The Singapore Law Gazette

Not Really a Case of Everything Everywhere All at Once: Trademarks and the Metaverse

This article highlights how the development of the metaverse and the proliferation of collectible non-fungible tokens can have significant implications for trademark law.

Introduction

The metaverse conjures up infinite possibilities of a space without limits where our physical selves move seamlessly into virtual worlds as digital avatars in altered realities to play, work, learn, create, shop, socialise and trade. Like the exuberant genre-defying multiple Oscars-winning movie Everything Everywhere All At Once, where parallel universes exist in the multiverse, the metaverse as defined by Mark Zuckerberg in October 2021 promises a more immersive and embodied internet as “a set of interconnected digital spaces that lets you do things you can’t do in the physical world.”¹Meta, “Connect 2021: Our vision for the metaverse”, Meta (28 October 2021) <https://tech.facebook.com/reality-labs/2021/10/connect-2021-our-vision-for-the-metaverse/>; Mark Zuckerberg, “Founder’s Letter, 2021”, Meta (28 October 2021) <https://about.fb.com/news/2021/10/founders-letter/>. However, in recent months, the metaverse hype has been in decline as generative AI, particularly ChatGPT, surges into the public consciousness. In April 2023, an article in Forbes cheekily quips that the metaverse is quickly turning into the meh­-taverse.²Gene Marks, “This Week In Small Business Tech: Is The Metaverse Failing”, Forbes (2 April 2023) <https://www.forbes.com/sites/quickerbettertech/2023/04/02/this-week-in-small-business-tech-is-the-metaverse-failing/?sh=779172507a0d>. See also Jemina Kelly, “Whatever happened to the metaverse?”, Financial Times (16 February 2023) <https://www.ft.com/content/bddec314-3f4c-4296-ae6f-eb2a5328c109>.

