Brands flocked to file trademark applications for the metaverse earlier this year. Now, the number of those applications is falling, causing some to herald the end of the gold-rush era.
Between January and October, approximately 5,000 US trademark applications for metaverse and virtual goods or services were filed, according to public filings, from brands including Nike, Adidas, Tommy Hilfiger, Levi’s, and Versace. In the month of March, the number peaked at a total of 773. The 2021 total was 1890. However, the applications for the month of October were just 334, half of those in March, showing signs of decline, according to Josh Gerben, a trademark attorney and founder of law firm Gerben Perrott, PLLC.
“The gold rush era of Web3 is over,” said Gerben. “The folks that are going to file trademark applications going forward are likely going to be the companies doing serious work in the space. The speculators are likely spending less and have fewer resources now than they did earlier this year.”
Marketing professionals have long known the importance of trademarking their brands to protect their identity in the real world. However, it’s slightly trickier in the world of virtual reality, with high-profile ongoing cases, such as Nike alleging the reseller StockX LLC infringed on the brand’s intellectual property by including its logo on an NFT collection.
“What’s being sold in the metaverse is computer code when rendered by a virtual reality system to look like footwear,” said Michael Kondoudis, a trademark and patent attorney at The Michael Kondoudis law firm. “Brands have realized the easiest way to fix this gap in protection is to file a metaverse trademark application and list virtual goods and services.”
Protection against digital look-alikes
Brands want to protect their IP and, ultimately, be the sole party monetizing likeness and digital services in the metaverse.
“By filing trademarks, [companies] have more authority to monitor brand activity and protect against digital look-alikes,” said Greg Kahn, CEO of GK Digital Ventures. “Companies should prepare for Web3 by conducting an audit of all their current trademark portfolios. They should ensure that they file any new applications that will cover new classes of goods or services that could become possible in metaverse or Web3 environments.”
At the same time, brands look to what their competitors are doing in the metaverse. For example, after Nike’s trademark application in November 2021, brands like Puma, Adidas and Reebok followed suit.
“Most applications were more speculative than based on actual plans,” said Gerben. This means, although brands have filed for trademark applications, they may not have immediate plans to launch campaigns in the metaverse but have up to four years to do so. Currently, McDonald’s and CVS are patenting core brand elements in anticipation of growing their metaverse presence.
Brands consider trademark filings to be a cost-effective mechanism to protect their brands, compared with hefty legal fees. The cost to file a trademark in the metaverse ranges from $5,000 and $10,000 for larger companies, including legal fees, according to sources.
Applications point to brand metaverse strategies
Public trademark files give an indication of a brand’s intention in the metaverse.
Applications filed by fashion brands such as Tommy Hilfiger, Levi’s, and Versace show these companies aim to create an immersive experience such as the opportunity for people to participate in virtual fashion shows, akin to Decentraland’s Metaverse Fashion Week featuring brands like Dolce & Gabbana and Hugo Boss.
Similarly, restaurant chain Chuck E. Cheese‘s trademark application spells out its intention to create “virtual arcades, concerts and theatrical performances,” in the metaverse.
Other brands seek a revenue stream through simpler virtual meet-up spaces. For example, Wendy’s, in partnership with Meta’s Horizon Worlds, in April launched a virtual restaurant called Wendyverse. Similarly, Capital One has listed virtual café in its trademark application.
“It appears to be a direct way to monetize the metaverse where you can get a hundred people in your meeting space while displaying ads on the virtual walls,” said Kondoudis.
Notable holdouts for trademark applications, and metaverse activations, are insurance companies and healthcare groups, given the complex regulations they are required to navigate, such as the Health Insurance Portability and Accountability Act (HIPPA), before entering the metaverse.