user-user interaction – obscenity, violence, etc The most common legal dispute that arises in the Metaverse is legal issues pertaining to Intellectual Property Rights. In this paper, we will be more focused on the Intellectual Property laws with regards to Metaverse and the mode of dispute resolution in relation to such disputes.
RESEARCH
METHODOLOGY
Aims and Objectives: The aim of this paper is to study the “Role of Intellectual Property in Metaverse ."The objective is to provide a detailed analysis of the important aspects of the role of Intellectual Property Rights and answer certain questions that are encountered while conducting the research.
Scope
and Limitation: The scope of this paper is limited to a discussion of the concept of Intellectual Property Rights in Metaverse, the recent case laws related to it, and various cases and laws in India regarding IPR. The limitation of the paper is that it emphasizes more on the concept and recent developments. Research questions: The following questions are emphasized and have been answer in the paper: v What is the concept of Metaverse? Whether the Metaverse itself is protected under IP laws? v What are NFTs? v What is the role of Intellectual Property Rights in the Metaverse? • Infringement of IP • How to protect your IP Mode of Citation The mode of a citation followed in the paper is according to “The Bluebook: A Uniform System of citation, 21st Edition.
METAVERSE The word “Metaverse” was originally used by Neal Stephenson in his novel "Snow Crash," and in the year 2020, Metaverse became the buzzword on the internet as Mark Zuckerberg, owner of the tech giant "Facebook" changed its name to "META . "Meta and Apple Inc collaborated to make Smart Glasses which were an important part of the functioning of Metaverse. Metaverse is cyberspace which is the mirror image of our world, and people in Metaverse interact with each other through technologies such as i. Augmented Reality – encompasses overlaying cinematic, auditory, or other sensory data onto the real world to enhance one’s experience. ii. Virtual Reality – system that software, screens on each eye, and interactive controls to permit an individual to cross the threshold of reality to a virtual, digital world. iii.
Cryptocurrency – digital or virtual currency, which is transparent, decentralized, and secured by cryptography. It is used for transaction in online purchase of goods.
There are 2 types of Metaverse which are used depending upon the use of the technology i. Open Metaverse – term used to designate the virtual world outside any company’s enclosed space. It is a single, connected universe where users can interact with each other irrespective of which platform they are using. ii. Closed Metaverse – term used to designate the virtual world that is only accessible to a specific group of people to interact and meet. The companies own such places for their employees to interact. Ex- IBM, Coca Cola As we have now concluded that Metaverse itself is made from source codes and computer programs therefore it is protected under the Indian Copyright Act,1957. The owner is considered as owner of the platform and all the elements in it.
For example – Coca Cola is the owner of the closed metaverse “Coca Cola World” therefore it has the right over the particular platform and even owns all the elements that are in the platform. As the Indian Copyright Act states, “The creator of the work would be the owner of the copyright of that work unless there is a contract that states otherwise, including any terms of service for the platform together with any terms of practice of the platform, the copyright to the work would belong to the author of that work. Consequently, the real individual who produced that piece might interpreted as the creator of the piece and as such, the owner of it. Therefore, for open metaverse platform The copyright of the works they produce inside belongs to and is controlled by the user. authorizing such platform title-holders to take a transitional status and be cleared of liability for infringement.
NON-FUNGIBLE TOKEN (NFT) Non-Fungible Tokens or simply known as NFTs is the word that has been in the trending topics lately. NFTs are cryptographic assets that are created using the same technology that is used to create cryptocurrencies i. e “Blockchain” technology. As the name suggests “Non-Fungible” it cannot be transferred as other cryptographic assets because NFTs possesses unique properties. Cryptocurrencies which are made from the same blockchain technology as compared to NFTs can be interchanged or traded hassle free. With a genuine certificate generated by blockchain technology, NFTs can represent online collectibles such as games, music, and artwork. Such NFTs are purchased or traded for cryptocurrencies, mostly, Bitcoin and Ethereum. NFTs are minted digitally and cannot be edited or removed from the platform once minted.
Reserve bank of India in the year 2018 had a circular in place which bans financial institutions to deal with digital or cryptocurrencies. This ban was struck down by the Apex court in the case of Internet & Mobile Association of India Vs. Reserve Bank of India1. And as NFTs come under the purview of cryptocurrency as per section 2 of Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019. The Foreign Exchange Management Act,1999 prevents crypto-trading and therefore prevents NFTs. And as per the latest finance bill there will be 30% tax levied on cryptocurrencies. As of now India do not have laws to regulate or govern NFTs or Cryptocurrencies and such digitally created assets are not recognized in India. But on the practical side there is a dire need of legal framework which would help in regulating the NFTs and Cryptocurrencies.
