February 10, 2022

What’s Next for Trademark Wars in the Metaverse | PN x NFT Gators


NFT Gators: What’s Next for Trademark Wars in the Metaverse

Sharon Kahn chats with NFT Gators to provide some insight on what's going on with intellectual property in the Metaverse.


"The unregulated blockchain space has often been referred to as the digital “Wild West” and it appears that the metaverse is where the digital “gold rush” is currently happening — Goldman Sachs recently made a bold prediction that the metaverse could be an $8 trillion opportunity. An increasing number of well-known brands including PumaNew BalanceCrocs and even McDonald’s are joining the fray with metaverse trademark filings, while Adidas and Nike have both ramped up their efforts in the virtual world. Even the EU is analysing the metaverse ahead of possible regulatory action.

On the other hand, opportunists have gotten themselves embroiled in trademark wars for creating NFTs that use the marks and likeness of major brands. Recently, Nike sued Stock X for selling unauthorised sneaker NFTs bearing Nike’s logo while Hermes sued the creator of MetaBirkins NFT for copyright infringement. With the legal outcome of the lawsuits still unclear, we reached out to four law firms in New York that specialize in Intellectual Property under US Jurisdiction and asked them burning questions on the matter."


It seems like there’s a lot of legal action going on in the NFT space these days. Companies are rushing to file trademarks, others sue – what’s your take on this? Where is it going?

“It’s hard to say where the NFT space is headed, because it’s evolving every day. While we’re able to pull from different areas of Intellectual Property law to help guide us, the NFT space is filled with IP minefields. It’s important that everyone involved (the artists, the platform, any associated brands, etc.) have strong contracts in place protecting their rights. I always recommend ensuring that your respective Intellectual Property rights are protected and that they are cleared for use, whether that be through registered trademarks, copyrights or licensing agreements.” — Sharon Kahn, Esq., Associate Attorney at Pardalis & Nohavicka LLP.

What could be the repercussions for NFT owners who find out their collections infringe on trademarks of a different company? Could they lose the right to use their NFTs, if the company that created them lost in a lawsuit – e.g. if MetaBirkins lost against Hermes.

“This is a new legal issue that we’re going to see unroll over the next few weeks, months and years. While NFT owners are definitely at risk of losing their rights if the creators and/or administrators of the platform didn’t get proper clearance, we’ll have to wait and see how these IP owners decide to proceed once they’ve “won” their case.”

How far are we from NFT projects paying royalties to brands?

“It’s happening already to some degree. Brands that have their name, likeness, trademarks, etc. involved in the actual NFT are already making money not only off of the initial sale, but also on the secondary sales. While the compensation structure is unique to each contract, we’re seeing a lot of similarities to the classic royalties and residual structure.”

Do you think with governments stepping in, perhaps they could help bring some order by introducing a legal framework for the industry?

“I’m sure we will see some attempts for government control or guidance over this area, but it’s going to be a long time before a strong legal framework is established – and even that will bring up new issues. With each issue that arises, we’ll see how the court rules and that will slowly create the framework for the industry moving forward.”

Original article published on NFT Gators

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