The term “metaverse” was first coined in Neal Stephenson’s 1992 speculative fiction novel Snow Crash, and the 2003 virtual world platform Second Life is often credited as the first metaverse. Despite the lack of clarity on what the “metaverse” really means in terms of its interoperability, mechanics, technological networks and governing laws, the rebranding of Facebook as Meta in 2021, the introduction of Horizon Home, and the announcement of the company’s focus to improve virtual and augmented reality experiences have led to a seismic change in business models around the globe to focus on leveraging the metaverse. According to Forbes, by 2024, the metaverse was predicted to grow into a US$783.3 billion market.³E.g. Martin Taylor, “The Metaverse Is Coming – Are You Ready?”, Forbes (29 November 2022) <https://www.forbes.com/sites/forbestechcouncil/2022/11/29/the-metaverse-is-coming-are-you-ready/?sh=7396769a2115>. However, things are looking less rosy at the time of writing as the metaverse is looking more and more like a collage of virtual games and social networking sites that lack interconnectedness and interoperability.⁴Marco Quiroz-Gutierrez, “Meta’s Reality Labs lost $13.7 billion in 2022 – and just reported its worst quarter ever”, Fortune (2 February 2023) <https://fortune.com/crypto/2023/02/01/after-losing-13-billion-in-2022-metas-reality-labs-just-had-its-worst-quarter-ever/>; Ryan Mac, Sheera Frenkel and Kevin Roose, “Skepticism, Confusion, Frustration: Inside Mark Zuckerberg’s Metaverse Struggles”, The New York Times (9 October 2022) <https://www.nytimes.com/2022/10/09/technology/meta-zuckerberg-metaverse.html>; Brian X. Chen, “The PlayStation Goggles Are a Win for Gamers. Not for the Metaverse”, The New York Times (19 February 2023) <https://www.nytimes.com/2023/02/16/technology/personaltech/sony-playstation-vr2-goggles.html>. In April 2023, the International Trademark Association (INTA) released a white paper titled “In The Metaverse” which warned that the metaverse “currently does not identify a single shared virtual space, but is decentralized across various platforms.”⁵International Trademark Association, In The Metaverse: A Report From INTA (April 2023) at 13 <https://www.inta.org/wp-content/uploads/public-files/perspectives/industry-research/20230406_METAVERSE_REPORT.pdf>. Thomas Stackpole, writing for the Harvard Business Review, wryly comments: “Is the metaverse our future? Companies like Meta and Microsoft seem to think so, though their virtual worlds remained closed rather than the open ideal … We dream of the metaverse but end up with a mall.”⁶Thomas Stackpole, “Exploring the Metaverse”, Harvard Business Review (July 2022) <https://hbr.org/2022/07/exploring-the-metaverse>. Many companies that have ventured into the fray are now suffering losses and reevaluating their investments.⁷E.g. Sheera Frenkel, Adam Satariano and Ryan Mc, “Meta Lays Off More Than 11,000 Employees”, The New York Times (9 November 2022) <https://www.nytimes.com/2022/11/09/technology/meta-layoffs-facebook.html>; Doug Stephens, “The Metaverse Crash Is Exactly the Moment to Take the Metaverse Seriously”, Business of Fashion (15 December 2022) <https://www.businessoffashion.com/opinions/technology/the-metaverse-crash-is-exactly-the-moment-to-take-the-metaverse-seriously/>; Jemima Kelly, “Whatever happened to the metaverse?”, Financial Times (16 February 2023) <https://www.ft.com/content/bddec314-3f4c-4296-ae6f-eb2a5328c109>. Some commentators remain optimistic. E.g. Robert Strzelecki, “How The Metaverse Can Radically Change Our Lives”, Forbes (27 February 2023) <https://www.forbes.com/sites/forbestechcouncil/2023/02/27/how-the-metaverse-can-radically-change-our-lives/?sh=11a9145123f9>; Dedrick Boyd, “Luxury Fashion Meets Immersive Commerce: Luxury in the Metaverse Era”, Forbes (9 February 2023) <https://www.forbes.com/sites/forbesbusinesscouncil/2023/02/09/luxury-fashion-meets-immersive-commerce-luxury-in-the-metaverse-era/?sh=5f145fd2600a>. See also Mike Isaac, “After a Rocky Year, Zuckerberg Lays Out Meta’s Road Map to Employees”, The New York Times (8 June 2023) <https://www.nytimes.com/2023/06/08/technology/mark-zuckerberg-meta.html>. Regardless, the shift by Facebook to adopt Meta as its name has spurred many companies around the world to change their business models, invest in Web3 innovations, and increase efforts to make virtual worlds more significant in the video game, social media, and e-commerce sectors.⁸Jon M. Garon, “Legal Implications of a Ubiquitous Metaverse and a Web3 Future” (2022) 106 Marquette Law Review 163, 167.

Nonetheless, commercial opportunities abound, and many well-known brands have filed trademark registrations for myriad forays into the metaverse, as well as for non-fungible tokens (NFTs). In reality, the metaverse as presently understood is not an interconnected seamless world; it is in fact disparate virtual environments of games and networking spaces built on different proprietary platforms and blockchain technologies that are not interoperable. Virtual goods or NFTs purchased in Roblox or Decentraland cannot be brought into Fortnite or Blankos Block Party.

This article discusses trademark use in the metaverse and NFTs, and analyses how the freedom of expression can be accommodated in trademark doctrine as the law evolves to address the new challenges that technological advancement are presenting. The metaverse may be regarded as the emerging digital carnivalesque,⁹David Tan and Angus Wilson, “Copyright Fair Use and the Digital Carnivalesque: Towards a New Lexicon of Transformative Internet Memes” (2021) 31 Fordham Intellectual Property, Media & Entertainment Law Journal 864. where individuals communicate through the use of avatars, images and videos each chosen with its particular connotations understood within that community. It is in this new frenetic and dynamic digital milieu that trademark law must find its new space.

What is the Metaverse?

