The Metaverse Gold Rush: What Smart Brands Should Do (And Not Do) Now

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It is hard to escape the buzzword “metaverse” these days.

Major tech companies are betting on the virtual future, with Facebook even re-naming itself “META” in homage to the concept. Traditional brick-and-mortar based brands are staking a claim as well. For example, in February 2022, McDonald’s filed trademark applications before the U.S. Patent and Trademark Office (“USPTO”) covering virtual goods and NFTs along with virtual restaurant services.

Brand owners should consider how they can capitalize on the still rather fuzzy concept of the metaverse. Now is a good time to re-evaluate interactions with consumers and consider how to protect your company’s interests in the virtual world.

What is the metaverse?

First, it is important to identify what the metaverse is. The short answer is it’s unclear.

The term is often credited to 1992 dystopian science-fiction novel Snow Crash, in which “metaverse” was used to describe a virtual world populated by avatars.

But if you think your company doesn’t have anything to do with digital personas wandering around in a world of pixels, you may want to reframe your view of the term. Broadly, “metaverse” can reference any number of virtual interactions. If a company is finding and interacting with consumers in any kind of interactive digital way, it may be entering the metaverse.

Do plan for future consumer interactions

With the expansion of the metaverse, companies should at the very least consider how they plan to interact with and engage consumers in the next three to ten years. Companies that provide all kinds of goods and services can improve the purchasing experience with everything from new types of consumer feedback to engaging consumers with NFTs.

For example, suppose a consumer hardware company sells a cordless drill. The company could provide a QR code on the package or work with a furniture company to add the QR code to instructions for building a bookshelf. Consumers don’t need to go to the hardware store or even search the internet; they just need to scan the QR code for interactive tutorials on using the drill or building the bookshelf. The company can now track the consumer’s engagement and provide future opportunities for consumer usage and purchasing—powerful information for maintaining consumer loyalty. This might sound like a far cry from avatars in a new virtual world, but these are the types of everyday interactions companies should be having with consumers.

Do protect your company’s intellectual property

Companies should also be careful to evaluate and protect intellectual property, including new technologies and their brands themselves. For example, according to some reports, Meta has filed hundreds of patent applications for metaverse-related technologies, such as a bidding process that would allow brands to bid on the appearance of a virtual object.

If a company is developing new software tools or developing usage scenarios based on old software tools, it may have patentable technology. For example, how a user interacts with software can be patentable, or how your back-end techniques and algorithms for interacting with a user can be patentable. Think of patentability as an end product; if your technology has advantages or is a market differentiator, then it may be patentable.

Also note the United States is a “first-to-file” jurisdiction for patents, meaning that the first applicant to file a patent application will secure patent protection. For emerging technologies with metaverse applicability, early adopters are winning the patent game. A patent attorney can help evaluate your company’s technologies quickly and efficiently to locate patentable subject matter and file comprehensive claims.

Copyright protection also can protect creative works in the metaverse, from artwork distributed in NFTs to software code. It is generally easier and less expensive to obtain copyright registration than patent, and the duration of copyright registration is much longer than patent protection. However, copyright registration for software covers only the written code, while patent protection more broadly protects the process.

Finally, if a company is using its brand to engage virtually with consumers, consider whether it is necessary to file new trademark applications. Trademark law protects consumers from confusion among names, symbols, devices, and other indicia used to identify products or services. Because trademark rights arise from consumer perception, rights are limited to the goods and services for which use has been established. In the example of the hardware company, if prior use and registration of the brand covered cordless drills only, the company should consider filing new trademark applications if it plans to begin using the brand for services like interactive apps or games.

Do watch for pitfalls…and don’t collect unnecessary data

Major risks in the metaverse include privacy protection and data security. Our hardware company can illustrate. As the cordless drill user engages in activities like learning product features and looking at the bookcase user’s manual, the company gains valuable information about customer demographics and preferences. If the customer is in Europe, the company is subject to EU’s General Data Protection Regulation (“GDPR”), which strictly regulates collection of consumer information. The GDPR is based upon the consumer’s location, not the data collector’s, so the hardware company could be subject to these regulations—including fines for violation—even if it is in the U.S.

Unlike the EU, U.S. privacy protections are currently regulated on a state-by-state basis and vary widely. California generally has stricter regulations than elsewhere in the nation. Companies should consider whether they may be subject to California or other state privacy regulations.

Interaction through new platforms also includes potential for new data breaches. Companies engaging in the metaverse should have a plan to address the seemingly-inevitable breach in a way that complies with the law and is sensitive to consumer perception.

Companies also should understand and regularly monitor spaces in the metaverse where consumers interact with their brands for misuse such as counterfeiting.

Although the implications of the metaverse remain unclear, with careful planning and knowledge of their brands and technologies, companies can successfully forge their virtual futures.