It is a common belief that since NFTs digitally formed works might have a copyright once the NFT is procured. While it does have some limited copyright protection, the owner of the NFT is not able to enjoy the same rights that the work's author would in a non-digital society. As per the Indian Copyright Act, creator of a work will continue to be owned by its original creator.. Thus, once the authorization is approved to such person for creation of the NFT for the work, the creator of such digital asset shall have ownership rights towards only one particular digital asset. The right to re-create or make copies of such NFTs shall not vest in with the creator of the digital asset. Therefore, if the creator of the copyrighted asset does not transfer or assign any right over the asset, the same shall not vest with the NFT owner.
Therefore, in basic terms an NFT shall only grant ownership of a particular replica of the work which that particular NFT epitomizes and does not offer any rights over other NFTs of such analogous work being uploaded on any blockchains. The Indian Copyright Act, 1957 does play a noteworthy role when it comes to creating, distributing, and transferring copies of NFTs being created for digital recognition even though there is no recognized legal framework that governs NFTs in India. INTELLECTUAL PROPERTY RIGHTS IN METAVERSE Metaverse is place where many intellectual properties are present such as music, art, sports brand, fashion etc. So, there is a high probability that Patents, copyrights, trademarks might get infringed. As the Metaverse is vast and is rapidly growing therefore there is a limitless potential for advancement of businesses.
It becomes important to protect the Intellectual Property as to
1 Writ Petition (Civil) no. 528 of 2018
have a maximized return on the original investment. Metaverse presents and unique platform of opportunity as one can expand into new markets without leaving the current geographical area. For such expansion there must be an Intellectual Property Protection present so as to safeguard the owner from lawsuits and other legal complications from its overseas rivals. Copyrights Copyright is the exclusive authority to carry out or approve the performance of any of the work or a substantial part of the work in case of literary, dramatic or musical work and computer programs and databases. Copyright law protects the expression of the ideas. As per Section 13 of the Indian Copyright Act 1957, Copyright protection is given to literary, dramatic, musical, artistic, cinematographic and sound recording.
While considering the fact that Metaverse itself is a computer program and computer programs come under the virtue of literary work therefore it can be clearly stated that Metaverse itself can be Copyrighted. Example – The Metaverse of Fortnite (video game) is copyrighted. As discussed above that in a “Closed metaverse” the owner of the platform owns the platform as well as all the elements in that particular platform but the complication arises in an “Open Metaverse” as who shall be considered as the owner, whether it will be platform owner or the person who have created the work in the real world. According the Section 17 of the Indian Copyright Act 1957, the author of the work shall be considered as the owner of the work unless there exist a contract to contrary. Hence, the natural person who have created the work is considered the author of the work, and ultimately, its owner.
In the Metaverse it is tough to recognizethe permissions to use for commercial purposes as there is huge overlapping of rights and use. If any person who is not authorized to share the work that is created outside the Metaverse by another party (Copyright holder) without the permission then it amounts to an infringement of the copyright. In the case of Hermes Int’l vs Rothschild 2which was a landmark case with respect to infringement of Intellectual Property in Metaverse, it was clearly stated that without the permission of the author if any person makes or sells products which are deceiving as if the products are of the particular author, then it will be considered as an infringement of Intellectual Property rights.
2 Hermes Int’l v. Rothschild 22-cv-384 (AJN)
Similarly, another famous case of copyright infringement in Metaverse is the case of Jay-Z, here Damon Dash had tried to auction a NFT version of Jay-Z’s 1996 album Reasonable Doubt but since Damon Dash didn’t have the copyright to do so was later on sued by Jay-Z for the infringement of Copyright. Trademarks As the Metaverse is expanding most of the brands are looking for protection of protect their goods or services in the Metaverse. Each country has their own classification and in India such classification is provided in the Indian Trade Mark Law.
India follows the “NICE Classification” and recognises 45 different classes some of the important classifications which are suited for the Metaverse under the Indian Trade Mark Law are as follows: Class 9 – Downloadable virtual goods Class 35 – Financial services Class 42 – Non-downloadable virtual goods and NFTs The trademarking for online goods is picking up its pace and a great example of it is Reliance Industries. For "Ajio Luxe," Reliance Industries has secured registration in respect to virtual clothing and footwear intended for usage in virtual worlds. NFTs are getting trade marked by many of the business owners. This is because there is a huge possibility that a third party who is not authorized to use the brand name or logo for his/her own benefit. In Metaverse there are instances where NFTs are sold or minted by unauthorized parties.