On 28 October 2021, Mark Zuckerberg’s communique on the rebranding of Facebook to Meta marked the start of a new era that transformed our daily lives and redefined business models and strategies around the world.¹⁰Mark Zuckerberg, “Founder’s Letter, 2021”, Meta (28 October 2021) <https://about.fb.com/news/2021/10/founders-letter/>. From his description, it appears that the metaverse as an “embodied internet” is a concept of a space without limits, and one that connotes the integration or connection disparate internet sites that offer extended reality (XR) experiences,¹¹Extended reality (XR) stands for “reality-plus” technology using any kind of display, and is an umbrella term that covers virtual reality (VR), augmented reality (AR) and mixed reality (MR). VR is a subset of XR and is an immersive computing or gaming experience where the user’s entire field of vision is filled via the device’s display. AR is a subset of XR and it involves superimposing anything from the digital world onto a display of one’s real surroundings, such as a Pokémon Go character in one’s living room. MR is a blend of VR and AR; it is immersion, such as when one uses a smartphone screen in a headset to fully immerse in gameplay. Tom Gerencer, “What is Extended Reality (XR) and How Is it Changing the Future?”, HP (3 April 2021) < https://www.hp.com/us-en/shop/tech-takes/what-is-xr-changing-world>. and consequently a paradigmatic shift in the way we live our lives and the way we do business. This lofty vision has attracted numerous critics. For instance, Herman Narula commented that “Facebook’s vision of the metaverse amounted to vapor-ware: a theoretical space in which users could do almost anything, and thus an idea that, practically, amounted to nothing.”¹²Herman Narula, Virtual Society: The Metaverse and the New Frontiers of Human Experience (Penguin, 2022) 107. At the time of writing, it would appear that this digital landscape is unlikely to be an interconnected or interoperable virtual space with multiple points of entry, but more resembling a “loosely related constellation of virtual world-type experiences”¹³Ibid at 108. or “merely a buzzword for more advanced video games”.¹⁴Ibid at 113. Indeed there are already numerous online social networking platforms that allow for customisation of avatars (e.g. Second Life) and a giddy kaleidoscope of massively multiplayer online role-playing games (MMORPGs) that pre-date Zuckerberg’s announcement of the metaverse. Other more optimistic proponents of the metaverse, for example, Nick Clegg, described the metaverse as a logical evolution of the internet, and that its three attributes — ephemerality, embodiment and immersion — would mean “people will experience the metaverse in a way that is much closer to physical world interactions than to the experience of using a mobile app or website.”¹⁵Nick Clegg, “Making the metaverse: What it is, how it will be built, and why it matters”, Medium (18 May 2022) <https://nickclegg.medium.com/making-the-metaverse-what-it-is-how-it-will-be-built-and-why-it-matters-3710f7570b04>. In urging for greater interoperability, Clegg comments that “[d]igital items for avatars — or any 3D objects that someone might wish to take with them throughout the metaverse — will need to be like GIF or JPEG image files in today’s internet.”¹⁶Ibid. This expansion of virtual worlds, and in particular, interoperability, will have to occur within an environment largely defined by intellectual property (IP) rights of copyright, trademark, patent, trade secret, and the right of publicity or personality right, as well as the digital property rights associated with NFTs and their smart contracts.

What are NFTs?

