nickThe Metaverse continues to attract significant attention across a range of industries. Rapid technological developments, propelled by the global pandemic, across sectors like sport, media, entertainment, gaming and retail have seen a number of brands engage in a vast array of Metaverse projects as a means of engaging with consumers in new, innovative ways.

Sport has been at the forefront of these developments, engaging early with the Metaverse and seeking to experiment with several different platforms and projects. Given the primacy of intellectual property rights to sports brands – the real lifeblood of their commercial programme – it is imperative to give proper consideration to the IP issues involved in launching or engaging with a Metaverse project.

Cutting-edge fan engagement

Rights holders across a range of sports have begun experimenting with the Metaverse in a variety of ways, hoping to leverage their global fanbases and crucial, high-value IP to engage a new generation of fans (and potentially unlock new revenue streams).

For example, Premier League football club, Manchester City, have entered a partnership with Sony to create an online fan community where fans can gather in the Metaverse within a virtual recreation of the Etihad Stadium and explore the ground as avatars, interacting with others, and partaking in fan engagement opportunities. Additionally, in Spain, LaLiga have entered into an agreement with TVM to become their official Metaverse partner as they look to build the league’s fanbase through interactive experiences. TVM’s blockchain-based ‘Triverse’ is said to be the “metaverse for sports” in which teams and leagues can create cities for their fans to explore, access exclusive content and play in mini games. The aim of this partnership is to build their global audience and, in particular, reach a younger demographic.

Basketball has perhaps been more willing than any other sport to get creative with the Metaverse. The Brooklyn Nets have created a platform where fans can watch real-time, detailed 3D models and images of players on the court during matches. Fans can watch every angle of the game in whatever position they prefer, including from the middle of the court, through their “Netaverse” 360 virtual reality experience. On top of this, Meta recently partnered with the NBA and WNBA to launch more than 50 live games in virtual reality on its Meta Quest platform. The NBA have also launched an initiative in which fans can insert a 3D avatar of themselves into a live game to replicate the movements of a player in real-time.

The emergence of these cutting-edge fan engagement tools across the sporting sphere has brought with it a number of commercial and legal issues to be considered by sports organisations, with IP being high on the priority list.

Managing IP risks in the Metaverse

Trade Mark portfolio:

It is important for sports brands to ensure they have the right trade mark registrations in place before launching a Metaverse project. This will often involve reviewing a brand’s existing trade mark portfolio to identify any gaps in registrations (whether by trade mark class or territory) and searching for any marks registered by third parties that are similar to those that a sports brand is looking to exploit. Ultimately, having a robust anti-infringement strategy is crucial to ensure protection of the brand, and this will require an understanding of the infrastructure of the platforms relevant to the applicable project and how they interact with users.

Understanding key demographics and territories will be of paramount importance. Some Metaverse platforms might be described as ‘global’, but it is important to ensure that brands are willing and able to take out registrations for their marks (in the appropriate classes) across the board. Important considerations will be:

• knowing what the key targets for the particular project are;
• knowing which particular territories have the largest number of users; and
• having an understanding of where the infringement risks are highest.

Design rights:

Although trade marks are a crucial element of brand protection, the potential value of design rights should also be considered. Obtaining a registered design for a particularly important item that is being recreated in a Metaverse context adds an additional layer of protection and has the advantage of (in the UK) not having to continue to establish actual use of the design in order to maintain protection (as is the case with trade marks). So long as the holder of a registered design renews their registration every five years, the protection will last for up to 25 years.

Brand collaborations:

Most Metaverse projects involving sports brands to date have involved collaboration with pre-existing and well-known platforms. There is a longstanding relationship between video games and sport, as evidenced by recent collaborations between Air Jordan and the NFL within Fortnite and Ted Lasso within FIFA 23, concepts which are gradually moving to the Metaverse. Indeed, the above example of La Liga partnering with the Triverse by TVM is perhaps a sign of where these types of collaborations are heading.

Central to any collaboration will be the contract between the sports brand and the applicable platform. The applicable IP to be licensed is likely to be wide ranging, potentially covering the use of, inter alia, different logos, kits, player images, data and footage. The branding of in-Metaverse items is also likely to come with requisite design rights and copyright, as has been the case for some time in the context of video games (and as shown in the case of AM General LLC vs Activision Blizzard, Inc.).

Appropriately articulating the licence terms between the sports brand and platform is not straightforward, but among a number of key considerations will be the following:

• setting out precisely what IP is being licensed to the platform and in what context;
• scoping out exactly how that IP can be used, how long for, and what should happen once the collaboration ends;
• exercising caution in giving any warranties and indemnities around the platform’s use of the sports brand’s IP (which is linked to the above points regarding trade mark and design portfolio management);
• including robust approval rights to ensure that the sports brand is happy with the virtual representation of its IP within the platform; and
• providing the sports brand with recourse in the event of misuse of its IP.

Building a Metaverse:

The fashion industry has been quick to understand the potential of the Metaverse, and the importance of engaging with the world of gaming in particular. Some have gone so far as to launch their own games, such as Balenciaga’s Afterworld and Louis Vuitton’s Endless Runner.

For sports brands looking to take the next step in creating their own games or Metaverse(s), further IP considerations will likely come into play. A number of these will be familiar to those involved in software development projects, such as ensuring that the brand takes a sufficiently broad assignment of rights in the IP of the game/Metaverse created for it from those undertaking the development work (assuming the sports brand does want to own it), and clarifying where any open source technology has been used in the development process and the terms attaching to the same. Games and virtual world are extremely IP-rich and copyright will exist in the graphics, audio and designs created, as well as in the computer code used to build the game/Metaverse itself (which is protected in the UK as a literary work). Therefore, the importance of getting these issues right cannot be understated.

Additional considerations come into play where a Metaverse is designed to be truly global, and where blockchain technology is involved. By making a platform available to users everywhere, a sports brand should consider whether this could expose the platform to any IP enforcement risks in key territories (e.g. if the treatment of the IP subsisting in a Metaverse, or the terms on which it is licensed to users, would cause any difficulties under local law in a key market for the sports brand). In addition, if a Metaverse is being built on a third-party blockchain (such as Ethereum), a sports brand should consider whether that compromises the brand’s ownership of anything it creates using that blockchain. They should also question whether the immutability of blockchain technology presents any risks – e.g. if NFTs minted via a sports brand’s platforms are misused by a purchaser, to what extent does the brand have recourse to limit the damage done, and if infringing activity occurs will it be able to locate the infringer if they have signed into the platform anonymously.