In the case between Nike and StockX, where the later was sued by Nike for violating its trademark as it was creating and selling NFTs in the Metaverse. Nike has now filed a Trademark for “Nikeland” and for downloadable virtual goods made by Nike. Patents Patents are the rights that are granted for inventions having a new and inventive process, product which have novelty, inventive steps and is capable of industrial application. As the threshold of innovation is very high in patents therefore it becomes difficult to get a patent. This same reason is carried to the Metaverse as well. There have been multiple patent applications filed for metaverse patent but maximum of them have been rejected.
One of the noteworthy patent is “Cryptokick” by NIKE. It is basically a system for producing and trading cryptographical digital assets in form of digital shoes. Cryptokick provides a token to identify the shoe that is stored on the blockchain. What makes the Cryptokick token special is the presence of a genome which can be used to create offspring shoe called as the “collabokick”. The Cryptokicks can become real life shoes and the owners of such tokens will be notified by NIKE when such event happens. The best way to manage Intellectual property is by using the NFT technology as NIKE has been using it. NFTs can be made with information such as description, rights, ownership and history of the said product. Such information shall be very useful as it will give a clarity whether such product is an authenticate product and the person selling it is authorized to do so or not.
Most of the dispute in the Metaverse is now resolved by the mode of Block-Chain Arbitration. HOW TO PROTECT INTELLECTUAL PROPERTY IN METAVERSE As we have already discussed above that there is a very high possibility that the product which you use or buy or selling can be subjected to legal actions. So, the steps on how to protect intellectual property is the same as the steps taken in real world. • Securing the intellectual property through patents, trademarks or copyrights depending upon the criteria and with the relevant authorities in jurisdictions of India • Securing an Intellectual property right gives you an advantage over the competitors and prevents others from infringing your right.
• Taking a thorough analysis of the Metaverse in respect to the intellectual property owned by you will help to identify what are the Intellectual property of others and draw a boundary not to infringe such intellectual property rights. • Keeping a track of the Intellectual property owned is a way to ensure all IPs are accounted for. • To safeguard trade secrets the current best option is to sign a non-disclosure and giving limited access to people other than the owner. The big companies in the world patent, trademark and copyright their work as soon as possible so that they are protected in the real world as well as in the Metaverse. When it comes to Metaverse the big player IBM holds more than 20 patents followed by Korea Electronics with
15 patents. Technology patents relate to latest progressions in virtual reality, augmented reality
etc.
CONCLUSION
Anyone looking for an ideal business opportunity to exchange virtual products and services will find it a golden opportunity in the Metaverse. In order to capitalise on the goodwill associated with registered trademarks, copyrights, and patents, there will be infringement on them. The ideal course of action for an individual or business would be to obtain a separate registration for virtual goods before entering the virtual market. The plaintiffs' burden of proving consumer confusion, the cornerstone of an infringement claim, is made simpler by the defendant's prior use of a trademark, copyright, or patent in connection with same products and services as the infringer. Along with eliminating the replicated content, Metaverse has to establish a reporting system for intellectual property violations so that the owner of the original work may quickly report and have the violation removed.
Until then, using AI technology is often the best course of action. For instance, Google and YouTube employ AI to identify content that is protected by copyright. In order to safeguard against the unintentional dissemination of Intellectual Property, it is preferable to make sure that the contract with the consumer includes Intellectual Property right protection. Despite the fact that India's position in the Metaverse is still developing, firms are clearly attempting to follow the global trend. A comprehensive structure will be necessary in the near future to ensure protection of Intellectual Property rights in the Metaverse and prevent legal issues, given the growing interest of Indian businesses in entering the Metaverse.
As we are heading towards a more digitalized era, the presence of DMCA (Digital Millennium Copyright Act) in Indian law is a boon as it helps to regulate the digital copyright laws. The current Indian Laws related to Intellectual Property are applicable and still useful when it comes to Metaverse. Since there is no boundary to the Metaverse there will be difficulties to determine whether unauthorized use of any content would amount to fair use. And since there exists multiple Metaverse the test of fair use3 can lose their effect. There is an urgent need of global level legislation or guidelines as to how to regulate the matters related to Metaverse. To enable the protection of intellectual property in the developing Metaverse, it is imperative that the current laws be modified.
3 K.Murari v. Muppala Ranganayakamma (1987) 2 APLJ 62 (SN)