Often spoken (and frequently erroneously) in conjunction with the metaverse, NFTs are digital assets that have been verified using blockchain technology, and they can exist independently of the metaverse of games and social networking platforms, or integrated into these digital worlds. The play-to-earn business model is taking flight in the metaverse where players in MMORPGs can collect cryptocurrencies or NFTs in games like Alien Worlds and Splinterlands. There is no standardised process by which an NFT is created or – to use the technical jargon – “minted”, but one would need to start with a digital file (e.g. a .jpg image file) and then produce a “hash” of that file. Hashing entails the use of an algorithm to take data of an arbitrary size to produce a deterministic fixed-length output, which serves as a fingerprint of the original data.¹⁷For a detailed description of how the artist Beeple minted his NFT Everydays: the First 5,000 Days, see Kelvin F.K. Low, “The Emperor’s New Art: Cryptomania, Art and Property” (2022) Conveyancer and Property Lawyer 382, 388. A metadata file is then created including the first hash, following which a hash of the metadata file is produced, culminating in a unique hashchain on a blockchain. Most NFTs are part of the Ethereum blockchain, though other blockchains have implemented their own version of NFTs. A NFT consists of a unique token identifier, or token ID, in the form of a unique uint256 variable, which is mapped to an owner identifier and stored inside a smart contract on the blockchain. When the owner of a given token ID wishes to transfer it to another user, it is easy to verify ownership and reassign the token to a new owner. When NFTs are minted, they are listed on an NFT marketplace such as OpenSea or Rarible where NFTs can be sold or traded in accordance with smart contracts that govern the transfers.¹⁸Ibid at 389. This article will not be discussing in detail the mechanics of minting a NFT and the types of smart contract or blockchain technologies available, Low provides an excellent account of this process. See Low, supra note 19, at 388-390. By mid-2023, the stratospheric prices and buying frenzy of NFTs in the last two years have abated.¹⁹Farah Nayeri, “NFTs, on the Decline Elsewhere, Are Embraced by Some Museums”, The New York Times (30 November 2022) <https://www.nytimes.com/2022/11/30/arts/design/nfts-museums.html>; Shanti Escalante-De Mattei, “After 2022’s Crypto Crash, the Future Vision of NFTs Is Looking Far More Banal”, ARTNews (27 December 2022) <https://www.artnews.com/art-news/news/future-of-nfts-2022-opensea-royalties-1234651990/>. Nevertheless, the unauthorised minting and sale of NFTs associated with trademarks that have been the subject of high-profile lawsuits will set important legal precedents, such as Hermes suing artist Mason Rothschild for the MetaBirkins NFTs,²⁰Hermès International v Mason Rothschild, Case 1:22-cv-00384 (SDNY, complaint filed 14 January 2022); Hermès International v Rothschild, 2022 WL 1564597 (SDNY, 18 May 2022); Hermès International v Rothschild, Case 1:22-cv-00384-JSR (Opinion and Order) (SDNY, 23 June 2023). and Nike claiming that online reselling platform StockX had infringed its marks by displaying and selling its Vault NFTs that are each tied to a specific pair of Nike sneakers.²¹Nike, Inc v StockX LLC, Case 1:22-CV-00983 (SDNY, complaint filed 3 February 2022).

Trademark Registration for Use in the Metaverse and NFTs

A trademark functions as a designation used to identify and distinguish the source of goods and services of a person or company from other sources. Businesses routinely register a trademark (which can include words, images, shapes or colours) in the class of good and services, and in the specific jurisdictions, in which they are conducting their trade. Trademark law generally protects against unauthorised third-party uses of a trademark in a manner that would cause a reasonable consumer to believe that the trademark owner either was the source of the goods/services or endorsed or sponsored such goods/services (often referred to as the “likelihood of confusion” analysis in trademark infringement), or in a manner that may dilute a famous or well-known trademark.

There are typically 45 categories of goods and services known as the Nice Classification, of which 34 relate to goods and 11 relate to services. The Nice Classification was established following the conclusion of the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks in June 1957.

On 1 January 2023, the 12th edition of the Nice Classification entered into force and it had been updated to more explicitly refer to uses in what we would call the metaverse, as well as NFTs. When minting and selling NFTs that comprise its own trademarks or when using its marks in an online game, a company should register its mark in the appropriate class. These are the four most relevant classes:

• Class 9: includes “downloadable virtual goods/digital files authenticated by non-fungible tokens [NFTs]”
• Class 35: includes “retail store services featuring virtual goods”
• Class 41: includes “virtual entertainment services, namely, providing online, non-downloadable virtual footwear, clothing, bags, sports equipment, art, toys and accessories for use in virtual environments; providing online virtual guided tours”
• Class 42: includes “mining of crypto assets/cryptomining”

Although there exists much ambiguity as to cohesive and viable business strategies regarding the metaverse and NFTs, big brands in the fashion, food, entertainment, automobile and real estate sectors are definitely registering their trademarks in these classes and commencing a spectrum of XR activities and issuing of NFTs. Based on information collected from the US Patent and Trademark Office (USPTO), as of January 2023, the USPTO has received 7,746 trademark applications that incorporate or relate to NFTs, compared to 2,179 trademark applications in 2021 and only 18 in 2020.²²“Do Metaverse and NFTs Have a Future? These Statistics on Trademark Filings Will Convince You”, Cryptofiles (5 January 2023) <https://blog.cryptoflies.com/do-metaverse-and-nfts-have-a-future-these-statistics-on-trademark-fillings-will-convince-you/>. For metaverse and/or virtual products and services, it has received 5,850 trademark applications, compared to 1,798 trademark applications in 2021 and just 155 in 2020.²³Ibid.

