Metaverse 3D Replicas Spark Open Questions Over IP Protections

When intellectual property attorney Tracy-Gene Durkin started receiving requests from clients to help them get 3D models of their products taken down from a Shutterstock Inc. subsidiary, she recognized a trend spurred by the advent of the metaverse.

The Sterne, Kessler, Goldstein & Fox PLLC director noticed an uptick in clients concerned about virtual versions of their goods available for download from TurboSquid, a site that hosts models typically used for 3D printing. These renderings can depict a range of items, from cars and food to furniture and gadgetry.

With virtual reality gaming and other metaverse applications going mainstream, digital goods modeled after their real-life counterparts take on new significance, and lawyers and courts must grapple with how to apply intellectual property law to fast-moving technology.

Durkin said the activity around TurboSquid raises interesting questions that have yet to be answered: How might brand- and patent-holders’ rights change with the expanding metaverse? And might these rights holders have to protect themselves in new ways?

“Where this has now become more interesting is that there’s a use for 3D models in the 2D world, in the metaverse,” Durkin said.

A Sense of Realism

A smattering of high-profile examples have already emerged to call into question the rights that attach to digital goods.

Hermès International brought a trademark infringement lawsuit against an artist for selling “MetaBirkin” nonfungible tokens, another type of digital asset, while Nike Inc. similarly sparred with StockX LLC over NFTs tied to pairs of physical shoes. Meanwhile, actor Seth Green dealt with the theft of his Bored Ape Yacht Club NFT, leading to legal debates about ownership.

As precedent around digital goods evolves, attorneys say the law will likely favor a user’s ability to recreate a branded item if its purpose is to lend a general sense of realism to a digital environment. That calculus will likely change, however, if the creator appears to be motivated primarily by profit.

“It’s not a clear-cut answer. It’s always going to revolve on, how is this particular person using the brand, the image, the 3D model?” said Patrick Torre, a patent attorney with Stites & Harbison PLLC. “Are they selling copies?”

Courts weighing trademark infringement claims have generally favored artistic expression in works like video games that try to replicate the feel of a real-world environment. In 2008, the US Court of Appeals for the Ninth Circuit ruled against The Play Pen, a Los Angeles strip club that objected to the use of similarly styled signage in the landscape of the game “Grand Theft Auto.”

“They want to make the city in the game look and feel like Los Angeles, and part of that is putting elements from Los Angeles into the game,” said Jacob Schneider, a Holland & Knight LLP partner who focuses on intellectual property litigation. “The court said, ‘Hey, this is a piece of art. This is an element of the creative work that’s important.’”

A New York federal court took the analysis a step further in 2020, when it OK’d Activision Blizzard Inc.’s use of Humvee trademarks in the video game series “Call of Duty.” In that instance, Schneider said, the brand owner had a stronger case because the vehicle wasn’t a mere landscape ornamentation: Players could interact with the vehicle and drive it around.

Still, the court ruled in favor of the game maker, finding that consumers wouldn’t be misled into thinking the game is sponsored by Humvee simply because some of its vehicles appear in the game.

‘Virtually Wearable’

Case law still hasn’t fully explored whether designs in virtual spaces that users can manipulate and that include brand-specific elements are protected under artistic expression.

For example, in Meta Platforms Inc.’s Horizon Worlds virtual reality application, players can build their own homes and public spaces such as movie theaters, and invite other users to explore their worlds. If a player wants to build a realistic model of their own home and include things that really exist there, like placing a MacBook Pro on an Eames chair, it’s unclear what level of protection brands might be able to claim.

“Do we call that artistic, or is it just a functional space that you’re in?” Schneider posed. “I don’t know. The courts haven’t dealt with that yet.”

In the ongoing MetaBirkin NFT trademark-infringement case, US Judge Jed S. Rakoff noted that the scales would probably tip more clearly in Hermès’ favor if, instead of handbag images linked to digital tokens, the artist Mason Rothschild sold Birkin handbags that are “virtually wearable” in the metaverse. This would render the MetaBirkins mark “a non-speech commercial product” and exclude it from free-speech protection under the First Amendment, the judge wrote in a footnote.

“That’s a court kind of lifting the curtain a little and saying, in the future, this might be different,” according to Schneider.

Some experts see the allusions to 3D branded merchandise as a hint of things to come.

In his opinion, Rakoff observed that “fashion companies are just starting to branch out into offering virtual fashion items that can be worn in virtual worlds online.” He also acknowledged that Rothschild released a new line of wearables—“I Like You, You’re Weird”—for the Arcade metaverse platform, but he said that’s not enough to prove that Rothschild plans to release wearable versions of his MetaBirkins for the metaverse.

“Probably where a lot of the initial case law is going to be made is in the retail operations that are established,” Torre said. “That’s where a lot of the money’s going to go.”

New Brand Protections

Brands must start thinking about how to protect their goods in 3D and digital spaces, attorneys said, including through copyright and trademark registrations and design patents, which cover the distinctive visual aspects of some goods.

Brands are increasingly filing for trademark protection in digital classes, Torre said, with big retailers like Nike and Gucci jumping at the chance to extend their covered use cases to the virtual sphere. Digital trademark classes can include downloadable virtual goods, retail store services featuring virtual goods, and NFTs.

Mark Radcliffe, a DLA Piper partner whose firm represents Nike in the StockX NFT trademark case, said major companies must start thinking outside the box if they wish to protect themselves both in the real world and in virtual spaces. For example, some companies might want to turn their logo into a 3D design and register to protect that version of it.

“It does require a rethinking about what you’re trying to protect,” Radcliffe said.

The Coral Castle, a limestone structure in South Florida with a garden of megaliths, offers a prime example of a brand using trademark registration to protect itself online, said Christine Morgan, a partner at Reed Smith LLP.

The castle’s owner sued Epic Games Inc. in 2020 over a Coral Castle map in its hit game “Fortnite,” alleging that it shared both a name and features with the real-life, trademarked landmark, including beach motifs, castle silhouettes, and stone objects.

While the owner eventually dropped his claims, the dispute still highlights the importance of registering to protect brand-related IP rights instead of relying on common law usage to enforce a mark, Morgan said.

“I think you’ll see an uptick in counseling for brand owners that are aware of” such online infringement risks and want to protect themselves, she said.

In the meantime, Shutterstock’s TurboSquid and its library of 3D designs is just one more arena that brands must start paying attention to, said Durkin of Sterne Kessler. Shutterstock representatives didn’t provide comment for the story.

“Now, you’ve got another potential marketplace that you now have to start thinking about and taking action [in],” she said.