From Physical to Virtual: The New Age of IP in the Metaverse

Imagine paragliding from the peak of Mount Everest and landing on a beach in Miami or sharing a cup of coffee while walking through a virtual park with a friend thousands of miles away. That immersive, persistent, and shared digital universe is what we now call the Metaverse.

Understanding the Metaverse

The Metaverse refers to a network of interconnected virtual spaces where people can work, play, socialize, trade, and create through avatars and digital assets. While this concept once sounded futuristic, it has rapidly transitioned into commercial reality. The rebranding of Facebook to Meta marked a major shift — signalling that businesses are no longer just watching the Metaverse unfold; they are building within it.

This expansion, however, raises a fundamental question:

How do you protect intellectual property in the Metaverse?

The Rise of Virtual Trademarks and Digital Assets

From luxury brands to fast-food giants, businesses are investing heavily in virtual commerce. Key areas of interest include:

1. AR/VR devices and immersive platforms

2. Downloadable virtual goods (clothing, accessories, skins)

3. Non-fungible tokens (NFTs)

4. Virtual currencies and marketplaces

5. Metaverse-based services and experiences

A quick search at the U.S. Patent and Trademark Office shows a surge in filings covering “downloadable virtual goods” and “retail services featuring virtual merchandise.” Companies like Nike, McDonald’s, Crocs, Walmart, and Skechers have proactively secured trademark protection for their virtual offerings, ensuring their brand presence in the digital dimension.

This shift demonstrates a major trend: traditional brand protection strategies must now extend beyond the physical marketplace.

Landmark Legal Battles Setting Precedents

As business activity in virtual worlds grows, so do disputes, pushing courts to interpret how existing IP law applies to digital spaces.

Hermès v. MetaBirkins

Hermès sued digital artist Mason Rothschild for creating and selling MetaBirkins NFTs, virtual renditions of its famous Birkin bags. Rothschild claimed artistic freedom, but Hermès argued trademark infringement and cybersquatting. The court sided with Hermès, holding that trademark protections can extend to virtual environments when digital use risks consumer confusion.

This case marks a crucial precedent in defining the limits between artistic expression and brand rights in virtual markets.

Nike Inc. v. StockX LLC

Nike took action against StockX for minting NFTs linked to Nike sneakers without authorization. StockX asserted that its NFTs simply represented ownership of physical products, but Nike maintained that the practice amounted to trademark infringement. The case spotlights a key question for future jurisprudence:

Does connecting a digital token to a branded physical item infringe trademark rights?

The outcome will shape how NFT-linked goods are treated under IP laws globally.

The Metaverse Marketplace in Action

The Metaverse is already thriving, not hypothetical. Platforms like ZEPETO have attracted over 300 million users, while luxury houses such as Ralph Lauren and Gucci have launched virtual fashion lines for avatars. As digital identities begin to mirror (and often monetize) real ones, trademarks become vital to preserving brand authenticity and preventing consumer deception.

Key IP Challenges in the Virtual Realm

Alongside endless opportunities come significant IP risks, including:

• Unauthorized NFT minting and sales

• Virtual counterfeiting and replica goods

• Cybersquatting of digital brand assets

• Misleading avatar-based brand endorsements

• Unlicensed use of trademarks and logos in digital worlds

• Complex digital franchising and licensing arrangements

Traditional legal doctrines of trademark infringement and passing off are now being reinterpreted in virtual contexts. The core question remains: would a virtual consumer believe that a digital good originates from or is endorsed by a particular brand, even if no physical product exists?

The Indian Context: Adapting IP Law to the Metaverse

While Indian IP law is yet to explicitly recognize virtual goods, the Trade Marks Act, 1999 offers flexible protection that can extend into the Metaverse through strategic classification. Trademark applications increasingly include virtual goods within Class 9 (downloadable digital files, NFTs, virtual clothing) and related service classes for digital environments.

Indian jurisprudence provides useful analogies through cases on trademark misuse, passing off under Section 29 of the Act. Similarly, remedies under the Information Technology Act, 2000 may be invoked to address unauthorized online use of marks, domain names, or avatars.

Regulatory agencies are also exploring frameworks for NFTs and digital assets from a taxation and consumer protection perspective — underlining the need for legal modernization as the Metaverse economy expands.

The Road Ahead: Reinventing IP Strategy

The Metaverse represents not only a technological revolution but also a transformation in how we understand ownership, identity, and brand equity.

For businesses, the path forward lies in proactive protection:

• File trademarks covering virtual goods, NFTs, and digital services

• Expand specifications in existing registrations to include digital equivalents

• Monitor NFT marketplaces and virtual platforms for infringement

• Establish clear digital licensing and collaboration agreements

• Develop enforcement protocols for virtual counterfeiting and misuse

IP law will continue to evolve as technology progresses, but foresight and adaptability remain the most valuable tools for rightsholders. As virtual spaces become integral to commercial life, protecting intellectual property in the Metaverse isn’t just a new challenge — it’s a New Age of IP in the Metaverse.