In particular, luxury fashion brands such as Louis Vuitton, Gucci, Balenciaga, Dolce & Gabbana and Burberry, as well as sporting apparel titan Nike, are actively exploiting the metaverse with a proliferation of online collaborations, digital experiences and NFT sales. Over the past year, watch brands like Hublot, Bulgari and Panerai have also embraced the possibilities of NFTs as a way to release works by notable artists inspired by the companies’ watch designs, to serve as a mark of authentication and ownership and to enhance customer experiences.²⁴Jessica Bumpus, “Expanding the Watch World’s Metaverse with a Gaming Twist”, The New York Times (14 June 2022) <https://www.nytimes.com/2022/06/14/fashion/watches-nfts-nimany.html>. Jewellery brands are similarly hopping onto the bandwagon.²⁵Jessica Bumpus, “Jewelry Decorates the Metaverse”, The New York Times (24 March 2022) <https://www.nytimes.com/2022/03/24/fashion/jewelry-nft-jevels.html>. Despite the fact that “many NFTs lost their luster given the plethora of legal issues, commercial risks, market fluctuations, and other uncertainties”,²⁶Lorraine Tay and Pin-Ping Oh, ‘Looking Back at the Rise of NFTs & Lessons for Brands Going Forward’ (The Fashion Law, 14 December 2022) <https://www.thefashionlaw.com/with-enduring-uncertainty-at-play-lessons-for-brands-looking-to-nfts/>. many brands are continuing to register their marks in the relevant classes.

A Case Study – MetaBirkins

Within the constraints of this short article, I wish to demonstrate how trademark law plays out in a recent high profile litigation in the United States.

When artist Mason Rothschild launched his furry colourful digital renditions of a Hermes Birkin at Art Basel in Miami – 100 digital collectibles created on the Ethereum blockchain – and then sold them on the OpenSea NFT marketplace, he was sued by Hermès.²⁷Hermès International v Rothschild, 2022 WL 1564597 (SDNY, 18 May 2022). While the NFTs in this case are not strictly part of the metaverse, since they exist independently of MMORPGs and other immersive virtual environments, the ongoing litigation presents an insight into how courts and the broader legal community are approaching the issue of balancing freedom of expression with the enforcement of proprietary rights in a well-known mark. Nike had also taken online sneaker marketplace StockX to court for selling physical Nike shoes with readily tradable digital tokens that track ownership of the physical product,²⁸Nike, Inc v. StockX LLC, Case 1:22-CV-00983 (SDNY, complaint filed 3 February 2022). but this case does not have any significant implications for freedom of expression, and will not be discussed here.

In December 2021, artist Mason Rothschild created digital images of faux-fur-covered versions of the luxury Hermes Birkin handbags which he titled “MetaBirkins” and sold them as NFTs. The first sold on 3 December 2021 for US$42,000. Hermès sued in the New York district court, claiming trademark infringement, trademark dilution, and cybersquatting. Prior to this, in May 2021, Rothschild created a digital image entitled “Baby Birkin,” which depicted a 40-week-old fetus gestating inside of a transparent Birkin handbag and sold the NFT linked to the “Baby Birkin” digital image for US$23,500; it later resold for US$47,000. Although initially positioning the NFTs as a tribute to Hermès’s most famous offering and “an experiment to see if [he] could create that same kind of illusion that [the Birkin bag] has in real life as a digital commodity,” Rothschild later asserted that the MetaBirkins NFTs are “a commentary on fashion’s history of animal cruelty, and its current embrace of fur-free initiatives and alternative textiles”²⁹The Fashion Law, ‘Hermès v. Rothschild: A Timeline of Developments in a Case Over Trademarks, NFTs’ (The Fashion Law, 2 December 2022) <https://www.thefashionlaw.com/hermes-v-rothschild-a-timeline-of-developments-in-a-case-over-trademarks-nfts/>. and hence protected speech. The Court declined to grant summary judgment to either party,³⁰Hermès International v Rothschild, 2022 WL 1564597 (SDNY, 18 May 2022). noting that even under the Rogers artistic relevance test, there were “sufficient allegations that Rothschild entirely intended to associate the “MetaBirkins” mark with the popularity and goodwill of Hermès’ Birkin mark, rather than intending an artistic association” and “sufficient factual allegations that Rothschild’s use of the “MetaBirkins” mark is explicitly misleading and thus still actionable under the Lanham Act.”.³¹Ibid at *5.

Rothschild was represented by Lex Lumina PLLC, and more specifically the attorneys for the defendant include Harvard Law professor Rebecca Tushnet and New York University Law professor Christopher J, Sprigman, both academic luminaries in the field of intellectual property. In their motion to dismiss, the attorneys argued that “trademark law does not give Hermès control over Rothschild’s art” and that Hermès’ claim should be dismissed under the Rogers v Grimaldi artistic relevance test which ought to be applied in lieu of the multifactorial likelihood of confusion test when artistic expression protected by the First Amendment risks being suppressed. For the Rogers test to apply, defendants must “make a threshold legal showing that [their] allegedly infringing use is part of an expressive work protected by the first amendment.”³²Dickinson v Ryan Seacrest Enterprises, Inc., 839 Fed Appx. 110, 111 (9th Cir. 2020). When “artistic expression is at issue,” a number of Circuit Courts have accepted that the general likelihood-of-confusion test “fails to account for the full weight of the public’s interest in free expression.”³³VIP Products, LLC v. Jack Daniel’s Properties, Inc, 953 F.3d 1170, 1174 (9th Cir. 2020). In VIP Products, LLC v Jack Daniel’s Properties, Inc, the US Supreme Court in June 2023 avoided answering the question whether the Rogers test ought to be applied as a matter of trademark law when First Amendment interests are implicated in an infringement claim, opting instead to decide on a narrower point that it should not be applied when the defendant had used a trademark “as a designation of source for the infringer’s own goods.”³⁴Jack Daniel’s Properties, Inc v VIP Products LLC, No. 22-148 (Slip Opinion) (8 June 2023) at 10.

Legal counsel for Rothschild, citing how Andy Warhol depicted iconic brands such as Campbell’s Soup and Coca-Cola in his artworks, contended that Rothschild’s fanciful depictions of the Birkin bags and his identification of his artworks as “MetaBirkins” are artistically relevant and do not explicitly mislead about their source or content:

“MetaBirkins” depict furry Birkin bags, reflecting his comment on the fashion industry’s animal cruelty and the movement to find leather alternatives. The digital images invite viewers to consider the difference between the material objects—made of animal skins in reality—and the fantasized, immaterial images with their faux fur. Rothschild’s images show luxury with no function but communication, luxury emptied of anything but its own image, calling into question what it is that luxury lovers actually pay for. Rothschild is not attacking the Birkin, but inviting consideration of its meaning as an image, rather than as a handbag.³⁵Hermès International v Rothschild, Case 1:22-cv-00384-AJN-GWG (SDNY, motion to dismiss filed 9 February 2022) at 15-16.

Indeed the MetaBirkins NFTs have a strong claim to artistic relevance, compared to the RR/BAYC NFTs by Ryder Ripps which point to the same online digital images as the Bored Ape Yacht Club (BAYC) collection but use verifiably unique entries on the Ethereum blockchain. In denying the defendants’ motion to dismiss, a Californian district court concluded that the Rogers test does not apply because the defendants’ sale of a collection of NFTs that point to the identical online digital images as the BAYC collection does not constitute an expressive artistic work protected by the First Amendment; the RR/BAYC NFTs also do not express an idea or point of view.³⁶Yuga Labs, Inc v. Ripps, 2022 WL 18024480 (CD Cal. 2022).

On the trademark dilution claim, it is trite law that the federal dilution statute, 15 U.S.C. § 1125(c)(3)(C), expressly excludes “noncommercial” uses. The standard for tarnishment is also a high one, and the MetaBirkins NFT by Rothschild are unlikely to be adjudged dilution by tarnishment.³⁷E.g. V Secret Catalogue v Moseley, 605 F.3d 382, 388 (6th Cir. 2010). See also Suneal Bedi and David Reibstein, ‘Measuring Trademark Dilution by Tarnishment’ (2020) 95 Indiana Law Journal 683, 689 (“These cases have generally fallen into four categories: unwholesome tarnishing, low-quality tarnishing, disgust tarnishing, and sex tarnishing”). Case law has relied on the First Amendment’s definition of noncommercial speech, which extends to all expression that does more than simply propose a transaction. In the paradigmatic case of Mattel Inc v. MCA Records, the Ninth Circuit declared that Aqua’s Barbie Girl song was not purely commercial speech as “the song also lampoons the Barbie image and comments humorously on the cultural values Aqua claims she represents”, and hence the statutory noncommercial use exemption applied.³⁸Mattel, Inc. v MCA Records, Inc., 296 F.3d 894, 907 (9th Cir. 2002). In a recent litigation involving the unauthorised use of the plaintiffs’ MOSSACK FONSECA logo in Netflix’s film “The Laundromat”, the court held that the noncommercial use exception applied as Netflix used the logo for the sake of making its movie scenes true to reality and hence it was constitutionally protected speech that “does more than propose a commercial transaction.”³⁹Mossack Fonseca & Co, SA v. Netflix, Inc, 2020 WL 8509658 (CD Cal. 2022).

After a nine-day trial, an eight-person jury found Rothschild to be liable for trademark infringement, trademark dilution and cybersquatting, awarding US$133,000 in damages. In his opinion and order handed down on 26 June 2023, Justice Rakoff addressed the Supreme Court’s decision in VIP Products, LLC v. Jack Daniel’s Properties, Inc, and held that Rothschild has in fact used the Birkin trademark as a trademark, and hence the Rogers test would not be applicable.⁴⁰Hermès International v Rothschild, Case 1:22-cv-00384-JSR (Opinion and Order) (SDNY, 23 June 2023) at 7-9. It was relevant that Rothschild used a website “www.metabirkins.com” to sell the NFTs labelled as “MetaBirkins NFTs”. Moreover, the jury found that Rothschild did use the Hermes’ marks with “an intent to deceive” potential customers into believing that Hermes was associated with his NFT project.⁴¹Ibid at 10. Ultimately no error was found in the jury’s decision, and the court ordered an injunction on the marketing and sale of the MetaBirkins NFTs, disgorgement of profits and transfer of the domain name to Hermes.

The MetaBirkins NFTs decision can be distinguished from other cases involving more specific parodic products (e.g. My Other Bag and dog toys by Haute Diggity Dog) where a famous brand’s trademark was not used as a trademark. In the context of MMORPGs and other social networking platforms in the metaverse, famous trademarks nonetheless can be used in myriad ways which may attract First Amendment protection (or other equivalent freedom of expression constitutional guarantee in other jurisdictions) for their expressive value that would include parody, satire and critical commentary.

What Does It Mean for Singapore

The analysis of trademark infringement in Singapore is very different from that in the US, and the judicial evaluation of infringement here is governed by the Court of Appeal’s framework in Staywell.⁴²Staywell Hospitality Group Pty Ltd v Starwood Hotels & Resorts Worldwide, Inc (2013) SGCA 65; (2014) 1 SLR 911. See also Trade Marks Act (Cap 332, 2005 Rev Ed) s 27(2)(b). For some of the decisions applying Staywell, see TMRG Pte Ltd v Caerus Holdings Pte Ltd (2022) SGHC(A) 4; Han’s (F&B) Pte Ltd v Gusttimo World Pte Ltd (2015) 2 SLR 825. I have previously compared the approaches between the two jurisdictions and have concluded that the Staywell step-by-step marks-similarity and goods-similarity approach lacks the flexibility of the US multifactorial Polaroid or Sleekcraft test, and would not permit the consideration of extraneous factors such as the defendant’s intention to engage in artistic parodic or satirical speech.⁴³David Tan and Benjamin Foo, ‘The Extraneous Factors Rule in Trademark Infringement: Avoiding Confusion or Simply Confusing?’ (2016) Singapore Journal of Legal Studies 118. Certainly the application of the more speech-protective Rogers v Grimaldi artistic relevance test has no place in Singapore law. However, when a plaintiff’s mark is used in a MMORPG in the metaverse environment or in the minting and sale of an NFT, the Staywell consideration of marks-similarity and goods-similarity will invariably preclude the further assessment of speech-related factors to alleviate a presumptive likelihood of confusion, especially when the plaintiff has registered its relevant marks in the Classes 9, 35, 41 and 42.

In respect of trademark dilution, the protection for well-known or famous trademarks is increasingly extending beyond their meaning as a badge of origin. In the United States, despite the availability of trademark dilution actions,⁴⁴See Trademark Dilution Revision Act 2006, Pub L 109-312, § 2, 120 Stat 1730, 1730-32 (2006) (amending 15 USC § 1125(c) (1946)). The Act incorporates robust First Amendment protections that render non- actionable, inter alia, uses that parody, criticise or comment on the famous mark owner. Lanham Act § 43(c)(3)(A)(ii), 15 USC § 1125(c)(3)(A)(ii) (2006). free speech considerations often trump the proprietary interests of trademark owners, as evident in the repeated failure of Mattel to protect the Barbie mark⁴⁵Eg Mattel Inc v MCA Records Inc, 296 F 3d 894 (9th Cir, 2002); Mattel Inc v Pitt, 229 F Supp 2d 315 (SD NY, 2002); Mattel Inc v Walking Mountains Productions, 353 F 3d 792 (9th Cir, 2003). and cases like Louis Vuitton Malletier SA v Haute Digitty Dog⁴⁶507 F 3d 252 (4th Cir, 2007). and Hormel Foods Corp v Jim Henson Productions.⁴⁷73 F 3d 497 (2nd Cir, 1996). The evolving judicial attitude toward embracing a more expansive reading of the noncommercial use exception under the US Lanham Act (15 USC § 1125(c)(3)(C)) has the effect of overprotecting so-called expressive uses which nonetheless take advantage of the commercial success of famous marks. Examining the action of dilution by tarnishment, Alexandra Olson cautions that the free speech rights of artists tend to trump the property rights of the mark holder as the noncommercial use and nominative fair use/parody defenses under the Trademark Dilution Revision Act will immediately shield defendants when applied to artistic works.⁴⁸Alexandra E Olson, ‘Dilution by Tarnishment: An Unworkable Cause of Action in Cases of Artistic Expression’ (2012) 53 Boston College Law Review 693. While Singapore protects “well known” trade marks under section 55 of the Trade Marks Act, the “non-commercial purpose” exclusion under section 55A(3)(b) is unlikely to be interpreted as widely as in the US which incorporates First Amendment interests that shields a range artistic parodic and satirical uses from liability.

In summary, even as the metaverse and NFTs transcend jurisdictional borders, trademark litigation – whether for infringement or dilution – will lead to very different results in the US and in Singapore when expressive (i.e. not purely commercial) interests are implicated.

Conclusions

The famous marks are the ones that carry with them the most potential for expressive use – whether in real life or in the metaverse. The panoply of MMORPGs and other interactive sites in the metaverse will invariably deploy well-known marks in many creative ways. It may be as a parodic character in a game, or it may be as a virtual item one can acquire and trade, or it may be manifested as an evil empire that one must destroy. The possibilities are endless as one creatively expresses the zeitgeist in this digital environment. In the US, courts have generally adopted the view that trademark law is not the proper vehicle for combatting speech with which one does not agree.⁴⁹E.g. Radiance Foundation, Inc v. National Association for the Advancement of Colored People, 786 F.3d 316, 332 (4th Cir. 2015). Indeed it is “it is often virtually impossible to refer to a particular product for purposes of comparison, criticism, point of reference or any other such purpose without using the mark.”⁵⁰New Kids on the Block v. News America Publishing Inc, 971 F.2d 302, 306 (9th Cir. 1992). As activities in the metaverse attempt to mimic reality – whether shopping, socialising or playing games – the way the law protects our expressive uses of trademarks in the real world will continue to adapt to confer similar protection in this virtual environment. However, the divergent perspectives between the US – with the juggernaut of the First Amendment – and the rest of the world regarding the emphasis to be placed on the status of freedom of expression in intellectual property jurisprudence will no doubt be a formidable challenge to the architects and users of the metaverse who are still trying to make sense of this new space which perhaps should be more appropriately known as “the multiverse of madness”.